Sitting of 3 March 1998

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

PRIVATE BUSINESS
LLOYDS TSB BILL [Lords]
Order for Second Reading read.
To be read a Second time on Tuesday 10 March.

Oral Answers to Questions
  ENVIRONMENT, TRANSPORT AND THE REGIONS
  The Secretary of State was asked—

  Regional Regeneration
  Mr. Ian Bruce: If he will make a statement on the closure of the South Dorset economic partnership and the implications of this for the Government's regional regeneration policies. [30620]
  The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): The South Dorset economic partnership is a local delivery organisation. How it operates and decisions about its future are matters for the local partners.
  Mr. Bruce: I am sad that the Minister has not thought to acquaint himself with exactly what is happening at the delivery points of Government policy. The Government have expressed their intention to regenerate jobs, particularly where defence jobs are being lost. Surely the South Dorset economic partnership demonstrates that Government policy is not working and that, because the regional development agencies are not providing funds, and the local authorities are not being given sufficient resources to assist, the excellent delivery of the South Dorset economic partnership is failing. Will the Minister please take some action and find out what is happening on the ground floor? By the time that the regional development agency is up and running, there will be no means left to deliver his policies.
  Mr. Caborn: We are keeping close contact with Dorset, where I understand that the three local authorities have withdrawn funding from the scheme. They plan to create a new organisation with a wider remit.

  Local Government Finance
  Mr. Gray: What representations he has received on the 1998–99 local government financial settlement. [30622]
  The Minister for Local Government and Housing (Ms Hilary Armstrong): The Department received 406 written representations within the deadline for responses. I and other Ministers at the Department also met the Local Government Association and the Association of London Government, delegations from 95 local authorities, and one special interest group during the consultation period.
  Mr. Gray: Is the Minister aware that, after the correction of an arithmetical error in the announcement of the revenue support grant for Wiltshire, this year's settlement represents a real cut of 7.2 per cent. which has meant for Chippenham an increase of £75.49 in band D council tax? Are the Government to blame for that increase, or is it the fault of the county council, in which case, will the Minister join me in calling on the four Labour councillors who keep the incompetent Liberal authority in place to withdraw their support?
  Ms Armstrong: The hon. Gentleman clearly still has the blame mentality. He will know that the previous Government wanted to shift the balance between central and local funding. We have continued that, but it is up to local government to make decisions about the balance between central funding and local taxation.
  Mr. Bill O'Brien: Has my hon. Friend received representations from Wakefield—my local authority—about the way in which the formula has reacted against it? Has she also received representations from the West Yorkshire police, who are now saying that there is a deficit in their income from the formula that has been set by council tax funding? As band D properties in West Yorkshire have received a 75p reduction in council tax, there will be a knock-on effect in all other bands and therefore a substantial reduction in revenue for the West Yorkshire police. Will she address that point and investigate the problems?
  Ms Armstrong: I am always interested in hearing from colleagues about how the settlement is working in their area. My hon. Friend will know that consultation on this year's settlement has finished, and the House has made a decision. The authorities that he mentioned will have an opportunity to make representations on how we decide on the standard spending assessments for next year. We intend to achieve a more just settlement.
  Sir Norman Fowler: May I ask about the position in London? Will the Minister acknowledge that, even after all the changes to distribution that the Government have made, Wandsworth's band D charge next year will be £319 and Westminster's will be £325, while Camden's will be £879 and Greenwich's will be £883? Why, even under this Government's system, do Labour councils come out so expensive?
  Ms Armstrong: I am sure that the House will note the difference between that contribution and what the right hon. Gentleman said during the debate on the settlement. We have begun the fairness exercise, but we have not yet completed it.
  Mr. Skinner: To ensure fairness, will my hon. Friend take particular note of the fact that, during the 18 years when the Tories were in power, many Tory Members from Derbyshire used to tell Ministers in the House to cut the grant for Derbyshire? They did that for 12 consecutive years. The net result is that we now need a little extra help to achieve fairness. I am being consistent. I called for extra money when the Tories were in power. I do the same now. Will my hon. Friend ensure that help is received?
  Ms Armstrong: My hon. Friend reminds us of the comments of the Conservatives during debates on settlements. We have not yet received representations from Derbyshire. When we do, we shall consider them fairly.

  Water Treatment Works
  Mr. Sanders: If he will introduce measures to allow independent public monitoring organisations to gain automatic entry to water treatment works. [30623]
  The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott)rose—
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Angela Eagle): I see no reason to provide for additional organisations to monitor water treatment works. Standards of water treatment are extremely high. Water companies must, by law, check that drinking water meets 55 separate standards. It is the job of the drinking water inspectorate to check that companies carry out their quality checks properly.
  Mr. Sanders: I thank the Minister for that reply, but it does not answer the question. Private companies are able to stop public bodies, such as the drinking water inspectorate and the Environment Agency, from gaining access to water works. There were problems with the cryptosporidium bug in my constituency in 1995 and more recently in London. Will the Minister look closely at the rights and duties of the public bodies that exist to protect the public's drinking water so as to enable them to inspect water works without prior appointment?
  Angela Eagle: We are looking carefully at the fallout from the outbreak of cryptosporidium and the health problems caused in Torbay in 1995, particularly in the light of the subsequent attempt to prosecute the water authority, which failed because the court did not allow as evidence the report of the outbreak control team. We hope to be able to make a statement about that shortly.

  Local Government (Best Value)
  Jane Griffiths: When he expects to publish his consultation document on best value in local government; and if he will make a statement. [30624]
  Mr. Prescott: At last; I was so keen to get in.
  Today, my hon. Friend the Minister for Local Government and Housing launched the consultation paper on best value in local services. It takes forward our commitment to introduce a comprehensive regime, which will empower local people and ensure continuous improvement in the performance of local services. The proposals were discussed with local government at the central-local partnership meeting, which I chaired this morning, along with nine members of the Cabinet and Ministers.
  Jane Griffiths: I thank my right hon. Friend for his answer and welcome the publication of the consultation document. Will he confirm that the purpose of best value is that councils should provide services at the level that residents have the right to expect, and at a price that residents can afford? Does he agree that Reading's Labour council, with its partnership-focused approach, is very well placed to meet the challenge posed by best value?
  Mr. Prescott: I very much agree with my hon. Friend. Our approach is about better value and fairer employment.
  Mrs. Ballard: The majority of councils are run by the Labour party. The Government, in their White Paper, are rightly wary of councils with large single-party majorities. Does the Secretary of State agree that the best way in which to achieve best value and truly accountable local government is by a fair system of local elections?
  Mr. Prescott: Although I am not surprised that the hon. Lady equates everything with a fairer voting system, I think that our proposals for best value are the best way of dealing with the issue.
  Mr. Tipping: Will the Deputy Prime Minister ensure that all councils benefit from the experience of best value councils and that good practice is promoted by the Audit Commission and other bodies? Will he particularly consider Newark and Sherwood district council's excellent record of energy efficiency and conservation?
  Mr. Prescott: Yes, the Audit Commission has looked at the matters and reported very favourably on local authorities. I endorse a great deal of what it says. We have made it clear in our approach to best value that we want better value and fairer employment. The pilot schemes, of which there are about 40, are under way. The reports from them will make a major contribution to improving standards of service and gaining better value in our local authorities.
  Sir Norman Fowler: Will the Secretary of State acknowledge that competitive tendering achieved hundreds of millions of pounds of savings to the benefit of the council tax payer? Is not the danger with the new system that has been set out today that it is too bureaucratic, will allow reluctant councils to continue to resist change, and will therefore work directly against the interests of the council tax payer?
  Mr. Prescott: It has been acknowledged by all parties that have studied the matter that competitive tendering cost the taxpayer considerably more, as the system was reduced to least cost, least value. The cost to the taxpayer,

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  either through family income supplements or as a result of the resources that were needed, was considerable. Even the private sector, in partnership with local authorities and trade unions, came to the conclusion that the previous system was over-bureaucratic and, in some cases, denied equality of employment in the contracts. That was the result of compulsory competitive tendering. We are seeking to change it.

  Regional Development Agencies
  Mrs. Spelman: What representations he has received from local authorities over the accountability of regional development agencies. [30625]
  Mr. Caborn: We received a number of representations from local government about the accountability of regional development agencies. RDAs will be non-departmental public bodies; as such, they will be accountable to Ministers. They will also be required to consult the designated regional chamber, and account for their activities to the chamber.
  Mrs. Spelman: Will the Minister assure the House that the new regional development agencies will not remove powers from local government, especially the planning powers envisaged in clauses that were withdrawn in consideration in Committee of the Regional Development Agencies Bill?
  Mr. Caborn: The hon. Lady knows that, in Committee, we said that we should look at certain clauses and come back to the House on Report.
  Mr. Blizzard: Will not people judge the accountability of a regional development agency by how successful it is in tackling a region's problems? For example, in Lowestoft in my constituency, where unemployment is 9.2 per cent., against a regional average of 3.6 per cent., people are looking forward to the RDA tackling the disparity, which was left unattended for 18 years by the Conservative party. Will my hon. Friend confirm that addressing such disparities will be one of the priorities of RDAs?
  Mr. Caborn: My hon. Friend is right. Apart from the Opposition, everybody accepts that there is a need to address the serious structural weaknesses in our eight English regions. To that extent, all the major stakeholders involved in the RDAs will address the issues and will try to bring more employment back to those regions than ever before.
  Mr. Yeo: As the Minister will appoint every single member of the RDA boards and will also choose the organisations that are to be designated as the regional chamber, is there not clearly a serious lack of accountability in the structure proposed? Against that background, is it not absolutely extraordinary that every one of the Opposition amendments, which would have required the Minister to consult local authorities about the activities of RDAs, were voted down by the Government?
  Mr. Caborn: The Opposition should be the last people to start lecturing the Government about quangos and accountability. We well know that the Conservatives took
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  more powers from local authorities than any other Government in history. We want no lectures from the Opposition on this issue.
  Madam Speaker: Mr. Boswell.
  Mr. Boswell: Number seven, Madam Speaker.
  Mr. Prescott: I think that it is number eight. At least I am right on this one.

  Air Quality
  Mr. Boswell: What plans he has to introduce measures to improve air quality. [30628]
  Mr. Prescott: The Government are taking action to improve air quality through the implementation of the national air quality strategy. On 12 February, we announced our plans to take forward an immediate review of the strategy, during which we shall look at all options for delivering improved air quality more quickly.
  Mr. Boswell: While that is welcome, will the Deputy Prime Minister take a particularly close look at the Environmental Agency's recent proposals in connection with sulphur dioxide emissions from power stations, which do not seem to be well founded in the facts and go well beyond our current international obligations? Incidentally, the proposals would have the serious effect of virtually wiping out the economics and the potential of the British coal mining industry overnight.
  Mr. Prescott: The hon. Gentleman will be aware that this strategy was begun by the previous Administration and that that is one of the gases under consideration in the review. We shall take into account the points that he has made.
  Dr. Lynne Jones: I understand that the planting of trees can have beneficial effects on air quality. However, will my right hon. Friend assure the House that he will not encourage the planting of leylandii trees and hedges in residential areas? On the contrary, will he consider introducing measures to curb the activities of those who insist on growing those hedges to monstrous proportions, thus inflicting considerable misery on their neighbours?
  Madam Speaker: The hon. Lady's question is vaguely related.
  Mr. Prescott: It will be vaguely replied to, Madam Speaker.
  I can confirm that we are considering some form of Government intervention in relation to those hedges if necessary.

  House Building (Rendering)
  Mr. Collins: What representations he has received about legislation governing the use of rendering in newly built housing; and if he will make a statement. [30629]
  The Minister for London and Construction (Mr. Nick Raynsford): Apart from the hon. Gentleman's letter of 24 February to my right hon. Friend the Deputy Prime Minister on this subject, the Government have received no representations regarding legislation concerning the use of rendering to newly built houses.
  Mr. Collins: The Minister will know from my letter that I have laid before the Department the concerns of my constituents living in the Helme View estate, built by Barratt Homes, in Kendal. Will he consider legislation to require the minimum specified standards of rendering set out by the manufacturers of those materials, to be used by private sector builders? Will he also consider replacing the National House-Building Council with something that is rather less of a toothless watchdog?
  Mr. Raynsford: I am grateful to the hon. Gentleman for providing me with some detailed background information about the case of Helme View. On the strength of his representations, I have seen that there is some evidence that the rendering may have been put on in a way that did not comply with the specification contained in the British Board of Agrément recommendations. If that is the case, there would certainly be grounds for the home owners concerned to seek redress through the NHBC, which has provided the insurance back warranty on the scheme. We have had general discussions with the NHBC about the performance of its obligations, and I have twice met its chief executive. I am expecting a report on the progress that it is making in the review of its service to ensure that it provides effective warranties to the public.

  Local Government Finance
  Dr. Cable: What plans he has to reduce local authorities' reliance on central Government funding. [30630]
  Ms Armstrong: We shall shortly be consulting on possible changes to the system of local government finance.
  Dr. Cable: Does the Minister recall that the Government have signed the European charter of local self-government? Is she willing to tell the vast majority of councils—of all parties—which are well run, what time scale the Government now envisage to allow councils to raise their own revenue to meet local needs free of central Government capping and other centralised controls?
  Ms Armstrong: We have said that we shall consult shortly. The consultation document will be going out in the next two to three weeks. Councils will then be able to respond. We shall be able to deal with the points that the hon. Gentleman has raised in that process. We then hope to bring a White Paper to the House. He will then see precisely how the Government intend to proceed.
  Dr. Ladyman: When the Minister is looking into how to reduce local government reliance on central Government funding, will she also look into those ways in which local government is bailing out central Government? I am thinking of the burden of housing benefit payments on district councils. When the
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  Conservative party passed the responsibility for such payments to local government, it promised that not a penny of that expenditure would fall on the council tax payer. In my district of Thanet, £3 million out of £15 million goes on covering the cost of housing benefit payments. Will my hon. Friend take that into consideration when considering how local government finance is to be reorganised?
  Ms Armstrong: That is part of the present review of housing finance. I met the Local Government Association to discuss issues associated with that last week. It is one of the areas that we are reviewing and I look forward to reporting back on the results at some stage in the future.

  Local Government
  Mr. Bob Russell: If he will reduce central Government intervention in local government. [30631]
  Ms Armstrong: We are committed to making local decision making less constrained by central Government and more accountable to local people. However, there will remain a need for reserve powers for Government to act if and when councils fall seriously short of what people are entitled to expect.
  Mr. Russell: While I acknowledge the Minister's response, does she agree that, after 18 years of relentless attacks on local government by the former Government, Britain now has the most centralised local government system anywhere in the democratic world—even more centralised than the system that Stalin achieved in the former Soviet Union? Is it not time that the Government started to roll back central Government control and get rid of the quangos? In short, is it not time that central Government got off local government's back?
  Ms Armstrong: I certainly accept and agree that we have ended up with the most centralised system in Europe. Indeed, the number of Acts that the previous Government passed to try to neuter and devalue local government was almost more than the number of Conservative representatives on the Opposition Benches at the moment. We are determined to change the situation, but we want to do so in partnership with local government. That means that we are working with local government to plan the way forward and to do that in partnership. We shall not take decisions on our own without recognising the valuable contribution that local government has to make to the way forward.
  Mr. Rammell: All of us would want to see an end to crude and universal capping as soon as possible, but does the Minister agree that political consistency is necessary on those issues? While in the House the Liberals argue for extra powers, extra expenditure and extra taxation at a local level by local councils, in my constituency and, I imagine, in others they criticise the fact that council taxes are increasing to fund reasonable increases in expenditure. Do we not need some consistency on those matters and does not that problem undermine the credibility that the Liberals might otherwise have on such issues?
  Ms Armstrong: I think that both Opposition parties have some difficulties in consistency in their local government policy. Of course we need consistency, but, more than anything else, if we are to get a proper democratic balance in this country, we need a rejuvenated local government. We need that rejuvenation and diversity properly to express the will of local people and to ensure that they really are in the driving seat and we get a democracy worthy of its name.
  Mr. Pickles: One of the principal worries of local councils about Government intervention concerns the planning powers of the regional development agencies. There is confusion on that. The Select Committee on the Environment, Transport and the Regions was told that there were no plans to take away powers from local authorities. The Regional Development Agencies Bill originally proposed to give the agencies such planning powers, but those proposals were then withdrawn. I accept that there may have been drafting problems, but my question is wholly reasonable—what powers does the Minister believe that the RDAs should have on planning?
  Ms Armstrong: I am staggered by the hon. Gentleman. Year after year, he supported measures that gave central Government greater powers of intervention in local government. He knows that the issue will be dealt with properly on the Floor of the House on Report.

  Parish Councils
  Mr. Burns: If he will extend the powers of the local government ombudsman to cover parish councils.[30632]
  Mr. Raynsford: We have no plans to extend the powers of the local government ombudsman to cover parish councils. Individual electors can raise complaints directly at meetings of the parish council.
  Mr. Burns: Why not?
  Mr. Raynsford: Quite simply because, even though there are some 17,000 parish councillors and some 8,000 parish councils in England, the Department has received fewer than 10 representations suggesting such an extension.

  Local Government Reform
  Mr. McNulty: What progress he is making in his consultation on the reform of local government. [30633]
  Ms Armstrong: On 9 February, my right hon. Friend the Deputy Prime Minister launched a wide-ranging consultation paper, "Local Democracy and Community Leadership", on modernising local government. A second paper, "Local Services Under Best Value", was published today. Further papers on the new ethical framework and on aspects of local government finance will be published shortly. Following consultation, the Government will set out their firm proposals in a White Paper this summer.
  Mr. McNulty: I thank my hon. Friend for that answer. Does she agree that the apparent conversion of the right hon. Member for Richmond, Yorks (Mr. Hague) to the value of local government is far too little, far too late? No one will be convinced by Mickey Mouse conversions by the Opposition on that, the countryside or any other issue.
  Ms Armstrong: We are determined to rejuvenate local government. The Conservative Government left local government demoralised and in a mess. They believed that they knew best about everything, but they had their answer on 1 May and they will receive similar answers in the future.
  Mr. St. Aubyn: Does the Minister accept that there was no countryside rally or countryside march against the last Government? The reason why more than 100,000 people rallied in Hyde park last year and more than 250,000 people marched through London at the weekend is the Government's meddling attitude to rural affairs.
  Ms Armstrong: The hon. Gentleman needs to learn a little history. People in the countryside are not obsessed by one issue; they want a Government who listen to them on the whole range of issues. That is precisely why I am consulting them on the future of housing opportunities in the countryside, and why we are ensuring that brown-field sites in the countryside are properly used for social housing. Moreover, we are considering transport opportunities to ensure that there is decent public transport in areas where few people have had access to it. People in the countryside are anxious—and angry—about those issues because, for the past 18 years, they have been absolutely neglected.
  Mr. Soley: Has my hon. Friend seen Hammersmith and Fulham council's proposals for improving the representation of councillors and reinforcing their role, while subjecting them to closer scrutiny? In anticipation of the Local Government (Experimental Arrangements) Bill, may I ask whether that is not the way in which the Conservative party, and all parties, should encourage local authorities to develop the local democracy that will strengthen the bond between elected councillors and the electorate? Is not that where the real argument lies?
  Ms Armstrong: Of course it is where the real argument lies. We want to ensure that local councils take responsibility for thinking about how they can be as responsive and as open as possible to local people. Those ideas are expressed in the Local Government (Experimental Arrangements) Bill, which has recently been considered in the House of Lords. That private Member's Bill arose from a House of Lords Select Committee; it had all-party support in the House of Lords, as well as the strong support of local government. I hope that the House of Commons will treat it seriously.
  Sir Norman Fowler: It needs debate.
  Ms Armstrong: It certainly needs debate and, if Opposition Members are co-operative, it will get debate. We are determined to ensure that it is debated properly. If Opposition Members agree with that, they

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  will ensure that the Bill gets into Committee, so that we can give local government the chance to develop its own way of working.

  Dorchester Relief Road
  Mr. Ian Bruce: When he will make a decision on the financing of the Dorchester relief road in Weymouth; and if he will make a statement. [30649]
  The Minister of Transport (Dr. Gavin Strang): The Government's priorities for investment in local road schemes, including the Dorchester relief road, will be decided in the context of the new appraisal framework that we are developing in the trunk roads review.
  Mr. Bruce: I thank the right hon. Gentleman for his non-answer. I approached the Government about the scheme, which was waiting for them on 1 May. They decided that they wanted an integrated transport solution to be proposed by Dorset county council. The council rewrote its bid and submitted it to the Government on a tight deadline, spending probably tens of thousands of pounds, but the Minister's Department did not even send it to the Treasury task force for private finance initiative bids, further delaying the scheme. What is the reason for that prevarication; for the extra money being spent by local government; and for the lack of a decision from the Government?
  Dr. Strang: Surely the hon. Gentleman is aware that the Government are implementing the manifesto commitment to conduct a fundamental review of our roads programme; to decide what role roads play in an integrated transport policy; and to determine what criteria should be taken into account in choosing which roads to give priority to. In the business plan for its proposed PFI scheme, Dorset county council envisages signing the contract in 1999–2000.

  Driving Test Centre, Chelmsford
  Mr. Burns: If he will make a statement on the progress being made in moving the driving test centre in Beeches road, Chelmsford, to another site in the Chelmsford area. [30650]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): A planning application for the Chelmer business park, which includes plans for a purpose-built driving test centre, is due to be considered by Chelmsford borough council planning committee on 6 April. Assuming that the application is successful, building work should start this summer and driver testing operations could move there from Beeches road by the end of the year.
  Mr. Burns: Many of my constituents in the Waterhouse Farm area of Chelmsford will be extremely heartened and gladdened to hear what the Minister says, and I am grateful to her. Will she keep a watching brief to ensure that there is no slippage? As she will be aware, the problem has been rolling along for at least eight years and has been the subject of an adverse report by the Parliamentary Commissioner for
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  Administration. There was a problem earlier this year when the ownership of the land on which the centre is to be built changed hands. My constituents would appreciate it if the Minister could ensure that the deadline that she has given today is honoured.
  Ms Jackson: I can well understand the hon. Gentleman's constituents' concern. The issue has indeed dragged on since 1989. I am pleased to note that, since the Labour Government came to power on 1 May, there seems to have been a move in the right direction. We want the centre to be retained at Chelmsford, but the decision rests with the local authority, and we are hopeful that planning permission will be granted.

  Road Traffic Reduction
  Mr. Dobbin: What guidance has been issued to local authorities under the Road Traffic Reduction Act 1997. [30652]
  Mr. Prescott: Guidance to local authorities on meeting their obligations under the Road Traffic Reduction Act 1997 was issued in draft on 15 January in order to allow local authorities and other interested parties to comment on its contents.
  Mr. Dobbin: Is my right hon. Friend aware of the growing concern about ill health caused by pollution from road traffic? Does he agree that the Road Traffic Reduction Act 1997 will provide an important framework for local authorities to tackle the problem of traffic congestion? I welcome the guidance that has been issued under the Act and I congratulate the Government on their support for the Road Traffic Reduction (United Kingdom Targets) Bill.
  Mr. Prescott: My hon. Friend has established a reputation for campaigning hard on this matter. Air pollution from traffic is a serious problem and we hope to tackle it through our national air quality strategy and the integrated transport White Paper that we will publish shortly. The Road Traffic Reduction Act 1997 provides an important framework for local authorities to take action, and the Government are committed to tackling the harmful effects of the growth in road traffic. It is estimated that up to 24,000 people die prematurely each year because of exposure to such air pollution.
  Mr. Brake: Will the Secretary of State add up the reductions contained in all the local authority plans so that we can assess the contribution that local authorities will make to reducing road traffic? Will he also introduce a national target for the Government so that local authorities do not have to take sole responsibility for reducing traffic?
  Mr. Prescott: Those matters are very much in our mind and are being considered for the White Paper, which will be published in May.
  Mr. Ottaway: Does the Secretary of State agree that, whatever their good intentions, local authorities can do little in practice to reduce traffic levels, and that the way forward is to encourage people on to public transport? With that in mind, will he give a warm welcome to Virgin's announcement today of a

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  £1.8 million order for rolling stock for the west coast main line, which demonstrates the long-term benefits of rail privatisation?
  Mr. Prescott: I welcome the hon. Gentleman's conversion to the need to give public transport priority over private transport. Whether the privatised rail system will contribute to that, we wait to see, although the signs are not good. I would point out to the hon. Gentleman that, in the past 20 years, the costs of car transport have increased by 8 per cent. while the costs of public transport have increased by 30 per cent., and that that happened because the previous Government pursued a different policy.

  New Roads
  Mr. Mullin: How many miles of new road he has (a) approved and (b) declined to approve since he took office; and if he will make a statement. [30653]
  Dr. Strang: Last July, I approved three schemes, which included 36 miles of road on new alignments. At the same time, I declined to approve 22 schemes, which would have included 85 miles of road on new alignments.
  Mr. Mullin: I welcome that reply. Is the Department still under the control of the road lobby or has word reached the civil servants that the days of bigger and better roads are over and that the future lies with better public transport? I know that Ministers have grasped that point, but is my right hon. Friend satisfied that word has reached all concerned?
  Dr. Strang: I assure my hon. Friend that, under this Government, the days of predict and provide are over. We recognise that we cannot build our way out of our transport problems and that is why we will publish a White Paper on an integrated transport policy in a few months' time.
  Mr. Chope: Is not the Government's record, albeit short, deplorable? In 18 years, the Conservatives built or upgraded 1,300 miles of motorway and trunk road. That investment is a vital ingredient in the nation's prosperity and in regional competitiveness. Does the Minister agree that further extra taxes on motorists in the Budget before the publication of the White Paper would be unacceptable?
  Dr. Strang: The hon. Gentleman is surely aware that the Government no longer regard building a new road as the first option for tackling a transport problem. We have to consider a range of options, although we will, of course, always have to build some new roads. One of the biggest problems that we inherited was the previous Government's complete failure adequately to maintain the existing roads network. That is why we have provided for such a large increase in expenditure on maintenance of our trunk roads and motorways in the next financial year.

  Roads (Noise Pollution)
  Mr. Randall: If he will make a statement on his Department's plans to limit noise pollution on major trunk roads.[30654]
  Dr. Strang: Noise pollution is being addressed in the review of the role of trunk roads in England and is being considered with other matters in the preparation of the White Paper on integrated transport.
  Mr. Randall: I thank the Minister for his reply. What assurances can he give my constituents, particularly those living in Ickenham close to the A40, about measures to alleviate the misery of noise pollution there?
  Dr. Strang: The hon. Gentleman is right to focus attention on that. I know how important the issue is for many of his constituents. Under the policy of previous Governments, there has been no specific provision for tackling the problem once a road has been constructed. We are considering the matter, and we will announce our decision when we publish our White Paper on integrated transport.
  Fiona Mactaggart: I am glad that the matter will be covered in the White Paper. Is there any prospect that the paper will include proposals to protect people who live near existing roads, such as the A40 and M4, that have had increasing traffic in recent years and become very noisy for people nearby? If there were to be some alleviation, it would be for the first time for many years, which would be welcome to those of us who have campaigned on the matter for a long time.
  Dr. Strang: My hon. Friend is right to point up the problem. As she knows, there is an excellent chapter on the subject in the report on transport of the royal commission on environmental protection. It is an issue of growing importance for many people and we intend to address it.

  A5
  Mr. Paterson: What plans he has to dual the A5 north of Shrewsbury. [30655]
  Dr. Strang: We are considering that proposal as part of our review of the roads programme.
  Mr. Paterson: Twenty-five people have been killed between Shrewsbury and Ruabon over the past five years. The project has the full support of all the neighbouring local authorities and the Government office of the west midlands. It is the last link in the trans-European network route between Felixstowe and Holyhead that has not been dualled. When will the Minister be able to give a clear idea of when a final decision will be made?
  Dr. Strang: We will take decisions on such roads in the context of our roads review. The hon. Gentleman is right, and makes a strong case for the road. New roads can save lives, and safety is a factor in this case.

  Traffic-Calming Measures
  Mr. Bob Russell: What action the Government are proposing to take to encourage councils to introduce further traffic-calming measures; and if he will make more financial resources available. [30656]
  Dr. Strang: I recently announced the Government's intention to remove the requirement for local highway authorities to obtain the Secretary of State's consent to making 20 mph speed limits. That should encourage the creation of more 20 mph zones, particularly where children and vulnerable road users are most at risk. The Department will continue to provide local authorities with guidance on traffic-calming measures. We are currently considering what resources can be made available for 1999–2000.
  Mr. Russell: I am grateful both to this Government for what they are doing on road safety—and, in fairness, to the previous Government, who pioneered traffic calming. I regard road safety as a non-party issue. However, more money is needed because road safety is in the national interest. I draw the Minister's attention to the high street scheme in my constituency, which has been funded by Government, past and present; the county council, past and present; and the borough council. It has led to a reduction of almost 50 per cent. in the number of accidents. Given that the Department's figures show that a fatal accident costs £1 million, a serious injury accident £110,000 and a slight injury accident about £10,000, the introduction of that traffic-calming system across the country would save hundreds of lives, prevent thousands of injuries and save the country money. Can we have more resources for more traffic-calming schemes?
  Dr. Strang: Yes, the hon. Gentleman is right to commend so strongly the Colchester transport package, which this Government, like the previous Government, support. It contains a number of positive elements such as the provision of bus priority measures at key points and the development of cycle networks. As he rightly said, it has a strong emphasis on safety, traffic-calming measures and 20 mph zones. It is because of the merits of those schemes that I recently announced that local highway authorities will no longer have to approach the Government to create new 20 mph zones.
  Ms Southworth: Will my right hon. Friend work with local authorities and public and private sector partnerships that are working to create sustainable town centres that are safe, environmentally friendly and accessible to everyone in the local community? In particular, will he give consideration to the unfair competition from out-of-town shopping centres that provide free car parking?
  Dr. Strang: Yes, I agree with my hon. Friend. Most hon. Members would accept that when the former Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal (Mr. Gummer), announced that he was changing the planning legislation in relation to the development of out-of-town centres, it was a case
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  of shutting the stable door after the horse had bolted. Far too many out-of-town centres have developed. We must now cope with that situation. Clearly, the encouragement of greater use of public transport and the promotion of an integrated transport policy are made so much harder by the development of out-of-town schemes.
  Mr. Dafis: Do not reductions in the roads budget—which are reasonable enough for the purpose of discouraging unsustainable traffic growth—sometimes lead to cuts in the resources available for traffic-calming measures? That is an ironic outcome. What can the Government do to ensure that, while the roads budget may be reduced for good reasons, that other aspect of investment in roads is encouraged and enhanced?
  Dr. Strang: I would be keen to examine any examples of that. We are, as the hon. Gentleman knows, very much in the business of encouraging more investment in traffic-calming measures and more emphasis on safety. However, he is right to point out that we cannot continue a policy of building more and more roads. It is important that transport packages are designed to put the emphasis on safety.

  Road Fatalities (Drugs)
  Mr. Flynn: What is his estimate of the numbers of road fatalities that result from the use of medicinal drugs. [30657]
  Ms Glenda Jackson: No such estimate is available. A survey that my Department is conducting found medicinal drugs present in 6 per cent. of road user fatalities—only 4 per cent. in the case of drivers—but their presence does not necessarily mean that they were a factor in causing the fatality.
  Mr. Flynn: The Government are to be congratulated on being the first Government to take practical steps to deal with the dangers of drug driving. As my hon. Friend knows, the trial can identify only a small number of problems involving medicinal drugs. As she is aware, 100 million prescriptions are issued every year for medicines which, if taken according to instructions, will leave drivers' reactions as impaired as if they had drunk an equivalent quantity of alcohol. Will my hon. Friend give more attention to the matter, as medicinal drugs are the major drugs that cause accidents?
  Ms Jackson: I believe that my hon. Friend is confusing the incidence of drugs in road fatalities and the cause of such accidents. In our survey to date, 16 per cent. of the fatalities—drivers, passengers, pedestrians and cyclists—had evidence of an illicit drug in their bodies. The incidence for drivers was 18 per cent. Six per cent. had evidence of medicinal drugs. For drivers, the incidence was 4 per cent. Compared to a survey 10 years ago, that represents a fourfold increase in the incidence of illicit drugs, but very little change in the incidence of prescription drugs. However, road fatalities and serious

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  casualties overall have fallen by more than a third during those 10 years, so it is extremely difficult to judge the road safety implications of drug use.
  Rev. Martin Smyth: I welcome the Minister's statement. Does she share the concern of diabetic people who feel that they are discriminated against by the new regulations coming out of Europe?
  Ms Jackson: I should be extremely sorry if there were a sense of discrimination with regard to insulin-treated diabetics. Since 1991, they have been prohibited from holding licences to drive large goods vehicles and buses, and, as a consequence of the United Kingdom's implementation of the second EC driving licence directive, the prohibition extends to licences to drive lorries between 3.5 and 7.5 tonnes and minibuses with nine to 16 seats. Licences to drive cars, restricted to a maximum of three years at a time, continue to be granted to insulin-treated diabetics, subject to satisfactory health checks at each renewal. The road safety dangers associated with drivers treated with insulin have been recognised for many years—it can lead to hypoglycaemia, which in turn can result in loss of consciousness, in some cases without warning.

  Fuel Duties
  Mr. Gray: What assessment his Department has made of the impact of increasing fuel duties by 6 per cent. a year in real terms on road traffic levels. [30658]
  Ms Glenda Jackson: The Department's national road traffic forecasts assume that fuel duties will increase by 6 per cent. per annum until 2002. Those forecasts predict that the level of road traffic will increase by 11 per cent. between 1996 and 2002.
  Mr. Gray: Is the Minister aware of the disproportionately harsh effect that an increase in road fuel duties will have on rural motorists, many of whom rely exclusively on private motor cars to get about? Will she consult her right hon. Friend the Chancellor of the Exchequer to find ways of deterring the city driver—and particularly the company car driver—while safeguarding the interests of the rural motorist?
  Ms Jackson: That question comes ill from a party which inflicted enormous damage on rural transport through its policies of rail privatisation and bus deregulation. In the past two decades, rail fares have risen by 75 per cent. and bus fares have risen by 60 per cent. above inflation, yet overall car costs are 6.5 per cent. below inflation. Central to this Government's policies for rural communities is the restoration of real integrated public transport in order to begin to make some sort of inroad into the isolation in many rural communities that is a direct result of the policies of the former Conservative Administration.
  Mr. Baker: Given that the real cost of motoring has decreased by 6.5 per cent. since 1974, and that rail fares have increased by 75 per cent. or 78 per cent., are the Government prepared to consider in their transport White Paper not simply increasing costs for motorists but using funds to decrease costs for rail and bus users?
  Ms Jackson: We are reviewing every possible lever of government to ensure that, when we produce our integrated transport policy, it will be clear to the whole country that we are taking a long-term view. This is our window of opportunity to create an integrated transport policy based on an integrated public transport system and to reduce the huge costs that this country has suffered through 18 years of neglect by the previous Administration.
  Sir Norman Fowler: But my hon. Friend the Member for North Wiltshire (Mr. Gray) was asking about the position of motorists. Will the Minister acknowledge that the car is an absolute necessity for millions of people in rural areas and elsewhere? Will she acknowledge also that hundreds of thousands of people work in the motor industry in areas such as mine in the west midlands—which used to be a rather important consideration as regards industrial policy? Will the Minister recognise that there is no justification for introducing swingeing increases in motor taxation that will simply penalise many millions of ordinary people?
  Ms Jackson: I repeat that the greatest damage was inflicted on the rural communities by the previous Government's policies of rail privatisation and bus deregulation. I repeat that the issue of rural communities is central to this Government's policies. The rural communities' need for a properly integrated transport policy, which is essential for regeneration in those areas that the former Conservative Government neglected for 20 years, will be central to the Government's policies.

  Workplace Parking
  Mr. Swayne: What assessment has been made of the cost of enforcing proposals to limit the availability of workplace parking. [30659]
  Ms Glenda Jackson: The Government are currently looking at the potential costs and benefits of a levy on non-residential parking places. Administration and enforcement arrangements are of course an important element in that.
  Mr. Swayne: I find that most regrettable. Does the hon. Lady agree that, given the Government's aspirations to reducing congestion, this is a daft idea that will increase congestion by 20 per cent. and load new costs on to small businesses, many of which will be rural?
  Ms Jackson: No—and anything that causes the hon. Gentleman regret is music to my ears.

  Rail Passenger Satisfaction Surveys
  Mr. Cranston: If he will make a statement on the publication of rail passenger satisfaction surveys. [30660]
  Mr. Prescott: The Government welcome the customer satisfaction surveys, which the franchising director has required to be published. They show that a significant proportion of privatised train companies are offering a worse service and an overall reduction in the standard and quality of service. That is unacceptable.
  Last November, I gave the franchising director new objectives, requiring him to change his priorities. He must now put the interests of passengers first. Concerns continue to be expressed about safety and the excessive profits that are being made by individual directors as a
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  result of the privatisation of the railways. Furthermore, the franchising director and the regulator think that their powers are inadequate. Our White Paper will address that.
  Mr. Cranston: Can my right hon. Friend confirm that under the previous Government there was no obligation on many train operating companies to publish these surveys and, where they were obliged to do so under some of the contracts, they had a free choice as to what they could publish? Does he agree that such information is vital? I welcome what he has done in the past month or so to ensure that survey results are published.
  Mr. Prescott: That is correct. I increased the franchising director's powers to achieve those objectives. Indeed, I made it clear to him that his primary objective is not to secure maximised profit and privatisation but to put customer satisfaction first.

Points of Order
3.30 pm
Mr. Simon Burns: On a point of order, Madam Speaker. Obviously, you are not responsible for the contents of Ministers' written answers, but, on behalf of hon. Members, I ask whether there is anything that you can do to protect hon. Members who table questions for written answer, only to have them blocked.
As you are aware, last Wednesday I tabled a question to the Department of Social Security, asking for the raw numbers on the lone parent scheme. It now turns out that those numbers are somewhat embarrassing to the Government. On Friday, to forestall my question, the Department of Social Security got the hon. Member for Gravesham (Mr. Pond) to place a planted question asking for the proportions, not the numbers, on the lone parent scheme.
Yesterday, shortly after 3.30 pm, the hon. Member for Gravesham received his answer, saying that the Secretary of State for Social Security had published a press release, which appeared on the tapes. In my answer, I was referred to that given to the hon. Member for Gravesham, but mine was not the same question as his, so I never got an answer on the raw figures. To my mind, the Government are abusing their position by failing to answer questions that are embarrassing.
Is there anything that you can do to try to stop that practice?
Madam Speaker: I can make no comment on the hon. Gentleman's first point, which is far too general and is unacceptable to me. I quite understand his frustration. He was good enough to give me the information—which is rather convoluted—that he expressed at the Dispatch Box. He is quite right that the contents of answers are not a matter for me. It is for Ministers to take responsibility for the replies that they give. The hon. Gentleman is an experienced Member of the House, and I am sure that he can find further parliamentary means of following up the matter. If hon. Members are dissatisfied with replies that they receive, they might in the first instance consult the Table Office, which is extremely helpful in these matters. I would prefer the hon. Gentleman to do just that.
Mr. Eric Forth: Further to that point of order, Madam Speaker.
Madam Speaker: No. There is no further point of order; I have made a ruling. I have seen the answer to the question asked by the hon. Member for West Chelmsford (Mr. Burns), and all the answers that he has received.
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If he consults the Table Office, he can table a question that will get the answer that he wants. That is the point that I am making. What is the further point of order?
Mr. Forth: You mentioned the Table Office, and that is helpful, but are you aware that in its efforts to be helpful, it has on occasion said to me, and, I am sure, to others, "This matter has been blocked by the Department"? It would appear that a trend is emerging, whereby Government Departments are able to place an arbitrary block on questions tabled by hon. Members, which, apparently, the Table Office has to respect. I should have thought that the Table Office was responsible to you and the House, not Government Departments. Therefore, are you satisfied that the House can be treated in that way by Government Departments?
Madam Speaker: I am satisfied because, as Speaker under the previous Government, I am well aware of the number of questions that were blocked then. I must be frank and tell the House that. In this case, a question could be tabled to elicit the information that the hon. Member for West Chelmsford requires.
Mr. Tam Dalyell: This point of order has the attraction of being not at all generalised but very particular.
On the radio this morning, the Foreign Secretary said that it was his understanding—he was doubtless speaking for the Government—that the agreement reached by the United Nations went along with previous agreements, in that it allowed military action to take place under existing United Nations charter resolutions on Iraq.
Mr. Dale Campbell-Savours: Thank God for that.
Mr. Dalyell: My hon. Friend says thank God for that; some of us take a different view.
Later on the same programme, the Chinese ambassador, representing some of the permanent members of the Security Council, made it abundantly and unambiguously clear that their interpretation was diametrically opposite—that there could be no military action until the powers had gone back to the Security Council. They cannot both be right. My point of order is simply to ask you, Madam Speaker, whether you have had a request from the Foreign Office or the Law Officers to explain precisely what the legal position is in this crucial matter.
Madam Speaker: No. I have not been informed that a Minister will make a statement to the House. Foreign Affairs questions come before us next week, when the hon. Gentleman may seek to catch my eye on those matters.

Religious Discrimination and Remedies
3.36 pm
Mr. John Austin: I beg to move,
That leave be given to bring in a Bill to render unlawful religious discrimination in employment and in the provision of certain types of goods, facilities and services and to make provision for appropriate enforcement; to create new offences relating to incitement to religious hatred; and for related purposes.
In a submission to the United Nations in 1995, the previous Government stated succinctly and boldly their vision of an inclusive society. The submission said:
"It is a fundamental objective of the United Kingdom Government to enable members of ethnic minorities to participate freely and fully in the economic, social and public life of the nation, with all the benefits and responsibilities which that entails, while still being able to maintain their own culture, traditions, language and values. Government action is directed towards addressing problems of discrimination and disadvantage which prevent members of ethnic minorities from fulfilling their potential as full members of British society."
The twin aims of public policy are social inclusion and participation by all in a shared civic culture, combined with cultural pluralism. The achievement of that requires issues of discrimination and disadvantage to be addressed. Racial abuse and racial harassment are a fact of life for many of our citizens. Racial harassment occurs when someone abuses or assaults someone else because of his or her colour, race, nationality, or ethnic or national origin. Incitement to racial hatred is a criminal offence, but what if the harassment, abuse or incitement is based not on one's colour, race, nationality, or ethnic or national origin, but on one's religion?
The National Secular Society and others have expressed concern that the Bill may limit freedom of speech and expression. I do not intend to make it more difficult for the religious beliefs and practices of any group to be open to critical scrutiny or rational discussion. The Bill does not intend to extend the blasphemy laws; nor would it suppress the legitimate reporting of atrocities or gross violations of human rights carried out in the name of religion. Freedom of speech and of expression, and freedom of the press and other media, are the sinews of our democracy, but they are not an absolute right without limits.
Some have argued that the existing laws are adequate to deal with the problem, but evidence published by the Runnymede Trust in its report, "Islamophobia—a challenge for us all" clearly shows that the law is inadequate to secure the objective of an inclusive and pluralist society, as set out in the previous Government's submission to the United Nations.
The Commission for Racial Equality has recommended changes in the law in respect of discrimination on grounds of religion and incitement to religious hatred. The previous Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), said in response to the Commission for Racial Equality:
"I have yet to be convinced that legislation could be justified. So far, there is little hard evidence of discrimination against individuals on religious rather than racial grounds, but I can assure you that the Home Office remains ready to look at any other evidence."
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I hope that the new Home Secretary will examine that evidence, which is clearly stated in the Runnymede Trust's report on Islamophobia.
Since that time, various faith communities have become more concerned, particularly about the extent and nature of discrimination in this country against Muslims and the lack of legal remedies that would allow those problems to be tackled. The Runnymede report refers to the prejudice and discrimination that Muslims experience in their everyday lives and describes Islamophobia as
"an ugly word for an ugly reality"
and as a growing phenomenon.
Hatred of Islam has existed in western cultures for several centuries, but it has become more explicit, extreme and dangerous. It is an ingredient of all sections of our media, which means that many Muslims are frequently excluded from the economic, social and public life of the nation.
The Runnymede report goes further than the Bill and makes wide-ranging recommendations. The Bill addresses only the issues of discrimination in employment and the provision of goods and services, and incitement to hatred. Estimates of the Muslim population in Britain vary, but the community is reliably thought to number between 1.2 million and 1.4 million. Whatever the correct figure, for the sake of members of that community and society as a whole, we cannot afford to allow Muslims to feel isolated and excluded from society.
The argument for legislation outlawing religious discrimination is broadly the same as that for legislation outlawing racial discrimination. First, a religious discrimination law would be a powerful symbol of public policy and would convey the important message that religious identities are valued and respected throughout society.
Secondly, there must be consistency. The Fair Employment (Northern Ireland) Acts have created an anomaly: religious discrimination in employment is unlawful in one part of the United Kingdom, but not in Great Britain. A further anomaly has been thrown up by the House of Lords decision that Sikhs constitute a racial group and are entitled to protection under the Race Relations Act 1976. Similarly, Jews can rely on that Act, because, like Sikhs, they can be defined by their ethnic as well as their religious identity. No such protection is afforded to other religious groups, such as Hindus or Muslims.
Yet another anomaly has been thrown up by the Crime and Disorder Bill, which addresses racially aggravated behaviour. In a civilised society, criminal law must be operated even-handedly. An attack carried out on a Sikh or a Jew because of his religion could be classified as racially aggravated assault, but an attack on a Hindu or a Muslim could not. In employment, except in Northern Ireland, an employer is free to discriminate against an employee on the ground of religion, which is often used as a cover for racial discrimination.
The Government have always maintained that equality of opportunity in employment is economically desirable: discrimination is an inefficient business practice which results in talent being wasted, to the detriment of the public at large. Discrimination also creates alienation and frustration among those who feel that the law does not provide them with redress. My Bill would contribute in no small measure to the elimination of such alienation and frustration.

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The adherents of some faiths could make a discrimination claim under the Race Relations Act 1976 on the basis of their membership of an ethnic group. Hindus might do so as Indians, or Muslims as Arabs or Pakistanis, under the indirect discrimination clauses of that Act, but a white or Afro-Caribbean British citizen who had converted to Hinduism or Islam could not. Nor could groups such as Rastafarians, who are a minority within their own racial or national group. The 1976 Act deals with indirect religious discrimination, but financial compensation is not available unless the discrimination can be shown to be intentional. I accept that defining religion is difficult, but difficulties are no argument for not acting in the interests of harmony in our society.
The Bill does not deal with the issue of blasphemy. I would prefer the current law to be rescinded rather than extended, but there is a difference between the offences of blasphemy and incitement. Blasphemy outrages people's sensibilities, whereas incitement endangers their material and physical well-being. Currently, incitement to racial hatred is an offence under the Public Order Act 1986; inciting others to hate Muslims, however, is not a crime—the 1986 Act does not deal with the stirring up of religious hatred.
It has been suggested that the Bill limits freedom of speech, but the current law acknowledges that it is legitimate, in a democratic society, to interfere with freedom of expression if the publication of threatening, abusive or insulting material may not only offend people's sensitivities, but have a direct and harmful effect on their lives. An extension of the law to cover religious groups, as well as racial or ethnic groups, would give Muslims treatment equal to that of Jews and Sikhs, and would reassure them that their interests were respected sufficiently to warrant their protection from religious hatred.
The international covenant on civil and political rights declares that
"any advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited."
We are not legally bound to introduce legislation to implement the provision, but I think that it is essential if we are serious about human rights, and about building a society in which all our citizens can participate freely and fully in the economic, social and public life of the nation—with all the benefits and responsibilities that that entails—while maintaining their own culture, traditions, language and values.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Austin, Mr. David Atkinson, Mr. Simon Hughes, Fiona Mactaggart, Mr. Terry Rooney and Mr. Marsha Singh.

RELIGIOUS DISCRIMINATION AND REMEDIES
Mr. John Austin accordingly presented a Bill to render unlawful religious discrimination in employment and in the provision of certain types of goods, facilities and services and to make provision for appropriate enforcement; to create new offences relating to incitement to religious hatred; and for related purposes: And the same was read the First time; and ordered to be read a Second time on Friday 3 July, and to be printed [Bill 133].
Opposition Day
[8TH ALLOTTED DAY]

ISAs, TESSAs and PEPs
Madam Speaker: I have selected the amendment in the name of the Prime Minister.
3.46 pm
Mr. Peter Lilley: I beg to move,
That this House welcomes the success of TESSAs and PEPs in extending popular saving and deplores the Government's proposal to abolish them and replace them with Individual Savings Accounts (ISAs); condemns the retrospective taxation of the most prudent savers who have accumulated more than £50,000; believes that ISAs will involve high administrative costs, especially because of the unnecessary and unfair lifetime limit on tax-free saving; and urges the Government to bring forward new proposals that would not involve retrospective taxation, would build on PEPs and TESSAs, would reduce the costs of administering the schemes and would not involve a lifetime limit on the amount that may be invested.
This is the first opportunity that we have had to debate an issue that is of great and growing concern to our constituents since the Paymaster General shook millions of people by announcing that he planned to abolish personal equity plans and tax-exempt special savings accounts. People were shaken because they could not have guessed from what Labour had said before the election just what would hit them.
Last spring, the Labour party told us—and told the British people—that it had changed. This was new Labour: the people's party. Middle Britain was safe with new Labour, and so were its savings. It was the Prime Minister—"Trust Me Tony" himself—who said:
"We want to extend the scope of PEPs and TESSAs, so the idea that the Labour party is going to take action against those is completely absurd."
Labour's manifesto reaffirmed that, stating:
"We will … extend the principle of Tessas and Peps to promote long-term saving."
And it was the current Chief Secretary to the Treasury who was reported by the Investors' Chronicle as saying:
"The party has pledged that anyone who invests in a PEP or TESSA before the general election … would not be penalised under a Labour Government."
The article went on to say that the Chief Secretary had reiterated Labour's promise that it would not retrospectively abolish tax incentives on PEPs or TESSAs.
"It doesn't matter what the issue is with tax,"
he said.
"People are entitled to certainty."
If that did not reflect the Chief Secretary's remarks accurately, he could have written to deny it. Actually, he did write a letter to the Investors' Chronicle, in which he said:
"You correctly quote me as saying, 'We support Peps and Tessas but we want to build on that.'
However the assertion in the article that 'Labour is examining proposals to abolish PEPs and TESSAs' is not true."

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That was the height of deception. The Chief Secretary chose to deny the one assertion in the article that has since proved to be true, that Labour would abolish PEPs; but he chose not to qualify his clear assurances—which have since proved bogus—that Labour would do nothing retrospectively, that there would be no penalty for those with existing PEPs or TESSAs and that there would be no uncertainty in the tax regime.
It is the betrayal of those pledges which has caused so much fury among our constituents. That betrayal is why this debate is being held today, and why we have dragged back the Paymaster General from Guernsey. People had been reassured by Labour's pledges; now they are angry, and rightly so. We will hound the Government until they honour their pledges to savers.
People with longer memories might have known how little Labour cares for their savings. They will remember the deadly combination of socialism and inflation, which destroyed Britain's savings habit in the 1970s.
Conservative Members are proud to have rebuilt savings in the 1980s and early 1990s. We did it, first, by building up pension funds, to the point at which the United Kingdom has more money invested in pension funds than does all the rest of the European Community put together. We introduced PEPs and TESSAs, and now 3 million people have PEPs and 4.5 million people have TESSAs. Those schemes have massively extended popular saving.
We realise, of course, that more people need to save, and that many of those who already have savings need to save more. The Government would therefore have enjoyed our support if they had built on the success of our schemes. However, far from building on those schemes—building them up—the Government's proposals will mean cutting them back. Individual savings accounts will take away relief from those who have saved most prudently, giving less help, for less time, for less saving.
The only silver lining in the Government's proposals is that they have decided to open up the proposals for consultation. Ministers may rather regret that decision, because the reaction of savers, savings providers and expert advisers has been universally critical. It is not only that the plans were announced by Geoffrey Robinson; they were designed by Heath Robinson.
People's criticisms go to the heart of the Government's proposals. The best advice that Ministers could take would therefore be to listen to the thousands of small savers who are telling them, "Go back to the drawing board, and build on PEPs. In fact, do exactly what the Prime Minister and the Chief Secretary promised they would do. They should simply honour their pledges."
The public have been most infuriated by the retrospective impact of the Government's plans. My postbag is full of letters from aggrieved savers, who thought that they were safe and trusted Labour. I do not know whether the Paymaster General reads such letters, but he certainly does not reply to them. Perhaps we should forward them to him in Guernsey. Nevertheless, he will have to listen to one or two of them today.
A typical example is a letter from a pensioner in Abergavenny, who writes:
"This punitive tax proposal, in my view, breaks a contract which we established with a previous Government and it is neither just nor defensible."
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A gentleman from Chester sent me a copy of his letter to the Prime Minister. He wrote:
"We have worked hard, saved and planned for our retirement on the assumption that whatever steps we have taken would be honoured by whichever party was in power at the time. We have paid our taxes and behaved as responsible citizens and now your Government—the one we were asked to trust remember—has broken the contract between the state and those people who have more than £50,000 in PEPs."
The Government said that education was to be their passion. Some teachers in Birmingham disagree. They write:
"We are retired teachers who thoroughly enjoyed our chosen profession and who, during the later years of employment, made a conscious decision to save as much as we could from our salaries through PEPs and TESSAs towards our old age. Unlike the Paymaster General, we do not have a large offshore trust, a mansion in Surrey, a residence in Godalming or a villa in Tuscany.
We are just very ordinary members of the public who welcomed the opportunity by the Conservative Government to invest for our futures. Through careful planning and by putting prudence before pleasure we have been able to save in excess of the £50,000 limit now being proposed by Mr. Robinson."
I could go on. We have all received heaps of such letters.
Even if the Government will not listen, they must realise that to withdraw tax relief from savings that people made in good faith is not only wrong, but undermines the credibility of any future system. People will fear that if ISAs are successful, that regime too, could be changed. The Government must honour their contract with people who have saved in good faith.
Even if the £50,000 lifetime limit is not applied retrospectively, it remains the biggest problem in the ISA plan. There is no need for a lifetime limit, given that the annual limit on the amount that people can invest has been reduced, but if the Paymaster General insists on a lifetime limit, £50,000 is simply too low. The Paymaster General may consider it more than enough for humble folk not used to his style of life, but it is not a huge sum.
Another saver from Peterborough wrote:
"I may have to spend the final years of my life in a nursing home where fees are approximately £20,000 per annum, so £50,000 will last just two and a half years."
The Paymaster General himself admitted in reply to my right hon. Friend the shadow Chief Secretary that £50,000 invested in equities yields an annum income of less than £1,500 after tax. The Lord Chancellor would not get many rolls of wallpaper for that.
We do not know how many hundreds of thousands of savers have already accumulated more than £50,000. The Government did not even bother to find out before launching the new scheme, but it is not just those who have already reached the limit who will be hit. We should be encouraging those with £30,000 or £40,000 to continue building up their savings, yet the Government's plans mean that after a few more years, they, too, will lose the incentive to save. Will the Government publish an estimate not just of how many people have already reached the £50,000 limit, but of how many will reach it over the next few years?
It is not just the public who oppose the scheme. The experts are virtually unanimous in giving it the thumbs down. That is not my assessment. A survey of finance directors carried out by the company of one of Labour's most prominent business supporters, Alec Reed, found that more than 70 per cent. were opposed to ISAs.

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The scheme is half-baked, ill thought out, unnecessarily complex and unlikely to achieve its stated objectives—in short, very new Labour.
Criticisms come from people who are well disposed to the Government. Richard Branson condemned it as "retrospective". The Financial Times said that it was
"unfair … unattractive … and bureaucracy gone mad".
The Sunday Times said:
"ISAs will be the most complex instant access accounts ever."
The Consumers Association said:
"We are struggling to see the point of ISAs. We see no real advantages but a lot of problems."
The only possible justification for persisting with the reform would be if it generated more saving. The National Institute of Economic and Social Research is unequivocal about that, saying:
"The Government's proposed replacement of PEPs and TESSAs by Individual Savings Accounts would reduce the pool of savings available to finance investment in Britain."
and speculates
"that this could result in a reduction in the overall level of national wealth by as much as 4 per cent. of GDP".
ISAs could hope to attract extra savings, particularly from the less well-off, only if they offered either lower costs or better incentives, but far from reducing costs, the new rules will add to them. According to the management consultants OSI, setting up new systems to replace PEPs and TESSAs will cost nearly £1 billion. That is equivalent to an extra £30 a year for every ISA for the next five years. Running costs would also be higher than for PEPs and TESSAs because the lifetime limit is very costly to monitor, the profusion of annual limits adds to the costs and the absurd raffle will also cost money to run.
At the same time as driving up costs, the Government are reducing the tax relief in ISAs, particularly for small savers on the basic rate, whom they are supposed to attract. For such savers, relief from capital gains tax is likely to be of no importance, because they are unlikely to have capital gains greater than the £6,500 annual CGT exemption that they get outside an ISA. The tax relief that really matters to them is that on dividends.
Under the Conservatives' tax regime, for every £80 of net dividends, the fund manager could reclaim an additional £20 of tax credits. That was more than enough to cover the typical management charge. Under the ISA tax regime, the same dividends will give a credit of only £8.90. That is insufficient to cover the current costs of PEPs, let alone the higher costs of ISAs. Moreover, that tax credit will disappear after five years. I am glad to see that the Paymaster General is briefing the Chief Secretary, who was clearly unaware of the point. We know that he has been cut out of the circulation on welfare to work. He has clearly also been cut of the circulation of information on the debate that he is about to speak in.
The absurdity is that, whereas the majority of those with PEPs were basic rate taxpayers, ISAs will be attractive only to higher rate taxpayers. Does the hon. Member for Bolsover (Mr. Skinner) realise that the scheme that his Government are proposing will shut out
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from equity investment anyone on the basic rate of tax or paying no tax and that the scheme will be worth while only for those paying 40 per cent. tax?
Mr. Dennis Skinner rose—
Mr. Lilley: I am glad to have the hon. Gentleman's support.
Mr. Skinner: I shall tell the right hon. Gentleman, a previous Tory Minister, what I think. The issue is marginal in the extreme. However, I remember that every pensioner in Britain-10 million of them, including some who were able to find money to put in PEPs or TESSAs—lost £20 a week because of the Tory Government's decision to change the method of calculation for the old-age pension, linking it to prices instead of wages. The result was that every one of them constantly told me about the rotten, lousy Tory Government. What the right hon. Gentleman is saying today is just a bout of hypocrisy. Why does he not get back to his chateau in France?
Mr. Lilley: As I said, I am grateful for the hon. Gentleman's support. He says that a limit of £50,000 on tax relief is trivial. It is to him. He entered the House in 1970. I have had distinguished accountants calculate the cost of purchasing the pension that he is entitled to from the House of Commons. It would cost £356,000. He is worth even more than the pension scheme of the Paymaster General, and considerably more than the Chief Secretary, who is languishing at a mere £140,000, excluding his ministerial pension.
Mr. Skinner: I never realised that it was that much. If someone has been advising me wrongly, I shall go to my hon. Friend the Economic Secretary to the Treasury, who is dealing with the mis-selling of pensions, to ensure that it is put right. I come here every day to earn my money, unlike many Tories, who, not content with their £40,000 salary as a Member of Parliament, are lining their pockets with moonlighting jobs, directorships and consultancies, picking up as much as £200,000 or £300,000 a year. Why does the right hon. Gentleman not direct his attacks on them?
Mr. Lilley: The hon. Gentleman is worth every penny, and we wish him a very happy retirement.
Mr. Barry Gardiner: Will the right hon. Gentleman give way?
Mr. Lilley: I am going to make some progress. I have not made an estimate of the hon. Gentleman's pension, so he will have to apply for one.
Mr. Gardiner rose—
Mr. Lilley: I am not giving way.
I was pointing out that there will not be any incentive in five years' time, when it is planned that the tax credits in the scheme will disappear entirely. Can the Chief Secretary or the Paymaster General put their hands on their hearts and advise any basic rate taxpayer to invest in shares via an ISA? They will not. The Paymaster General is right not to, because he is sitting next to the

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Economic Secretary, who is in charge of pensions mis-selling. The Paymaster General knows that, if anybody gave such advice professionally, they would be guilty of mis-selling.
Where are the 6 million extra savers whom the Prime Minister tells us will be attracted to the scheme? The Prime Minister says that he sees them queueing up in Tesco, buying their corporate bonds with their Brooke Bond and getting their share tips with their PG Tips. The truth is that they are a phantom army. They do not exist; they had to be invented to pretend that tax relief was going to be spread more widely. In fact, tax relief under the scheme is being withdrawn wholesale. The effect of the scheme will be simply to raise extra tax revenue from savers. The Government's plans amount to a savings tax, to add to their pensions tax.
Do the Government accept that, as a very minimum, they must come up with a radically redrawn plan? Will they ensure that their final version fully respects those who have saved in good faith? There must be no retrospective taxation. There must be no lifetime limit—or at least a limit much higher than £50,000. The system must be simpler and have lower costs. Can the Minister give a guarantee today that those elements will be included in the final scheme?
If there is one characteristic that is starting to define this Government, it is that they practise the opposite of what they preach. When they say one thing, one can be sure that they will do another. They said that they wanted investment for the long term, so they introduced a £5 billion-a-year tax on pension funds—the country's main source of long-term investment. They said that they were pro-business, so they have imposed a £22 billion extra tax burden on the corporate sector in this Parliament. They said that they would stamp out abuse of offshore trusts, so they put in charge of the policy a Minister who has millions salted away in an offshore tax haven. When Labour spokesmen said before the election that they would not harm PEPs and TESSAs, the alarm bells should have started sounding for small savers. Under this Government, black is white, higher tax is a boost to investment, and the abolition of PEPs and TESSAs is to be sold as an opportunity for more people to save.
Whoever had announced this misbegotten plan, it would have provoked anger, but for it to come from the Paymaster General added insult to injury. The Chancellor has extraordinary insensitivity and arrogance. It was a cheek to put the Economic Secretary, Robert Maxwell's public relations spokesmistress, in charge of pensions mis-selling. It was brazen to put the Financial Secretary, who was taken to court for failing to pay her poll tax, in charge of tax collection. But it was an insult to put the tax-dodger general, with £12 million in an offshore tax haven, in charge of taking away tax relief from middle Britain. Power has simply gone to the Government's head.
I assure the House that we will not abandon this issue until the Government recognise that their scheme is mean, costly, complex, retrospective and a breach of trust. We will defend the savers of middle Britain.
4.9 pm
The Chief Secretary to the Treasury (Mr. Alistair Darling): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"welcomes the Government's commitment, set out in the pre-Budget report, to consult on tax proposals, including the proposed ISA; believes that the ISA will extend the opportunity to save and invest and that the Government's proposals will ensure a stable and fair savings environment; commends the Government for its commitment to long-term economic stability and low inflation which is good for savers; and rejects any return to the boom and bust policies of the past which were so damaging to those on low incomes, savers and investors.".
I wondered why so many Tories were here this afternoon; I suspect that it has not much to do with small savers, or any other sort of saver. In looking at the record of the previous Tory Government, we remember what they did to all those on low incomes and those who endeavoured to save, despite the difficulties visited upon them.
The Government have been consulting over the past few months on the new individual savings account. In the pre-Budget report, my right hon. Friend the Chancellor made it clear that it is this Government's intention—unlike what happened in the past—to consult, particularly where there are tax measures with long-term consequences. It is important to get the proposals right so that they endure in the long term. For that reason, we are happy to consult as many people as possible. The consultation period ended in January, and the Government will shortly set out our conclusions as part of the Budget process.
When the right hon. Member for Hitchin and Harpenden (Mr. Lilley), the shadow Chancellor, said that this was the first opportunity the Opposition had to debate this matter, he was not quite right. It was up to the Opposition to use any of their Supply days to discuss this matter far earlier than just two weeks before the Budget.
I am sure that the House will understand that it is necessary for me to confine my remarks to some fairly general principles, rather than pre-empting anything that may be part of the Budget process. If anyone has come to the House today expecting specific announcements—or if anyone is following our proceedings elsewhere—I advise them to switch off or to leave now, because I intend to make a short series of remarks, setting out the principles that underpin the Government's approach to the savings process.
The Tory party's claim to be the friend of small savers and those on low incomes simply does not add up. The shadow Chancellor referred to pensions and the mis-selling of pensions. The House and the country will recall that more than 600,000 people have cause to regret the day the previous Government took office, as many believe that their pensions were mis-sold. People remember the previous Government's advertisements—paid for by the public—showing a man in a straitjacket breaking free from his occupational pension into which he and his employers paid, as if the very act of going private and getting a personal pension was enriching, both in the spiritual and material sense.
We remember that many were mis-sold pensions and may have lost thousands of pounds. Yet there was not a word of apology from the Tory party. The Tories were responsible for one of the biggest financial scandals this country has ever seen. They are in no position to lecture anyone on the plight of those who have suffered.

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During the 1980s—to which the shadow Chancellor referred—inflation at one point hit 18 per cent. The Tory party ran economic affairs in such a way that many people who tried to save and to make provision for themselves found that what they had saved had been eaten up by inflation. The Tories are in no position whatever to talk about probity, or to lecture this or any other Government on helping those on low incomes.
Mr. John Townend: Does the Chief Secretary agree that the Government's proposal to limit to £50,000 what an ordinary saver can shelter from tax, while Ministers are sheltering millions in the Channel Islands, is the height of hypocrisy?
Mr. Darling: The Government's proposals are designed to ensure that more people have the opportunity to save than in the past. I remind the hon. Gentleman that, before the election, the right hon. Member for Hitchin and Harpenden proposed a reform to the pensions system that would have cost this country £7 billion a year at its peak—money that would have had to be provided by increased tax on the very people for whom the right hon. Gentleman says he wants to speak.
The Government have two key objectives, which are both set out in the consultation document. First, we want to develop and extend the savings culture, because that is good for individuals and for the country. More than half the population have less than £200 each in savings, which is less than half the average weekly wage, and just over a quarter have no savings at all. Indeed, 60 per cent. of those who save have less than £500 in savings.
It must be in the interests of the country and of everyone that we extend the savings principle to encourage people to save as much as they can. If we are to do so, three things are necessary. First, we have to get the right economic framework—macro-economic stability. Secondly, we must have a regulatory system that commands the confidence of individuals and industry alike—something which the Conservative party does not begin to understand. Thirdly, we must have specific measures, such as those canvassed in the consultation document, to encourage individuals to save.
The second objective is to ensure that where we are giving tax relief, it is fairly distributed. The problem is that we are spending about £1.5 billion in tax relief on PEPs and TESSAs. On present trends, by 2007 that amount would rise to more than £2 billion, which is the equivalent of 1p on the basic rate of income tax. We must ensure that that tax relief does what it is supposed to do, which is to encourage people who do not save to save in the future. There is no point in continuing to give tax relief to people who can already afford to have significant sums locked up for long periods.
Several hon. Members rose—
Mr. Darling: I shall give way soon to all hon. Members who are showing an interest. It is important to ensure that tax relief is focused in such a way as to help people who do not save to become savers and, once they
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become savers, to encourage them to continue saving. That is in their interests and those of everyone else in the country.
Several hon. Members rose—
Mr. Darling: First, I will give way to the hon. Member for Twickenham (Dr. Cable), but I will give way to all the other hon. Gentlemen who are trying to intervene.
Dr. Vincent Cable: Will the Chief Secretary confirm whether more, less or the same amount of tax relief will be available under the projected new scheme as could be available under the existing scheme?
Mr. Darling: I repeat what my right hon. Friend the Prime Minister has said. We believe that broadly the same amount of money forgone in tax relief under the present system will be forgone in tax relief under the new system. Encouraging people to save—people who do not save at the moment—is a useful application of the tax system.
Mr. Dafydd Wigley: While I accept the objective of trying to broaden the scope of the schemes and to get more people in, does the Chief Secretary accept that some people decided not to go for a personal pension but to invest in PEPs and TESSAs because of the old tax regime, and it is too late for many of them to revert and get a personal pension plan? Will that not put some people in an invidious position?
Mr. Darling: I am aware that many people have taken advantage of PEPs and TESSAs with a view to providing for their pensions and elsewhere. That is one of the measures of which we are well aware, and we want to encourage people to save to complement their pensions, although I regard the future individual savings accounts and the present PEPs and TESSAs as complementary to anything an individual might be doing as regards his or her pension. We ought to encourage people to make long-term arrangements for their pension, because that is the best form of security for the future.
Several hon. Members rose—
Mr. Darling: I will give way to one more Conservative Member—the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), as he has been standing the longest.
Mr. Nick Gibb: Given that most lower and basic rate taxpayers are unlikely to generate gains that would exceed their capital gains tax exemption every year, and given that management charges for individual savings accounts are likely to exceed the 10 per cent. tax credit paid into ISAs, what are the advantages for those taxpayers in holding their equities through an ISA?
Mr. Darling: The hon. Gentleman raises a number of matters. On management charges, he is right to highlight that, under the present PEP systems, there have been cases of people's management charges being rather more than the tax relief they were getting. The hon. Gentleman cannot be held to blame, because he was not here at the time, but the previous Government did nothing about that.

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That is one of the reasons why we want a robust regulatory system that will ensure that people are charged fairly.
Under the existing system, many basic or lower-rate taxpayers do not have gains that exceed their personal allowance, whereas, under the new system, holders of the individual savings account will enjoy tax relief—not only the tax credit for five years of lop, but a general tax exemption.
Mr. Gibb indicated dissent.
Mr. Darling: The hon. Gentleman shakes his head, but many providers and many objective observers have welcomed our proposals. [HON. MEMBERS: "Name them."] Conservative Members shout, "Name them." Let me quote from a representation that we received:
"There is much that we welcome within the ISA … We agree with features such as flexibility, no minimum level of saving, reducing the restrictions on the equity element and no 'lock in' … they are all welcome and we consider that there has been much careful thought given to the design of the ISA".
Conservative Members sneer, but, less than a year ago, they sat on the same Benches as the person who gave the proposals such a warm welcome—the former Economic Secretary to the Treasury, Angela Knight.
Virgin has welcomed the individual savings account, and the Halifax building society said that it saw a bright future for it. ProShare, an organisation dedicated to share-based investment, said that the Government had achieved the right balance in their aim to reach investors on low income, many of whom do not currently save, as well as others on higher income. Many people have examined the consultation document and praised the Government's objective of extending the base of savers to include those people about whom the previous Government did not care one jot—the Conservatives have never bothered about people on low incomes or people of modest means.
On those key objectives, it is worth reminding the House that one of the most fundamental prerequisites of generating a savings culture is to ensure long-term economic stability and low inflation. If there is high inflation or instability, any benefits that a saver may accrue will disappear.
The House should note two interesting phenomena that occurred when the shadow Chancellor was a Treasury Minister. First, during the Lawson boom in the mid-1980s, not only were people encouraged to spend as much as they had, then to borrow and to spend again, but the amount of money that people saved was reduced—there was a negative savings ratio. Secondly, because of the Conservative Government's failure to keep control of what was happening during the late 1980s, the inflation rate rose from nearly 5 per cent. to almost 10 per cent. between 1988 and 1990—in the space of two years. Interest rates also rose dramatically, which affected mortgages and the very people whom the Conservatives pretend to support.
Unless people can plan against a stable economic background, they will not be encouraged to save. If there is instability, any benefits from saving will be eaten up. We believe that economic stability is of fundamental
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importance if we are to encourage people to save—they must know the background against which they will plan and save over the ensuing few years.
Mr. Julian Brazier: Does the right hon. Gentleman accept that, although administrative charges are important to all investors, they are particularly crucial to small investors, whom Labour has chosen to target? In devising a scheme that, by its nature, is much more expensive than existing schemes to administer, the Government have undermined their objective.
Mr. Darling: I dealt with that point when I said that one of the problems with PEPs, particularly in the early days, was the high administrative charges. The transparency that we believe to be necessary did not exist then, so many individual savers did not know how much they were paying in administrative charges. The hon. Gentleman's point would have had far more force if he had raised it during the many years when, as a Conservative Back Bencher, he supported the Conservative Government.
Fiona Mactaggart: Does my right hon. Friend agree that, whatever the charges, people will know, in a stable situation, what they are buying into, unlike in the boom and bust years of the past? Every saver will benefit from the opportunity, sneered at by the shadow Chancellor, to enter the draw and get £1,000.
Mr. Darling: My hon. Friend is right. People well remember what happened in the late 1980s: the Conservative Government managed to create an unsustainable boom which culminated in one of the deepest recessions this country has ever known. The people who lost their jobs and their homes will remember that very well.
The shadow Chancellor was a Treasury Minister throughout that period. I commend to him another excellent document, "Fiscal policy: lessons from the last economic cycle", published at the time of the pre-Budget report, which draws on the lessons to be learnt from what the Conservatives did in the late 1980s when, through their economic incompetence, they completely misread the economic signals and took all the wrong decisions, with the result that millions of people suffered a great deal.
The first precondition to encouraging people to save is to ensure that we have economic stability, and the Government are absolutely committed to that. The second necessary condition is to ensure that we have a regulatory regime that enjoys the confidence of savers and investors alike, and we have delivered that already.
Mr. Tim Loughton: I agree that good regulation is essential, so why do regulation and compliance occupy only one line on page 17 of the Green Paper?
Mr. Darling: In the consultation document, we make it clear that it is necessary to have an appropriate and robust regulatory regime. [Interruption.] If Opposition Members care to look, they will find many references to what we propose to do to ensure that the regime will maintain the interests of those investing in individual savings accounts and elsewhere.

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The Conservative party showed scant interest in reforming and improving the regulatory system over the past 18 years, despite all the problems with pensions mis-selling, in the City and elsewhere. We, by contrast, have made clear our determination to reform the system, not only making it more robust and putting an end to the nonsense of self-regulation, which was too often more a matter of self-interest than of the public interest, but—and this is an important point—ensuring that it is at an appropriate level for the savings or investments that it is supposed to be looking after.
Mr. John Bercow: Will the Chief Secretary give way?
Mr. Darling: No.
We are very conscious of the fact that, in the past, the regulatory system became so expensive that the relationship between cost and benefit was completely lost. We are determined never again to return to the situation in which so much rampant mis-selling of pensions could take place.
My hon. Friend the Economic Secretary has shown what a difference a change of Government can make. Since she took up her post and the Government made it clear to the pensions industry that we would not tolerate a situation in which absolutely nothing was being done to remedy the plight of those who had been mis-sold pensions, there has been a dramatic improvement in the clear-up rate, so many people now have the reassurance that they would never have had under the Tory Government.
The third element needed to ensure that people save is to have the appropriate incentives in place. We have taken a number of steps, on which we have held consultations, that I believe will help people on low incomes. Conservative Members, when they were not shouting and bawling, tried to persuade us that they were interested in the plight of those on low incomes.
All the evidence is that one of the biggest obstacles to people on low incomes saving, especially under the current regime, is the necessity to lock up money for a considerable period. People on low incomes, who may have unexpected and unwelcome demands on their savings, have not been prepared to take that risk.
We want the system to be more accessible, with no "lock-in" period or minimum investment, partly because we want to encourage many people to save who would not dream of doing so under the current system. We want a flexible system which people feel they can use as confidently as they do banks and building societies. We also want to extend the variety of outlets from which the individual savings account can be bought, including supermarkets, friendly societies, national savings, banks and building societies. That will make it easier for people to access the individual savings account and will provide flexibility and a wide choice of tax-free products that are not available under the present system.
I thought that Conservative Members might have shown a little more practical interest in the measures that can be taken to encourage saving. However, their conduct this afternoon suggests that they are still not bothered about people on low incomes, any more than they were when they were in government.
Mr. Bercow: Given that the Chief Secretary is in listening mode, will he give a specific response to the
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criticisms made in the green budget published by the Institute for Fiscal Studies, which stated that the proposal for a cumulative contribution limit of £50,000 will impose substantial compliance costs, is unlikely to raise much revenue, and sits uneasily with a commitment to increase self-reliance in welfare provision?
Mr. Darling: The £50,000 limit was not meant to raise revenue. The hon. Gentleman is right, and we have made it clear that one of our objectives—and one of the reasons for a £50,000 limit—is to ensure that the amount of tax forgone is manageable. The amount of tax forgone would have to be examined, whichever Government were in power. Had the Conservatives won the election in May, they would have had to consider how tax relief was being focused. Our intention is that broadly the same amount currently spent, in terms of tax forgone, will be applied to the new scheme, but we are rebalancing it, to ensure that people who do not save now are encouraged to save in the future. That is a useful and worthwhile objective.
Mr. Kenneth Clarke: The Chief Secretary has evaded the question by speculating on what the previous Government might have done, but we were committed to PEPs and TESSAs. How does he reconcile what he has just said with the quotations put to him in which, on behalf of the Labour party, he pledged that it was not considering the abolition of PEPs and TESSAs? He also told savers that there was no threat to the continuation of the tax relief that the previous Government gave them.
Mr. Darling: I said on several occasions that we were committed to building on the principle established by PEPs and TESSAs. The individual savings account will do that. If the right hon. and learned Gentleman reads the consultation document—I know that he has a reputation for not always reading everything that is put in front of him—he will see that TESSAs will run their course. He is right to say that we will never know what the previous Government would have done had they been re-elected, but perhaps he will one day shed some light on the subject. I repeat the point, which he, as a former Chancellor, will acknowledge: every Chancellor has to keep the level of tax reliefs granted under review from one year to the next. It would be madness not to do so.
We want to ensure that the substantial amounts given in tax relief are directed to helping those people who do not currently save, but whom we want to save in the future. Helping more and more people to save is an objective of this Government, just as it was of the previous Government.
The House will understand that there is a limit to what any Treasury Minister can say only two weeks before the Budget, but I repeat the fundamental and important objectives set out in the consultation document. First, we want to extend the savings culture so that more and more people save and make provision for themselves. To achieve that, we need economic stability, the right regulatory framework, and specific measures to help people to save. That is the direction of the Government's thinking, and it has been broadly welcomed.
The second objective is to ensure that the scheme is affordable and sustainable, to give people the certainty referred to earlier. The proposals, on which we have consulted, are a useful contribution to encouraging people

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to save. It is in the interests of everyone in this country, and of the country as a whole, that as many people save as possible. I am sure that my right hon. Friend the Chancellor of the Exchequer will have more to say about that in the not-too-distant future.
Mr. Lilley: On a point of order, Mr. Deputy Speaker. It has been suggested to me that my description of the Paymaster General as the tax-dodger general may be out of order, in which case I withdraw it unreservedly.
Mr. Deputy Speaker (Sir Alan Haselhurst): The House will be grateful for that.
4.34 pm
Mr. John MacGregor: I declare an interest as a director of the London and Manchester Group, which specialises in encouraging people on low incomes to save. I make that declaration not only because it is necessary because of the Register of Members' Interests but because I believe that, on top of my lifelong interest in the issue, it has given me further insight into the problems that we are discussing. I therefore speak with considerable practical experience. I want to make a constructive contribution, but, given what the Chief Secretary said at the start of his speech, I must respond in a partisan way first.
It was outrageous for the Chief Secretary to suggest that pension mis-selling concerned only the Conservatives. We know that some took place, but many thousands, if not millions, more people benefited from personal pensions than suffered. It was a major contribution. He also ignored the fact that the major pensions scandal of the period was the work of a former Labour Member, for whom other Labour Members worked. It was outrageous that the Chief Secretary made such attacks.
The Chief Secretary accused us of having had a short period of high inflation. He forgets that under the previous Labour Government—I remember it well, because I served on every Finance Bill Committee—the average level of inflation was 15 per cent. We never in all our 18 years in government breached that average. For him to talk as though we were the party that did not understand the importance of a positive return on savings is nonsense. There was a negative return on savings throughout the time of the previous Labour Government, which was the biggest disincentive to save of all time.
For the Chief Secretary to suggest that we show no interest in low-income groups was a travesty of the speech of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), which was a devastating critique. We have not heard an answer to any of his criticisms. I want to turn to that now. The House agrees about the importance of savings, especially long-term savings. The key question is how to go about it. That is why it was disappointing that the Chief Secretary did not answer any of the points that were made, although I understand why.
I have four main points. The first concerns the £50,000 limit on existing PEPs and TESSAs. My right hon. Friend the Member for Hitchin and Harpenden made many criticisms on that, all of which I agree with, and some of which I want to reinforce. I agree that it is
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insulting that the Minister who introduced this ceiling has done well in many ways through tax avoidance, and so on. That is so well documented that I shall not repeat it.
I shall comment on the key points, starting with the retrospective nature of the proposals. The right hon. Member for Caernarfon (Mr. Wigley) put it well in his question. People who entered into PEPs—this is not so much true of TESSAs—thought that the tax regime would last. They were reassured by the Chief Secretary before the general election that it would. They invested year after year, often, as the right hon. Member for Caernarfon said, not only for short to mid-term savings but to pay for mortgages. More important, many people chose them as their form of pension, rather than taking personal pensions if they did not have occupational schemes, or as a supplement to their pensions. They now find a change in tax legislation which, in many cases, will severely reduce the benefit that they were getting from those savings. For someone who started saving in 1987, £50,000 is not a huge sum today, given the improvements in the stock markets. The first point is that the Government's proposal is retrospective legislation.
The second point is the volatility of the issue. We do not know what the position will be next year in relation to PEPs. The stock market may not continue as it is at present. Some people will find themselves unexpectedly above or below that £50,000 line, and they will do so thereafter.
Thirdly, as my right hon. Friend the Member for Hitchin and Harpenden made clear, £50,000 is not a substantial sum in terms of the income produced, particularly after retirement. It will produce nothing like what most personal pensions and certainly occupational pensions will produce. To cut the sum off at £50,000 when so many people are relying on it is the exact reverse of what the Government said that they were about—encouraging people to save for their retirement.
That leads me to my final point on the £50,000 limit. I plead with the right hon. Gentleman to think seriously about this. How will people enter into future savings schemes with tax incentives, if they see that there has been such a dramatic change in these? The right hon. Gentleman said that some parts of the ISAs are meant to be short term, but if these are fundamentally meant to be long-term saving schemes, and if the Government, who said before the election that they would not make such a move, now do so, who will believe that they or a future Government will not change again?
That is one of my most fundamental worries, linked to the retrospective aspect. I entirely agree that tax incentives are an important way of encouraging long-term savings. If we reduce the credibility of tax incentives by making this move, we will have undermined the specific long-term objective that we are all seeking to achieve. I plead with the Chief Secretary to think seriously about the limit.
The simple answer is to say that all schemes up to now should remain within the tax net in which everyone expected them to remain. As we know, TESSAs will drop out, by their very nature. Everyone knew that they entered that scheme for a five-year period. No one can complain about TESSAs dropping out, because when people entered the contract, they knew the terms.
However, PEPs are different. The Government ought to have said that, as from a given date, there will be no further opportunities to engage in TESSAs and PEPs,

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but that all those who already have them should be allowed to continue with them and to come out of them when they wish to do so. That is the simple answer, which deals with all the arguments that I have advanced, but, above all, with the point that it is essential to maintain belief and credibility among the population at large that tax incentives given for long-term savings are maintained.
My second general point is that the Government are in a muddle about the relationship between ISAs and the stakeholder pension. I believe that it is important to encourage many more people, especially at a younger age, to save for their retirement. I think that that is also the Government's objective.
The House is aware of the issues—the fact that the state pension will no longer provide enough. All public opinion surveys show that the public have at last got that message, although they have not sufficiently grasped the importance of their doing something about it. We know about the problem of retirement in nursing homes. We know that people live longer. All those factors mean that we must build on the already considerable success that we have achieved, especially in relation to the rest of the European Union and most other countries, to encourage occupational and personal pensions.
We all agree that that should be the main objective. I am in total sympathy with the Government about the need to find a way of enabling those who do not have personal or occupational pensions to have them. I therefore look forward to the stakeholder pension document. I put a much higher priority on that than on the ISAs, but the Government have presented a proposal first for ISAs, which are apparently designed for the same low-income groups as the stakeholder pensions will be. I cannot see the attraction of an ISA to those lower-income groups.
Let me elaborate. I have read all the responses to the consultation document, and many of them argue that we should have a compulsory third pension—we already have a compulsory second pension. If that is the direction in which we move, and I am reluctantly beginning to come to the view that that must be done, low-income groups will not have any extra income to put into an ISA, on top of the compulsory second or third pension, however one wishes to describe it. They will move into the pension area, which some of them will find difficult enough, and they will have very little to contribute to ISAs.
Secondly, ISAs will provide only limited benefits to lower-income groups. They would do worse on equities than they would under the existing PEP regime. Supposing people put up to £1,000, as they will be allowed to do in the existing ISA, into a deposit scheme, I calculate that the benefit to an individual from going into an ISA through cash will be under £5 a year. That is not a big attraction for going into an ISA: £5 a year for five years and that is it—no more after that.
Mr. Oliver Heald: Does my right hon. Friend agree that it would be wrong for someone in that income group to put the money in an ISA? It would be far better to put it in a pension,
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so that the money is there for the future. The Government's proposal creates a temptation that is all wrong in public policy terms.
Mr. MacGregor: I entirely agree with my hon. Friend. If the second—or third—pension is compulsory, that is what people will have to do anyway. We are setting up elaborate machinery, designed apparently for the low-income groups, which will be of little interest to them. Given the likely charges and costs, which I shall deal with later, that would probably be the wrong thing for them to do as a means of efficient saving. I would not quite call it a fraud, but it is a pretty poor prospectus—a con—for the low-income groups. The proposals for ISAs and stakeholder pensions should have been considered together. If they had been, the Government might have come to a different view.
I am all in favour of savings regimes with tax incentives for the middle and upper-income groups, for whom PEPs have largely been of benefit up to now. It is not just low-income groups who need to save for their retirement. We all know that one of the most devastatingly difficult problems to deal with is the case of people in middle-income groups who have to sell their family home to provide for nursing homes. Part of the objective is to encourage them, through PEPs and other regimes, to accumulate some liquid savings to deal with that situation when it arises, as it will for many in any age when people live so much longer.
I am strongly in favour of PEPs—indeed, as Chief Secretary, I took them through the House in the Finance Bill—but I am certainly not going out to sell the advantages of a PEP or of an ISA on the basis that it will be of great benefit to low-income groups, because that is not the case. The Government have got into a muddle.
One of the problems that have arisen from encouraging savings through occupational or other pensions is that those are available only to people with earned income. That is a strong criticism of the existing system, given that life styles are different, and people go in and out of work more frequently. The way to tackle that is for those who are not currently earning but who have some disposable income to be encouraged to put it into pension schemes with the same tax reliefs, rather than into ISAs.
Through their approach, the Government have clobbered the PEP saver. They have already clobbered pension savers through their measure on advance corporation tax in the last Budget. They are not putting in place a regime that is attractive enough to the people whom they intend to help. I hope that the forthcoming Budget does not contain any other measures to hit contributions or savings going into pension schemes. If further tax reliefs were taken away from contributions, that would be further evidence that the Government were not serious about what they claim to be their objectives, because their actions go in the opposite direction.
The last two points that I shall make are somewhat related. The first is the need to encourage the market and people out there to take up ISAs, if those are to be introduced. The second is the regulatory regime. When we were considering introducing PEPs—as I said, I took

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the legislation through the House—I said regularly that we had to give incentives to the marketplace, which is the financial services industry, to encourage it to sell PEPs. I was bothered then that the scheme that we were introducing, which had a limit of £2,400, would not prove sufficiently attractive to the financial services industry to enable it to recoup the costs of selling the scheme. However, I was happy to see the scheme start, because at least there was a regime and a tax incentive on the statute book on which we could build.
That is precisely what occurred. The take-up was low in the early years. As the conditions were relieved—we allowed some investment in shares in foreign companies, and the £2,400 limit was raised effectively to £9,000—there was massive take-up both by the industry and by individual savers. The Government should give the financial services industry—I shall turn to Tesco, Marks and Spencer and so on later—some incentive so that it can make the scheme work. The more the Government criticise the financial services industry without appreciating that point, the less successful the scheme will be. I urge the Government to acknowledge the importance of that argument with regard to PEPs.
The Government are doing something quite different with ISAs. According to the conditions outlined in the consultation document, they are producing a scheme that the industry will find difficult to market at low cost. First, the product is anything but simple, so advice must be provided. Secondly, the Government are insisting that a single manager should handle all the different elements of the scheme every year. It will be extremely difficult for individual providers to monitor those elements, and there will an associated cost. Thirdly, we have the limits. The industry will not take up ISAs easily—the vast range of respondents who criticise the scheme in the consultation document make that point based on their experience.
That leads me to ask whether we can simplify the product and sell it differently. I am in favour of Virgin, Marks and Spencer and others trying to simplify the product and using their marketing skills to reach a wider clientele. However, the product will not be easy to sell. It is suggested that people from low-income groups will be able to take up ISAs at the cash till, having asked the cashier what it means and what they should do with it. That is not on. It will not happen like that—if it does, there will be massive mis-selling on a huge scale for which the Government will have to take the blame. The product as it stands will not be easy to sell, so there will be an associated cost.
That brings me to my point about the regulatory regime. I am trying to be as objective as I can, because there has been too much criticism of pension mis-selling by Labour Members who do not understand the basics. If we introduce complicated schemes such as this, we must ensure that those who take them up receive proper advice—and there is a cost attached to providing that advice. There is a cost attached to administering the scheme and a big cost attached to tracking the £50,000 limit to which I have referred already.
There is a direct contradiction between the Government's comments about the regulatory regime, and their lambasting of the industry for high costs and charges, and the purportedly low-cost scheme that they have introduced. I am in favour of the Government's
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attempts to reduce costs and charges—that is a highly desirable aim. However, if the Government go down that route, they must recognise that the regulatory regime will have to change. We cannot maintain the current prescriptive and difficult regulatory regime.
In the event of any so-called "misselling", this or a future Government must not be able to blame those who sold the product. We must recognise that those who buy financial products assume a certain amount of the risk—it is caveat emptor to a certain extent. If we invest in equities in an ISA, and another unit trust performs better, we cannot blame the provider of the poor-performing trust. That would be ludicrous. There is a vast difference in the performance of unit trusts in any one year, so there must be a certain amount of understanding and give and take. The only way forward is to have the simplest possible regulatory regime with a kite mark—it could be a benchmark, but I prefer a kite mark—set by the Government. Providers could then follow that kite mark without needing to worry about redress—which could be enormously expensive—if it is thought subsequently that their original selling was wrong.
I plead with the Government to appreciate that they must understand what happens in the marketplace—not in the tax avoidance industry, but at the bottom end where the low-income groups are involved—regarding selling and the regulatory regime. I know from my experience in the London and Manchester Group that encouraging people on modest incomes to save can be a labour-intensive exercise, and therefore a costly business. However, that is how we shall achieve our objectives. The scheme and the regulatory regime must be made much simpler.
I do not seek to make a partisan point: I genuinely believe that the Government have got it wrong. I believe that the scheme is wrong and that the £50,000 limit is dangerous and unfair on those who have invested to date. It is a breach of the retrospective principle. The Government must take into account the relationship between ISAs and the stakeholder pension, and recognise that ISAs will not be particularly attractive to those in the low-income group—although I favour some form of saving of that sort.
I fully understand why the Chief Secretary could not reveal today the Government's response to the consultation document. However, I hope that the Chancellor will introduce a totally different scheme in two weeks that responds to all the objections that my right hon. Friend the Member for Hitchin and Harpenden raised.
4.56 pm
Mr. Ivor Caplin: I begin by responding to the comments of the right hon. Member for South Norfolk (Mr. MacGregor). He said that PEPs had no advantages for the low-income group; I shall outline the advantages of ISAs in my speech today. Before I do that, I must express my admiration at the desperate attempt by the right hon. Member for Hitchin and Harpenden (Mr. Lilley), the shadow Chancellor, to save his job. However, I think that he failed and I am sure that he will not hold that position much longer. He made a vindictive and petty speech, in which he failed to address seriously the issues of the day.
It is interesting to witness the politics of envy: Conservative Members are envious of anyone who is successful in this country. That is quite astonishing.

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I am waiting for a response from the Opposition, but there is none, as usual. The right hon. Gentleman launched a completely unnecessary attack on Ministers in a very important debate about the future of savings in this country. I welcome the fact that the right hon. Gentleman has apologised for one remark, but I think that he should reconsider many of his comments in light of today's debate.
Of all hon. Members, I am qualified to speak in this debate because—as I am sure Opposition Members know—until 1 May, I was employed by Legal and General, which is a major pension and savings provider. In 1986, when the then Chancellor, Nigel Lawson, introduced PEPs, I was in the marketing department of Legal and General. We faced the quandary of deciding what the PEPs products meant.
We looked carefully at Nigel Lawson's Budget speech in 1986. He said, for example, that
"it is the long-term ambition of this Government to make the British people a nation of share owners … in which more and more men and women have a direct personal stake in British business and industry."
This is not about privatisation; it is about personal equity plans. The then Chancellor continued:
"I propose … a radical new scheme to encourage direct investment in United Kingdom equities … it is specially designed to encourage smaller savers, and particularly those who may never previously have invested in equities in their lives."
His final comment on the PEPs scheme in March 1986 was:
"I am confident … it will bring about a dramatic extension of share ownership in Britain."—[Official Report, 18 March 1986; Vol. 94, c. 177–78.]
Those words, 11 years later, are wrong. What we in the marketing department discovered in 1986 was that it was not possible to put those words into action, because PEPs were not about greater share ownership. They were about allowing the better-off in society the opportunity to save in a tax-free vehicle. There would be nothing wrong with that if the Government in 1986 had been honest, but they were not because PEPs were not an attempt to bring about greater share ownership. [Interruption.] My hon. Friend the Member for Workington (Mr. Campbell-Savours) has just asked me whether the year was 1986. It was.
I will take the House through the PEPs issue in its entirety. Fewer than one in 100 of the poorest households in the United Kingdom have any form of tax-free share investments, whereas more than a quarter of the wealthiest do. That shows clearly that, as the right hon. Member for South Norfolk said, there is no advantage in PEPs for low-income groups. He is right. It is his Front Benchers who are getting it wrong by trying to defend PEPs and TESSAs. I looked at the pledges that the Conservative party made in its manifesto to rectify the point that the right hon. Gentleman made. Nothing in it corrects the anomaly that there is no advantage in PEPs for low-income groups.
Mr. Loughton: Is the hon. Gentleman aware that the latest Association of Private Client and Investment Managers and Stockbrokers figures show that earners down even as far as the fourth decile use PEPs extensively; that more than half the people who invest in PEPs are basic rate tax payers; and that 20 per cent. do not pay any tax? Does he agree?
Mr. Caplin: The hon. Gentleman might like to get a copy of the Institute for Financial Studies briefing paper
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on this, which is widely available, including in the Library. It says that 49.65 per cent. of households in the United Kingdom have no investments; that 40.27 per cent. have some investments but no PEP; that 4.62 per cent. have no investments other than a PEP; and that 5.46 per cent. have a PEP and some other investments. That does not seem to bear out the hon. Gentleman's point. Only 4.62 per cent. of households in the United Kingdom have no investments other than a PEP.
Mr. MacGregor: I should clarify what I said, and what I meant. One has to define low-income groups. If by that one means the groups to whom the company with which I am involved, London and Manchester, often appeals, and the groups to whom the £1,000 cash limit is meant to appeal, I agree with the hon. Gentleman that the low-income group is unlikely to be attracted by PEPs. There is a substantial range of income groups who did not previously invest in equities, but who have been encouraged by the PEP regime and the other ways in which we have encouraged savings.
Mr. Caplin: I do not think that I have denied that the previous Government attempted to encourage savings, and that PEPs and TESSAs are worthwhile causes, but have they encouraged many to save? They have not. I have just amplified the point that fewer than 5 per cent. of households in the United Kingdom have no investments other than a PEP. In that respect, no Government with any reasonable ambition for wider savings could sit on their hands and do nothing. That would be a travesty, but that was the proposal in the Conservative party's manifesto in 1997. Perhaps the Conservatives, like the rest of the country, knew that they would lose the election. I do not know.
The Institute for Fiscal Studies document says clearly that, on average, as the right hon. Gentleman will know, PEP holders are older and richer than non-PEP holders. In other words, the industry and the then Government aimed PEPs at people in the 50-plus age group.
Nigel Lawson said in 1986 that PEPs were about widening share ownership in the United Kingdom. The Conservatives must answer the question whether PEPs have achieved that. PEPs have not achieved their goal. Indeed, the financial research survey shows that the same type of people invest in PEPs as hold stakes in normal unit trusts. Unit trusts do not have tax incentives whereas PEPs do, yet the same type of people are investing in both. Unit trusts and PEPs are concentrated among those who are over 55.
Mr. Loughton: The hon. Gentleman's figures seem to be completely out of tally with those of the industry. Is he aware that the Association of Unit Trusts and Investment Funds has carried out a survey that suggests that 78 per cent. of unit trust holders who also have a PEP would not invest in those unit trusts if they were not "PEPable"?
Mr. Caplin: I will not bandy figures with the hon. Gentleman. I do not know where he got that survey from.
Mr. Dale Campbell-Savours: That is the same point that my hon. Friend is making.
Mr. Loughton indicated assent.
Mr. Caplin: Perhaps the hon. Gentleman is agreeing that only 5 per cent. of households in the United Kingdom have only PEPs.
Mr. Campbell-Savours: The overlap.
Mr. Caplin: I think that the hon. Gentleman was talking about 22 per cent. of those who have unit trusts and PEPs.

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I will try to make some progress, as I think that Opposition Members are getting a bit bored. [Interruption.] You are obviously not bored, as you keep intervening.
Mr. Deputy Speaker: Order. The hon. Gentleman must remember that he is addressing the Chair.
Mr. Caplin: Thank you, Mr. Deputy Speaker. I had not forgotten.
I shall make some points about the financial research survey carried out by NOP. I am sure that the shadow Chancellor has seen it, as he is well versed in these issues. The survey shows that 57 per cent. of adults in this country have less than £500 in any savings scheme, including PEPs, and that 85 per cent. of people in socio-economic classes D and E have less than £500 in savings or investments, so PEPs and TESSAs have not worked. They have not got the masses to save.
The question put to me by the right hon. Member for South Norfolk was whether, going up the salary scale, greater use had been made of PEPs? I am afraid that the answer is no. Those with incomes between £25,000 and £35,000 have less than £2,000 in savings or investments. The previous Government failed in their savings policy for PEPs and TESSAs.
Mr. Michael Fallon: If the hon. Gentleman's figures are true—for the sake of the argument, let us assume that they are—would he advise the same proportion of the population on low incomes to contribute to an ISA before they contribute to a stakeholder pension?
Mr. Caplin: I am grateful to the hon. Gentleman for his intervention, but I am not—and nor is he—qualified to give advice on financial products. That would be against the current regulatory regime. When one comes from the industry, one is aware of the traps when colleagues ask questions about financial services. I am surprised at the hon. Gentleman for suggesting that I should advise him on financial matters in the House of Commons. We cannot do that.
The shadow Chancellor made some disgraceful comments about the consultation process on future savings on which the Government have embarked. Opposition Members seem to have a problem with the word "consultation". For 18 years, it meant not consultation, but "This is what we shall do; we want you to sign up to it". When we say "consultation" and invite comments from the industry and all interested parties, including political parties, we mean it. In the past few weeks, I have been out and about speaking to colleagues in my old industry. People in the industry are debating vigorously the future of savings, but no one believes that the status quo, as proposed by the Conservatives in their 1997 manifesto, is a starter. People welcome the opportunity to contribute to the debate about the future of savings.
I have already owned up to having been in the industry when pensions were mis-sold in the late 1980s. I finished my career working as head of quality in Legal and General's compliance department, which was growing more quickly than the marketing department. That may
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have been a sign of the failure of the regulatory regime that the Tories gave us in the Financial Services Act 1986. It is now widely accepted that it has failed badly.
It would have been nice for the House to hear the person who was responsible for the mis-selling of pensions, the right hon. Member for Hitchin and Harpenden, apologise to the House today for the fact that hundreds of thousands of people were mis-sold pensions. He had the opportunity to do so today and in the Budget debate in July, but he has failed to apologise time and again. He must be judged in those terms.
The right hon. Member for South Norfolk said that the ISA is a product. In pure marketing terms, it is not a product, but a concept. It can become a product only once we have devised how it will be sold. I have attempted not to be partisan about that.
I have outlined in detail why PEPs and TESSAs have failed to extend savings. It is right that any Government should consult widely in an attempt to do that, which is what this Government have done. Ultimately, we shall have an effective and sensible product which will make savings available to the many. That must be the aim of every right hon. and hon. Member, because PEPs and TESSAs have clearly failed to do that in the past.
5.12 pm
Dr. Vincent Cable: May I couch my remarks primarily in terms of the Government's declared objective, which is to spread the savings culture and encourage low-income savers? That objective should be judged as laudable and sensible. I regret that the Conservative amendment makes not even a passing reference to that problem, although the right hon. Member for South Norfolk (Mr. MacGregor) made some pertinent remarks about it.
The hon. Member for Hove (Mr. Caplin) summarised very well the problem of low-income savings. The figures are reasonably well known: roughly a third of households have no financial assets and many of them are in debt. The reasons are profound and not easy to overcome. Many people simply do not have the money to save. The whole institutional structure discourages them from saving because there are relatively large returns for people with large bank deposits and smaller returns for those with small bank deposits. Those on low incomes sensibly and rationally discount saving and, unless spectacularly high returns are offered, keep such savings as they have in cash. The test of ISAs is whether they can overcome that.
Despite the Government's objectives, many of the proposals are disappointing. The right hon. Member for South Norfolk gave a good arithmetical example to illustrate the reasons for that. The logic of his arithmetic was that, under the Chancellor's newly proposed 10 per cent. income tax band, a £1,000 deposit with a 5 per cent. yield would give the saver an extra £5. If the saver falls below the 10 per cent. band, he would get nothing. The Government intend to compensate for that by some kind of bonus, but when one studies the details of the bonus, the word that comes to mind is "pathetic". They propose that 50 out of the prospective 6 million new savers be allowed to take part in a prize draw to claim £1,000. That is the kind of sum that one would get in a respectable summer village fete. It is not a large inducement to save, especially for low-income savers.
May I suggest, in a constructive spirit, how the Government might deal with that problem? One route is to adopt the Government's philosophy of rewarding

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reasonably good balances. Why not take up the proposal of the Liverpool Victoria Provident Society, for example, which suggests that small savers could be rewarded with a generous entitlement to premium bonds or a large portfolio of free lottery tickets? That is an attractive proposal.
I am surprised that no one so far has mentioned the fact that the benefit system severely damages the incentive for those on low incomes to save. Many low-income families are caught in a savings trap, just as they are caught in a poverty trap when they try to work. This weekend, I dealt with a lady who is having serious problems with the Department of Social Security. The DSS was in arrears of payment and, now that it has eventually paid the several hundred pounds owing into the lady's bank account, it is trying to claw back entitlement to supplementary income support because she has a few hundred pounds' savings in her bank account. Such practice is common under the benefit system. I hope that the Government will rule that all benefits paid to low-income savers can be credited as a savings disregard. I also hope that they will make some positive suggestions, in the Budget if not today, about how the savings disregard could operate more flexibly to help low-income savers.
My main criticism is that, although the Government's intentions for low-income savers seem admirable and should be supported, the incentives are weak. Most hon. Members have received a lot of representations about the £50,000 limit. Many people in Twickenham have written to me about it. I am not referring to some abstract philosophical problem with retrospective taxation—the Conservatives have missed the point in that respect, because it is not a basic point of principle. All Governments have chiselled away retrospectively at mortgage income tax relief, for example. That is common practice. The real problem is practical: the marketing of new savings instruments is undermined once it becomes clear that the Government tamper with hindsight in returns from successful products. That is what is happening with PEPs and TESSAs.
There is also a serious administrative problem. Under the PEP scheme, many people have 10 different accounts. Will there be a centralised register so that those can all be monitored? Potentially, there could be an administrative nightmare in capturing the extent to which people exceed their lifetime ceiling. The Inland Revenue has laid off 6,000 people and is already under pressure. It simply does not have the capacity to handle such administrative problems.
It would appear from leaks in the financial press that the Government have already thought about that problem. I therefore suggest that the £50,000 cumulative limit on TESSAs and PEPs be waived. If it were waived, a lifetime ceiling would be illogical, because the Government could impose the necessary restrictions on tax relief through the annual limit. Clearing up the system in such a way would deal with many of the objections of Opposition Members.
My final point relates to the reform's implications for public expenditure. The Chief Secretary gave a clear and helpful response to my earlier intervention, but my hon. Friends and I have been trying to get to the bottom of the matter for months and have received different answers from different Ministers. On 10 December 1997, the Prime Minister said at Question Time that there would be more relief than is currently available, but on 17 December, the Chancellor told the Treasury Select
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Committee that he was working within a ceiling of £1.5 billion, which is quite different and implies that significant savings will result from the reform.
The correspondence that we have had with Treasury officials to clarify the matter essentially confirms what the Chief Secretary said: the existing level of tax relief will apply for the first two or three years, but there will be a flatter profile after that, which is a technical way of saying that savings will result from the scheme. That is not simply a debating point: if savings are made, those resources should go into improving the scheme.
Two major improvements—to the £50,000 retrospective limit and to bounties or incentives for low-income savers—could be made to the scheme. If the Government can reassure us on those points, we shall support the ISA scheme in principle.
5.20 pm
Ms Sally Keeble: I am grateful for the chance to speak in the debate because financial services are of great importance to my constituents. I was particularly interested when the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said that Conservative policy was, somehow, in the best interests of middle Britain. I represent a constituency in middle Britain, which I took from the Conservative party. The financial reality faced by my constituents bears little resemblance to that which the right hon. Gentleman described. An estimated 9,000 people in Northampton need help with debt problems. Many of my constituents have no savings, but are sold more credit than they can manage. They are living at the limit of their income and have nothing to fall back on, even if they run into small family problems. Therein lie most of their problems.
I shall consider the individual savings accounts proposal from the viewpoint of my constituents in middle Britain with incomes of about £16,000 and mortgages of about £40,000. Most of those who have provided for continuing care have done so with insurance policies. I understand the problems that the right hon. Member for South Norfolk (Mr. MacGregor) mentioned, but he described them from the provider's viewpoint. That does not gainsay the need for a vehicle to ensure that the consumer has access to good financial services and good returns on savings.
The fact that 40 per cent. of the population have no savings has been referred to often. That figure is bad enough, but the position is worse. The Consumers Association recommends that people should have three to six months' savings to fall back on. For my constituents, that means £4,000 to £8,000, yet fewer than half of all savers have savings approaching that sum. Not only are people not saving; even those with savings do not have enough to protect themselves against the proverbial rainy day.
My hon. Friend the Member for Hove (Mr. Caplin) quoted figures showing that people with children, whether couples or single people, have the lowest savings. I strongly believe that the complex problems surrounding savings and debt, as much as those surrounding benefits and work, must be solved if we are to tackle child poverty. It is not good enough to accept the fact that families with children are the most vulnerable to financial ups and downs.
As my hon. Friend the Member for Hove said, TESSAs and PEPs have failed to deal with the problem. Although they attracted huge investment from private individuals,

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those people were not necessarily new savers and certainly were not on lower incomes. That failure is especially true of PEPs: one in four of the top 10 per cent. of earners have a PEP, but fewer than one in 100 of the bottom 10 per cent. have one.
The involvement of the wider public in share ownership has increased, but has recently tailed off among the young and those on lower incomes, partly because of marketing changes and the ending of the previous Government's privatisation advertising campaigns. The real problem with TESSAs and PEPs is that, although tax breaks undoubtedly encouraged investment, tax benefits mostly went to those who were already in higher income groups, which is why the proposed saving scheme with tax advantages for low-income earners is so welcome. Individual savings accounts will benefit the many, not the few.
It is especially important that ISAs will provide access to different types of investment. Conservative Members described that as a complication; I think that it is an advantage. People on lower incomes have tended to use only certain financial services, such as bank, building society and credit union savings accounts, which carry fewer risks, but offer lower rewards. If we are serious about fuller participation in the economy, people on lower incomes must have access to the sophisticated financial products that are on the market.
The industry may find the ISA formula complex, but it is relatively simple for the consumer to understand. Another important feature is easier access; I welcome the Government's intention to make schemes available through supermarkets. I have struggled through shopping centres with small children in tow, so I know the value of one-stop shopping. Other retailers may not like the idea, but consumers, especially women with young children, increasingly hope and expect to do the bulk of their shopping, pay their bills and bank in one shop.
The quality of ISAs will depend, in part, on the quality of the supermarket from which they are available. That is no different from supermarket banking or products such as Virgin PEPs.
Mr. Loughton: How will the hon. Lady get best advice among the frozen peas and discounted yoghurt at the checkout at Tesco or Sainsburys?
Ms Keeble: I shall return to that serious point. As I said in relation to Virgin PEPs, the quality of financial services depends, to an extent, on branding. The quality of financial advice is a serious issue—it does not have to be a problem—which the Government must address in response to the consultation.
The issue of the quality of financial advice is not exclusive to PEPs and TESSAs. A number of high street banks are shutting local branches, and financial products are marketed aggressively on the radio and can be bought over the telephone. There is a wider issue: personal banking service providers must give good advice to people who are looking into financial services while buying peas and yoghurts in a supermarket. Although ISAs may be complex for the industry to manage, they will be accessible to the consumer, which is a particular advantage for those who would otherwise be locked out
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of the increasingly sophisticated financial services market. Moreover, as I have said, banks are closing branches, and supermarkets are likely to become increasingly the most convenient—and sometimes the only—point of access.
The possibility of individual savings accounts being offered through credit unions is an important development which is often overlooked. Credit unions have been the poor relation of financial services in Britain, but the advent of the first national credit union—organised by the bakers' union, backed by Unity Trust bank—has changed that, allowing people to deduct amounts from their payroll.
I hope that when the Government produce their final proposals for individual savings accounts, they will address two issues. I have referred to the provision of financial advice for those who buy such accounts at supermarkets. The other issue is the amount of savings that people are to be allowed to hold before being disqualified from receiving various kinds of benefit, especially if they have chosen life insurance as one of their options for individual savings accounts.
I hope that the Government will consider those two issues, for a reason in addition to those given by Opposition Members. I think that they will particularly affect women who, although they want to save, may either find it difficult to gain access to good financial services and advice or feel concerned about the impact of their savings on benefit entitlement. The figures show that those with the least savings are, overwhelmingly, single parents, only about 20 per cent. of whom have any savings at all.
Much has been made of the £50,000 limit. We used to hear a good deal about the impact on PEP mortgages, but, according to information provided in Hansard, if both partners in a couple exercise their full rights they can support a combined PEP mortgage of some £250,000. Whatever the financial problems of people in middle Britain, they certainly do not focus on mortgages of a quarter of a million pounds. That error of judgment may have contributed to the Conservative party's losing its hold on middle Britain.
I believe that the plans for the individual savings account are both bold and ambitious. I believe that they provide people who have so far been excluded with access to a range of modern financial services. They combine imaginative and innovative features that will attract people who have not saved money before, and, in doing so, they will help to end some of the misery of those who find that lack of money turns a family problem into a financial crisis. I think that these will be savings accounts for the many, not the few, and that they will give more people just the kind of financial independence and choice that this Labour Government are all about.
5.32 pm
Mr. Peter Viggers: The hon. Member for Northampton, North (Ms Keeble) made a thoughtful speech. In her summing up, she referred to the need for advice to be available within the general context of savings schemes. It is interesting that she raised the question without having an answer to it, simply pointing out that it needed to be addressed by Government. I certainly agree with that. Another point that the hon. Lady made in summing up related to the effect of the level of savings on benefits, which I intend to discuss in my own short speech.

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The subject of pensions and savings may seem dry to those who are young and a long way from retirement age, but I have long been interested in it. I may be the only Member of Parliament to have recently taken the trustees' examination of the Pensions Management Institute; I am also the independent chairman of a pension fund. Given that Lord Nolan puts his nose into most matters nowadays, I suppose I should add that I am not a beneficiary.
This is an issue of raw politics. It goes to the centre of the contrast between the Labour Government and the Conservative party. The Conservative party lives in the tradition of kin Macleod, who said that it was the duty of Government to provide a framework within which each individual could save, and make himself a modest fortune in his own lifetime. In contrast, the Labour party promised in its manifesto to extend the principle of PEPs and TESSAs, which have done so much to enable many people to build up modest fortunes and look forward to retirement with confidence. There is no doubt that that undertaking to extend the principle of PEPs and TESSAs reassured savers as the election approached, and no doubt that it won votes for the Labour party. I submit that it was a misleading statement, a fraud on the saver and the electorate and a false prospectus.
A striking feature of the Labour Government's current formulation of savings policy is its lack of cohesion. As the Association of British Insurers has pointed out, the consultation paper on ISAs seems to have been written by a different hand from the consultation paper on stakeholder pensions. That is extraordinary. One would have thought that the Government's approach to savings would be within the general framework of their approach to pensions.
There are four main ways in which individuals can prepare for retirement. First, they can save for their pensions through an employment scheme, if they are fortunate enough to be in one. Secondly, they can save through a special additional scheme—the state earnings-related pension scheme, or an alternative private scheme. Thirdly, there is the basic retirement pension. Fourthly, there are personal savings.
I have attended seminars, and have studied the subject of low-cost pensions, which the Government's consultation paper is intended, in due course, to address. The expression "low-cost pensions" has become associated with stakeholder pensions. One certainty, however, is that there is no such thing as a low-cost pension. Any pension that is funded will need to be funded by an amount 15 to 18 times the amount of any required pension. People will need to save substantially if they are to save for their own pensions.
Some people will have had the benefit of saving through occupational pension schemes. Others will have relied on PEPs and TESSAs. I heard the Chief Secretary say that he had always regarded PEPs and TESSAs as complementary to pensions. Of course the Chief Secretary is economically literate. He may well regard PEPs and TESSAs as complementary to pensions, but some people do not, including a clergyman's widow who wrote to me from my constituency. She has been relying on her PEP and TESSA contributions as a significant part—perhaps a major part—of her retirement income. It is not good enough for the Government to change the rules on PEPs and TESSAs, and, effectively, to impose retrospective legislation to change the benefits that people will receive
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from them, when some have been looking forward to PEPs and TESSAs as the main plank of their retirement arrangements.
Attention has been drawn to the cost of the advice that people will need to take before changing their retirement plans. Legal and General carried out a survey, asking people how much they would think it reasonable to pay for advice on insurance and retirement provision. Most regarded £60—younger people said £50—as a reasonable amount to pay for advice on retirement provision. As the hon. Member for Northampton, North said, however, advice is needed, and the Government have now demanded that it be of high quality. The normal rate charged by a pensions or insurance adviser is about £150 an hour. No one can believe that it is possible for a pensions adviser to give realistic and sensible advice in 20 minutes. He cannot do so in less than two hours, given the time that it takes to appraise the position. That will cost £300 plus VAT—in other words, £335—which, incidentally, amounts to two thirds of 1 per cent. of a £50,000 fund. Those who wished to rely on PEPs, TESSAs and ISAs under a Labour Government have been badly let down.
Another issue that has not yet been raised in this debate is the implication of the savings trap, which the hon. Member for Northampton, North mentioned. The hon. Member for Bolsover (Mr. Skinner) clearly had absolutely no idea of the yield on pension funds, or, more important, of the capital sum required to provide a pension. The savings trap will have dramatic effects on savings for pensions. If savings are limited to £50,000, as they may be under ISAs, and if that sum is the sole pension provision, it will yield only £256 per month—£3,072 annually—in annuity for a 65-year-old married man, allowing for the normal 3 per cent. inflation expectation.
If someone with no other pension or savings receives a state pension of £5,083 annually, income support at the level of £330 annually, housing benefit at £2,080 annually and council tax benefit of £312 annually, his or her net annual income will be £7,805. However, if that individual has saved £50,000 in an ISA, the additional amount that he or she will receive will be only an extra £400 annually. Therefore, £50,000 which has been saved over the years will yield only four-fifths of 1 per cent.—representing a serious savings trap with which the Government must deal.
A 45-year-old man who expects to retire at 65 and has no other savings or pension would have absolutely no incentive to save for retirement unless his pension will amount to £4,132 annually, allowing for 3 per cent. inflation. Therefore, if he cannot save £65,000, he would be better off simply blowing his money and not bothering to save.
The message is quite clear: individuals who wish to prepare for their own retirement should start early and keep saving. Although individuals might well support a cap on the annual commitment to their pension or savings fund, it is not acceptable for them to have on overall cap of £50,000, as that would render such savings completely pointless. If such a scheme were to be their only method of savings, regrettably, there would be no point in their saving £50,000.
Are the Government small-minded and ignorant about those matters? No; the situation is worse than that. The Government, having won the general election by

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reassuring holders of PEPs and TESSAs, are now ditching those individuals. The losers will be many: those who believed the Labour Government when they said that they would extend the benefits of PEPs and TESSAs. The only beneficiary of the change, should it happen, will be the Treasury, which will save £800 million annually in tax relief on PEPs and £450 million annually in tax relief on TESSAs.
5.42 pm
Mr. Ross Cranston: The debate had a very unfortunate start. Nevertheless, both Labour and Opposition Members have made some valuable points. The right hon. Member for South Norfolk (Mr. MacGregor) made some valuable points on the interaction of pensions and savings vehicles, such as individual savings accounts and personal equity plans. The hon. Member for Gosport (Mr. Viggers) made some useful points on pension yields, although those who can afford to invest will rarely rely on only one vehicle.
It is useful to start such debates with some history. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) began his speech with some remarks about the previous Government's policy to promote savings. Lord Lawson—in his book, "The View from No. 11"—was much more frank about the matter, making it quite clear that policy was not thought up by the Conservative party, and that he got the idea from a law passed in France in 1978. The comments of the right hon. Member for Hitchin and Harpenden were therefore partly a mis-selling of Tory innovation.
The right hon. Member for Hitchin and Harpenden mentioned promoting savings. However, as my hon. Friend the Member for Hove (Mr. Caplin) rightly said, PEPs were originally designed to widen share ownership. In his book, Lord Lawson says:
"I was always very cautious about describing PEPs as savings incentives."
He went on to admit that PEPs were intended more to widen share ownership. However, as my hon. Friend the Member for Hove said, that intention was not fully realised, as those who already had shares moved into PEPs because they were a tax-efficient means of investing.
Conservative Members have suggested that the PEPs and TESSAs savings regimes are long established and almost sacrosanct. They also mentioned retrospectivity, which I shall deal with later in my speech. Conservative Members should remember that they changed the mortgage interest relief at source regime, which affected the tax advantages gained by putting one's investment—if one considers it as such—into housing. If the introduction of ISAs represents retrospective legislation, changing the MIRAS regime certainly represented retrospective legislation.
PEPs did not take off in the early years—until 1991, fewer than 50,000 had been sold. They have been bought in large quantities in only the past five or six years—so that now, according to one estimate, there are up to 2.5 million PEPs. TESSAs were introduced only in 1991, although TESSA ownership has grown more smoothly than PEP ownership. Nevertheless, only about 4.5 million people currently have TESSA savings. We are therefore
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debating not schemes that have been approved over generations but recent institutional developments. Hon. Members should therefore be much more careful when mentioning retrospectivity.
Labour Members have made some important points about the extent of TESSA and PEP ownership among the public, and Conservative Members have said much about how middle Britain will be hit—although the statistics do not begin to support their comments. My hon. Friend the Member for Hove cited the 1995 British household panel survey which showed that almost 50 per cent. of households had absolutely no investments—no shares, no bank accounts, no building society accounts and no friendly society holdings—and that only 10 per cent. had PEPs. Therefore, only a very small segment of society has such investments.
The 1996 family expenditure survey showed that just over 10 per cent. of families held TESSAs. If we go further and examine the type of people who comprise that 10 per cent. of the population, a point made by Labour Members is confirmed: wealthier and older segments of the population hold such institutional savings accounts and investments. The right hon. Member for Hitchin and Harpenden talked about small savers—but they are small savers with very large incomes.
I am not as cynical as Gillian O'Connor was last week in the Financial Times, when she rather acerbically said that the PEPs regime had been a licence for the middle class to print money. Nevertheless, the report by Andrew Dilnot and his colleagues at the Institute of Fiscal Studies demonstrates the limited ownership of those investment vehicles.
My hon. Friend the Member for Hove cited the figures, so I shall not repeat them, but it is clear, from the percentage of households with at least one PEP, that ownership is concentrated among the richest 10 per cent. A quarter of that cohort own PEPs. We should also bear in mind distribution by age. Ownership is highest among households aged between 50 and 59.
The report reveals that TESSAs are similarly concentrated among older and richer households. Again, the highest ownership rate is among those aged between 50 and 59 and more than 70 per cent. of TESSAs are owned by households in the top 50 per cent. in terms of income.
To anyone other than the Opposition, that would raise an interesting and important issue of public policy—how to involve other segments of the population in saving. The ISA proposals are designed to address that.
Opposition Members have not addressed other disadvantages with the existing regime of PEPs and TESSAs, such as the inflexibility of the TESSA regime. The report by the Institute of Fiscal Studies demonstrates that, because of their inflexibility TESSAs are not held by the sections of the population that one would normally expect to invest in them. People in their 50s, and particularly those in their 40s, need ready access to money to meet particular contingencies and the TESSA regime is far too inflexible.
There are also disadvantages in the PEPs regime. The hon. Member for Gosport touched on the fact that PEPs do not roll over to surviving partners in the event of the death of the investor. There are also marketing problems. My right hon. Friend the Chief Secretary

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mentioned that the management charges in respect of many PEPs were quite significant and in some cases outweighed the tax relief.
There are further problems. Some companies in the PEP market had to cease taking new business until they had sorted out their problems. A couple of months ago, Kevin Goldstein-Jackson wrote in his column in the Financial Times:
"In July 1995, I pointed out that many people had been persuaded to invest in Peps in order to 'save' tax—but the only tax they saved was that on dividend income. This was because many of them had invested sums which, had they been used to buy shares directly, would not have been subject to capital gains tax since they were within the exemption limit."
In other words, there was a mis-selling of PEPs. So there are problems in the existing system and, more important, there are grave disadvantages in terms of the coverage of current investment vehicles.
I now come to the ISA proposals which aim to increase the coverage in the general population. We want to encourage saving. Half the population hardly save at all. In 1995–96, the family expenditure survey revealed that more than a third of households had no financial assets—no bank accounts and no shares.
Mr. Loughton: The hon. Gentleman has said that for the third time.
Mr. Cranston: The hon. Gentleman does not want to hear the facts. He has never been concerned with empirical evidence, only rhetoric.
The ISA proposals are designed to get new savers involved. My right hon. Friend the Chief Secretary drew attention to the tax expenditure aspects of the current regime. In 1997–98, the figure was £1.25 billion and it would rise to £1.7 billion by 2001 under the current regime. Given the enormous tax expenditure, the idea is to distribute more widely the advantages that currently benefit a limited section of the population.
Of course, there have been criticisms from some parts of the industry. The shadow Chancellor quoted some industry reaction, but, as Gillian O'Connor said last week in the Financial Times,
"the industry's laments … suggest that they had been a nice little earner."
I would not be so cynical, but certainly some parts of the industry have been making a nice little profit from PEPs and TESSAs, and there is nothing wrong with that.
The right hon. Member for Hitchin and Harpenden quoted various criticisms. However, he omitted to mention the support for the proposals from various parts of the industry. Roger Cornick, head of marketing at Perpetual, a big provider in the PEPs market, is quoted as being
"confident that the company will still get a big slice of the ISA cake".
Mr. Loughton: And the share price fell by 10 per cent.
Mr. Cranston: If the hon. Gentleman examined the figures in the Financial Times more carefully, he would see that it rose again subsequently.
The industry will have to be much more flexible and innovative. At present, some parts of the fund management industry concentrate on equities. Under the
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ISA proposals, they will have to be more expansive in terms of the products that will fall under the tax shelter. Of course, there will be new institutions involved. My hon. Friend the Member for Northampton, North mentioned the supermarkets, some of which have made very positive comments about the possibility of promoting ISAs.
Lord Lawson explained in his book the great difficulty in the initial years with unit trust companies which were most reluctant and dragged their feet. It was only subsequently that they started to promote PEPs vigorously. ISAs will have to be sold in new ways as well as through the traditional channels. Supermarket checkouts are one possibility. Tesco described ISAs as "a smashing idea". Mr. Newton Scott, chairman of Tesco Personal Life was most complimentary. He was not especially happy with the idea of a prize draw fund, but said that, in his view, to get people on lower incomes involved it might be better to offer groceries and loyalty points, and such points have arisen in the consultation period.
Mr. Caplin: I have no interest in the matter, but is my hon. Friend also aware that Marks and Spencer has also welcomed the proposals for ISAs to attract the widest possible range of savers?
Mr. Cranston: Yes. Marks and Spencer has also been very forward looking, also in respect of the euro, unlike the Opposition.
My hon. Friend the Member for Northampton, North mentioned another advantage of ISAs, which is that a wider range of products could be developed. She mentioned deposits with credit unions, national savings products and shares in industrial and provident societies. They should all get a boost from incorporation in ISAs.
There will also be flexibility for investors, who will be able to withdraw their money when particular demands arise. As I said earlier, there is evidence that one off-putting feature of TESSAs is that because of their inflexibility those who might otherwise invest do not do so.
Conservative Members have talked about retrospectivity. They misunderstand the nature of retrospective legislation. It makes unlawful something that was lawful at the time or, in the tax context, renders a past transaction subject to tax that was not applicable at the time. At the most, one could say here that expectations have been disappointed. But I do not think that anyone who deals in the area of taxation can have any such expectations. I gave the example of MIRAS earlier. One has to expect different Chancellors to change taxation regimes. No one can proceed on the basis that regimes will remain unchanged for ever. No one could have had a legitimate expectation that the existing tax regime would remain unchanged.
Mr. Viggers: I take the hon. Gentleman's point. What is his comment on the Labour party's manifesto promise about the future of PEPs and TESSAs?
Mr. Cranston: Our manifesto made it clear that we intended to provide savings vehicles for a wider section of the population. That is what we are doing with our ISA proposals.

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It has been argued that increased flexibility will result in higher costs for providers than at present—up to 30 per cent. higher, according to one estimate. That demonstrates a misunderstanding of the nature of our financial services industry. Over the past 15 or 20 years, we have had increased competition and innovation. With new providers and managers coming in, I am sure that any increases in costs will be much lower than the figures that are being bandied around.
ISAs will also make the tax system more neutral, reducing the extent to which it distorts investment choices. I would have made further points about the £50,000 limit if I had had more time. Only between 10 and 15 per cent. of PEP holders would be affected by the £50,000 limit. We are talking about a relatively small number of people. My right hon. Friend the Chief Secretary took up the point about marketing. Given the past problems of pension mis-selling, we have to be cautious about the marketing of the products.
The charging regime must be more transparent than at present. That is one of the disadvantages of the PEP system. One has to go to Chase De Vere's guide to find out how much investing in a PEP will cost. There have to be controls on the operations and the administration of funds.
I congratulate the Government on the ISA proposals. I look forward to the results of the consultation exercise.
6.4 pm
Mr. Quentin Davies: I sincerely congratulate my right hon. Friend the shadow Chancellor on two things: his powerful and compelling speech; and—the Labour party should be grateful to him for this—his altruism in proposing the debate. A more cynical politician might have avoided talking in public about Labour's plans for ISAs and exposing all their shortcomings, perversities and absurdities to Ministers. Instead, he might have let Ministers get on with implementing their plans. When the shambles ensued, as it certainly will—when there was a collapse of tax-incentivised savings vehicles, when the individual aspirations of so many had been shattered, when the proposals had produced a great deal of justifiable resentment—the Conservatives could have made some political capital. My right hon. Friend has decided to take the high road and have a debate before legislation is introduced. We are trying to save the Government from the fate to which they are heading—taking the country with them—by having genuine parliamentary consultation. The debate has already illustrated extraordinary perversities and absurdities in the Government's proposals.
We do not have any quarrel with the objectives that the Government say that they are trying to pursue: to produce a fair scheme; to produce a system that increases savings, because one of our national handicaps is having the lowest savings ratio in the European Union; and to do something for the lower paid, helping wealth creation in the less financially privileged section of the population. We agree
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with all that, so we should be having a dispassionate and technical debate, deciding how best to relate objectives to means.
Mr. Caplin: Will the hon. Gentleman give way?
Mr. Davies: I am sorry, but the hon. Member for Dudley, North (Mr. Cranston) took such an awfully long time with his speech that I cannot accept any interventions. I apologise for that, because I normally enjoy the cut and thrust of debate on such occasions.
I shall deal briefly with those three objectives—fairness, aggregate savings behaviour and the position of the lower paid. The proposals cannot be fair. How can they be fair for someone who has decided to build up a PEP to repay his mortgage of more than £50,000, which is less than the average price of a house? He will suddenly find that his calculations have been thrown out, producing a gap that he had not anticipated. Given the promises that the Labour party made before the election, such a person would have had every reason to suppose that his PEP would continue under the same tax regime until his mortgage needed to be repaid. He and his family will be very badly let down. If the proposals go through, there will be a lot of miserable families. Some people will probably lose their home.
Mr. Steve Webb: Will the hon. Gentleman give way?
Mr. Davies: I am sorry, but, for the same reason that I gave to the hon. Member for Hove (Mr. Caplin), I have to refuse.
It is not fair to bamboozle the public in such a way. We heard the Prime Minister, then the Leader of the Labour party, the Social Security Secretary and Treasury Ministers making it absolutely clear to the public that the PEP and TESSA regime was not threatened. The quotations are very well known. We now know that it has been fundamentally threatened.
Given that the tax-incentivised savings vehicle was limited on entry—one was able to have only £6,000-worth of general PEP investments, £3,000-worth of a specialised PEP a year and TESSAs were limited on entry—it is not fair to say to people that, retrospectively, the vehicle will be limited on exit as well. It is not fair to say to people that, if the result of saving has been positive and they have managed to accumulate a reasonable pot of money, tax privileges will be retrospectively withdrawn or limited to some figure about which they did not know in advance. That is clearly the very reverse of fair.
I shall deal with what I think that the Paymaster General will say about fairness. He will say, "Oh, but we are withdrawing tax privileges from the rich who have accumulated £50,000, and the poor, who have not got anywhere near that sum, will continue to enjoy them." If that is being done in the name of traditional socialist egalitarianism, it is thoroughly perverse. It is one of the most foolish perversities in a whole string of such perversities in this debate. If one wants to go in for socialist egalitarianism and clobber the rich, one should put up marginal tax rates—although that would be very bad and destructive for everyone, including those who are less well off, since it would threaten their jobs and the country's prosperity.

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Most extraordinarily, however, the Labour Government are proposing to say to the rich that, if they spend their higher income, the tax regime will not be changed and they can go on enjoying exactly the same standard of living, but if they save their higher income, they will be worse off. The Government will clobber such people and ensure that they suffer if they save. The change will impact only on people who save on higher incomes or who are better off—not on those who spend that higher income. That cannot make the beginnings of sense and certainly cannot be justified on the grounds either of economic rationality or of fairness.
What about the impact on savings as a whole? How can such a proposal possibly increase aggregate saving? Let us just think about that for one second; it is clear that Treasury Ministers have not begun to think seriously about it. After all, on their own admission, they are proposing to reduce tax credits for such saving. On universal admission, due to the greater administrative complexity of ISAs, which will force managers to keep an account for every contribution in every year, administrative costs will greatly increase.
If the returns are reduced and the costs are increased, there will be a double negative impact on the net return to savers. Clearly, therefore, the attractions of the scheme as compared with its predecessors will significantly reduce. If human beings are rational, there will be less saving, not more. That is the only possible conclusion; it follows as surely as night follows day.
The negative impact on savings behaviour will be compounded by the fact that those who have already saved £50,000 in their PEPs will have no tax-driven incentive to save any more than they otherwise would. So, the section of the population which has the highest propensity to save—those on the highest incomes—will save less. One does not know by how much, but it will undoubtedly be less. If the aggregate return of saving for such people is reduced, the aggregate savings flow will fall. The proposal's effect on aggregate savings will undoubtedly be negative.
Let us look at those who are low paid—people whose interests the Government claim to have at heart. Will the proposal help them? Such people cannot get many of the benefits of ISAs. Nor could they in predecessor regimes; nothing has changed. In practice, such people will not benefit from capital gains tax relief because they are unlikely to have capital gains exceeding the £6,000 annual personal allowance—or whatever it is now. I think that it is £6,500.
Equally, low-paid people will not get higher tax relief because, by definition, they do not pay higher tax. All that they will get is relief on the basic rate of tax. We have demonstrated in this debate that, from any view, management charges will exceed that benefit, which itself is being reduced due to the reduction in tax relief on ISAs over the next five years.
For those on smaller incomes, the financial benefit of taking part in the new savings vehicle will be less than it was when they contributed to PEPs. The opposite effect of the one for which the Government hope will come
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about. There will be less saving, not more, by the less well off. The Conservatives are genuinely concerned about that, regardless of whether the Labour party is.
Ms Keeble: Will the hon. Gentleman give way?
Mr. Davies: I cannot take an intervention due to lack of time. I hope that the hon. Lady will forgive me. She and her hon. Friend the Member for Dudley, North had plenty of time to make their points.
There is another sinister discriminatory aspect of the proposal, which I fear will impact particularly seriously on those who are on lower incomes. As we know, the proposal is that anybody can save up to a maximum of £1,000 a year in cash, £1,000 in insurance products and £3,000 a year in equities. That is a very artificial portfolio balance, which may be totally inappropriate in certain circumstances.
For example, when the equity market is particularly high, it might be thoroughly irresponsible to put such a high proportion of savings in equities. Indeed, no independent financial adviser worth his salt would dream of advising his client to do so. For the wealthier savers who have an ISA—if any do—as part of a wider portfolio, such constraints are not very great. The balance of portfolio which they desire to achieve can be achieved elsewhere, outside the ISA regime.
People who will not have savings outside an ISA because they hardly have any savings at all—the people about whom the Government claim to be concerned, and whom the ISA regime purports to encourage to save—will not have the ability to obtain a portfolio balance outside the ISA regime. The portfolio balance forced on them inside the ISA regime may be extremely damaging. Poor people might be bamboozled into going for the product, and find that the apparent tax advantages are more than outweighed by management fees. On top of that, they might find that they are forced by regulation to put a disproportionate part of their savings into equities, which might prove to be a disaster at a certain stage in the market. They might find themselves exposed to losing a large part of their savings. That must be an exceedingly bad deal for the low paid.
Ms Keeble: Will the hon. Gentleman give way?
Mr. Davies: I am about to bring my remarks to an end. I am sure that the hon. Lady's colleagues will have an opportunity to make whatever points they can—if they can—in answer to my criticism of the Government's proposal.
I shall put one final point to Labour Members. The tragedy for the low paid is that it is not worth their while saving at all. They will merely find that they have deprived themselves of future income. In the event of loss of employment or some disaster, or when they reach retirement age, they will have deprived themselves of access to means-tested welfare benefits. Therefore, the return from their savings will be negative. They might find that they have sacrificed consumption by putting money away, and then do not qualify on retirement for income support, housing benefit, council tax relief and all the things enjoyed by the family next door, which has never bothered to save.

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It is the cheating of the poor by this particularly pernicious system that the Government should be addressing if they seriously want to do something for the lower paid, and if they seriously want to change the culture of this country in favour of greater saving. That requires either a much more radical and fundamental welfare reform programme than I believe the Government have the courage to begin to contemplate, or some form of socialist compulsion. We shall see, as the months go by, which of those courses the Government take.
6.18 pm
Mr. Barry Gardiner: Why do the Government give tax relief? It is to achieve a particular policy objective. In plain language, when the Government give people a handout, they do so to encourage them to do something. The point of the handout, and that is exactly what it is in the case of PEPs and TESSAs, is to encourage people to save.
"Although the scheme will be open to everyone, it is specially designed to encourage smaller savers, and particularly those who may never previously have invested in equities in their lives."—[Official Report, 18 March 1986; Vol. 112, c. 178.]
Mr. Bercow: Speed it up a bit.
Mr. Gardiner: I am taking my speech at the rate at which I think it is possible for the hon. Gentleman to comprehend it.
"I now want to extend savings incentives to the mass of ordinary tax-paying savers—and potential savers".—[Official Report, 20 March 1990; Vol. 169, c. 1024.]
That was said in the Budget statement on 20 March 1990 about the introduction of TESSAs.
How effective has that handout been? We have heard that 50 per cent. of adults—broadly the poorest 50 per cent.—have virtually no savings at all. They do not invest in PEPs and TESSAs, but they do pay for them. It is the tax taken from that poorest 50 per cent. of our community that still goes to contribute to the tax relief from which the richer 50 per cent. presently benefit. It is because of that that this handout must be justified to those who pay for it without benefiting from it.
We have been told today that £50,000 is not a huge sum. We have been told also—by the hon. Member for Gosport (Mr. Viggers)—that unless a person was able to save at least £65,000, there would be no point in saving at all. They might as well blow it, because the yield would be so small. I wonder whether the hon. Gentleman considers whether his words gave great comfort to those who have not yet accumulated £50,000 in their PEPs. There is little comfort here for the struggling pensioner who was mentioned, who put his faith in the then Government's PEPs scheme if, unless he accumulates £65,000, there is no point in accumulating anything at all.
The shadow Chancellor, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), stated that after the replacement of PEPs with ISAs, people would "lose the incentive to save." How does that statement stand up? Either there is a benefit from saving or there is not. If there is, and no one in the Chamber today has suggested otherwise, it seems clear that by the time one has accumulated £50,000 of tax-free savings, one has worked
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out the value of that activity; one does not require an additional handout to convince one further. Money spent in this way is doubtless much appreciated by the recipient, but it is unjustifiable to the neighbour, who pays for it without benefiting from it.
The shadow Chancellor, in a carefully crafted speech, enticed my hon. Friend the Member for Bolsover (Mr. Skinner) to bite and then closed the trap on him. The right hon. Gentleman said that a fund of £356,000 would be required to produce my hon. Friend's pension—about £20,000 per annum. He refused to take an intervention from me at that time, when I would have informed, or reminded, him that the new stock exchange regulations to force companies to disclose the pension arrangements for their directors have revealed—I see some Opposition Members blanching—many more interesting cases than that of my hon. Friend.
Let us take the example revealed in the annual report of the Bass brewing and leisure group, which states that one director—Sir Ian Prosser—has a pension which, at 30 September 1997, is valued at £304,300. That is not the fund—it is the pension which he will take each and every year in retirement. Even the shadow Chancellor might accept that in the light of such a pension, my hon. Friend the Member for Bolsover may be entitled to his paltry £20,000.
Unlike the shadow Chancellor, I do not want to get into the politics of envy. The director of Bass may well deserve his £304,000 a year pension. However, the remarks of the right hon. Gentleman were significant in that they were a reversal of what the Conservatives have traditionally echoed in this Chamber over past years. The politics of envy have never been quite so clearly stated as they were by the right hon. Gentleman this afternoon.
The hon. Member for Grantham and Stamford (Mr. Davies) talked of penalising people who have saved because they will not get tax relief on their savings in excess of £50,000. However, no penalising is going on. It is a change in the tax regime so that taxpayers' money is spent where it is most effective and most needed—in persuading the 50 per cent. of the population who presently are unconvinced of the benefits of saving.
Mr. Caplin rose—
Hon. Members: Oh!
Mr. Caplin: At least I am taking an interest in the subject—unlike Opposition Members, particularly some who have just walked into the Chamber. Has my hon. Friend had time to consider the figures I mentioned in respect of the lack of people who have PEPs? I referred to a figure of less than 5 per cent. Will he address that point?
Mr. Gardiner: My hon. Friend is entirely right. The figures that he gave were most revealing in that only 4.7 per cent. of people have a PEP and no other form of saving. He also laid before the House his qualifications, as someone previously employed in an insurance company. Although it is many years ago, my qualification as an associate of the Chartered Insurance Institute gives me some reason to stand in this Chamber this afternoon.
When the hon. Member for Grantham and Stamford talked about penalising, the critical fact that he failed to mention was that the legislation is not retrospective.

901
Nothing that was lawful would be unlawful and nothing that was unlawful would be lawful as a result of the proposed measures.
The right hon. Member for South Norfolk (Mr. MacGregor) talked about the way in which people who have not got great incomes but are of modest means, go about saving. They do so piecemeal and in dribs and drabs. Indeed, the whole foundation of the old Prudential insurance company was based on that policy—the fact that it was difficult to get people to save. We know the old image of "the man from the Pru", who knocked on the door to pick up the weekly premium—the odd five shillings—from the householder. I would be reticent to refer to my right hon. Friend the Chief Secretary as the modern day "man from the Pm", but in setting up ISAs we are seeking a contemporary equivalent of just that.
The ISA would enable people to bring together a range of savings—stocks, shares, cash, national savings, life insurance—and to do so in dribs and drabs, in small weekly amounts. That is the way in which people are able to save—over a period of years—and how they have learnt to save in the past.
At the same time, the great majority of TESSA and PEP investments could be carried forward into the tax-favoured environment of the ISA. For most people, the ISA will be the natural home where their savings and investments of the past few years can lodge to their benefit for the future. It is simply not the case that the Government are trying to penalise people who have saved hard and planned for their retirement. There has been no more telling remark this afternoon than that of my hon. Friend the Member for Dudley, North (Mr. Cranston), who said that if there were ever a case of people's planning for their futures being thrown up in the air by the Government, it was when the previous Government changed the MIRAS tax relief system to their financial detriment.
In conclusion, in the past eight and more years since TESSAs and PEPs were introduced, the schemes have significantly failed to find acceptance throughout society. The people who have benefited from them are those whom one would expect to benefit—people who have traditionally saved and planned pensions and who take advantage of whatever scheme is available. I do not believe that any hon. Member thinks that the schemes have succeeded in the original intention as stated in the extracts from Hansard that I quoted—the intention in those Budget statements that the benefits of tax-free savings would be extended down to the most disadvantaged in our community.
6.35 pm
Mr. Michael Fallon: All I can say about the speech of the hon. Member for Brent, North (Mr. Gardiner) is that the hon. Gentleman is clearly one of the few hon. Members who speak faster than they think. We now have a Paymaster General whose tax is sheltered and whose reply to the debate has had to be sheltered by the sort of filibuster that we just heard.
The Government's proposals are dishonest, ill thought out, technically defective and hypocritical. I shall begin with the dishonesty. This scheme is mis-selling in every sense. The individual savings account is designed not to encourage new saving, but to cut the cost to the Treasury of existing saving. Before the election, the Government
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claimed that they wanted to extend the scope of PEPs and TESSAs. Even the consultative document that they published concealed their true purpose. That was forced out first in the debate in another place two weeks ago, when the Government spokesman, Lord McIntosh, came clean about PEPs and TESSAs, saying:
"We must consider the ultimate effect to the revenue of a system which relies only on annual limits … I want to make clear that capping is an essential part of any tax-free savings package."—[Official Report, House of Lords, 11 February 1998; Vol. 585, c. 1220–21.]
That statement flatly contradicts the Prime Minister's assurance before the election and that given by the Chief Secretary after the election, that existing savers would not be affected. I hope that Ministers will now apologise for deliberately misleading the public. Of course, they will not do so—expecting contrition from this Government is like expecting openness from the Paymaster General.
The whole ISA scheme is ill thought out. As my right hon. Friend the Member for South Norfolk (Mr. MacGregor) and my hon. Friends the Members for Gosport (Mr. Viggers) and for Grantham and Stamford (Mr. Davies) said, there is nothing long term about encouraging instant access accounts at supermarket checkouts. There is nothing sound about offering a monthly flutter as a way of building lifetime savings. The Government now admit that the £50,000 limit would yield only £1,420 a year. That will not pay for long-term care or support PEP-based mortgages and it will certainly not help to provide the sort of pension that, as my hon. Friend the Member for Gosport so neatly illustrated and my right hon. Friend the Chief Secretary—[HON. MEMBERS: "Who?"] I mean the former Chief Secretary, who pointed out that the scheme is wholly inconsistent with the stakeholder pension that the Government are simultaneously proposing.
The scheme is flawed in conception and deeply flawed in detail. I cannot recall a Treasury proposal that has had such universally bad press—[Interruption.] Let me quote it. The Consumers Association has described the scheme as
"fundamentally flawed, and … a considerable risk to consumers."
The Association of Investment Trust Companies said that the ISA proposals
"will do very little to encourage those on modest incomes to save."
The Independent Financial Advisers Association said that the scheme was
"little more than a tax efficient Christmas club."
The Association of British Insurers believed that it was "potentially anti-competitive". It said:
"Complexity, and hence cost, is a major worry."
The National Association of Pension Funds said that the proposals were
"tackling the problem from the wrong end."
Even the Treasury's spokesman in the other place attacked the scheme. The hapless Lord McIntosh criticised the consultation paper for not proposing a proper regulatory framework. He said that such a framework
"receives almost no mention in the document … That is certainly a defect."—[Official Report, House of Lords, 11 February 1998; Vol. 585, c. 1223.]
All the practitioners regard ISAs as unworkable. As the Association of Private Client Investment Managers and Stockbrokers—led by the former Conservative Economic

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Secretary to the Treasury, whom the Chief Secretary prayed in aid—highlighted, the proposals will be an administrative nightmare. The association said:
"For the system to work, ISA providers will have to provide the following information at the end of each tax year during which they have provided an ISA:—
ISA assets transferred in or out.
ISAs which have been closed.
ISAs which have been made void.
Investor details.
Where an ISA has been transferred, the provider to whom it was transferred.
Where a transfer has been received, the provider to whom it was received.
Where an ISA has been closed, the date of closure.
Net investment made during the tax year … We cannot emphasise too strongly the difficulty and so the associated cost of administering"
this system. In case the Chief Secretary is still tempted to claim that Angela Knight is in favour of the scheme, I should point out that she proposes—her views are set out in black and white—that
"the tax regime for all the existing PEPs and TESSAs should be honoured".
ISAs are unfair, technically defective, administratively complex and will be very expensive for the providers to operate. We are entitled to ask, therefore, who dreamt up this scheme, which brings us to the architect of ISAs, the Paymaster—or taxmaster—General. He launched the scheme in his usual, careless, blustering style. In the foreword to the consultative document, he opined:
"Everyone should have the opportunity to save in a tax-favoured environment".
He wrote that in happier times, of course, before the storm broke over his head. Perhaps he wrote it in one of his two large country mansions—perhaps those words were inscribed in his Park lane penthouse, in his apartments in Cannes, or even in his unselfconsciously named "Villa Muchio". His words would show nerve enough, but he then had the gall to attack those who currently hold PEPs as
"well-off people who have done extremely well out of the accounts".
Not as extremely well as he has done with his £12 million offshore—all of it sheltered from tax.
The plan is this: those who have scrimped and saved their PEPs over 10 years will now be penalised. The tax man will rob them retrospectively of anything over £50,000. The Paymaster General, however, will still pay nothing on his £12 million—no income tax, no capital gains tax, no inheritance tax. That is true hypocrisy.
As we have learnt, when the hon. Gentleman is caught out, he blusters. One ISA conference was told that the £50,000 limit would stay, whereas the next was told that it could be changed. Finally, he blamed his officials. In meetings with representatives of the savings and investment industries, he revealed that
"he was not fully briefed on the widespread appeal of Peps among all taxpayers.
He allegedly said that he was given out-of-date information and was wrongly advised that Peps were still the domain of higher-rate taxpayers."
904
This is a true Labour saga: a broken promise that was dishonestly concealed; an ill-thought-out scheme that is technically defective; a measure ridiculed by the industry that is supposed to provide it. For the 3 million people who hold PEPs, for the 4.5 million people who hold TESSAs, this is a serious breach of faith that will undermine confidence in Government savings.
The Government have one way out, which is an unusual one for the Paymaster General—he can come clean. He can admit that he has bungled. He can admit that he tried to deceive existing savers. He can take away his ludicrous scheme and rethink it in the fortnight that remains before the Budget.
6.45 pm
The Paymaster General (Mr. Geoffrey Robinson): We welcome this opportunity to discuss the ISA proposals, which have been put out to consultation. Indeed, consultation ended on 31 January—clearly, the Opposition have only just caught up with that fact, but we welcome them none the less to the debate. We wish that they had had something more substantive to say, on which we could further consult, but the pettiness and irrelevance of what they said were no better exemplified than in the speech of the hon. Member for Sevenoaks (Mr. Fallon).
It is left to us to consider the representations that we have received—they have been many, varied and all of considerable interest, as we intended when we put out the scheme to consultation. The former Conservative Government refused to consult—they did not adhere to that process—which is why they got things very wrong.
No hon. Member can expect me or my right hon. Friend the Chief Secretary to the Treasury to pre-empt what the Chancellor will say in the Budget. I welcome the hon. Member for Sevenoaks to his position as shadow spokesman—I think that this is the first time that he has spoken from the Front Bench, at least since I have been in government—but I was surprised that he did not quote in full the words of Angela Knight, who is not unknown to Conservative Front Benchers. I should put the record straight, as he seems incapable of reading what she said. She stated:
"There is much that we welcome within the ISA and APCIMS"—
which, as the hon. Gentleman read out, stands for the Association of Private Client Investment Managers and Stockbrokers—
"endorse the policy of attracting more people to save. We also agree with features such as the flexibility, no minimum level of saving, reducing restrictions on the equity element and no lock-in'".
Those are precisely the points that the hon. Member for Sevenoaks and others, including the hon. Member for Grantham and Stamford (Mr. Davies), tried to refute. Angela Knight continued by saying that those aspects
"are all welcome and we consider that there has been much careful thought given to the design of the ISA."
She speaks with much experience and authority in these matters, to which she clearly gave much thought.
That does not mean that we shall not also listen carefully to other representations that we received, although those we heard today from the Opposition will not rank highly in our consideration. The Virgin organisation, for example—which has driven down costs on various sorts of savings and investments—said:

905
"Undoubtedly ISAs are good news. They will bring more savers into the market."
Fidelity, one of the biggest product providers in the financial services industry, said:
"We welcome the new scheme … this was the big breakthrough in investment."
The Halifax said:
"Halifax sees a bright future for the ISA."
The Prudential said:
"We welcome the Government's aim of promoting saving, in particular for people with modest incomes … we welcome making ISAs as accessible as possible."
Those quotations are worth reading because they show clearly that, while we were open to consultation, we thought carefully about the document that we issued as the basis for that consultation.
Mr. Fallon: Will the Paymaster General give way?
Mr. Robinson: I shall give way in a moment, although I did not interrupt the hon. Gentleman in his speech. In all that he said, he made no attempt to discuss any of the points raised in the debate. I do not say that he acted discourteously, as he had other, less relevant, things to say.
The shadow Chancellor told us that he, personally, by some Herculean endeavour, had rebuilt savings in the 1980s. What happened in the 1980s is a sorry story. When he was in the Treasury in various guises, from 1986 to 1990—a full five-year period—we had a negative savings ratio in the household sector. The figure was -0.3 per cent. in 1986; -1.9 per cent. in 1987; -2.8 per cent. in 1988; -2.7 per cent. in 1989; and -0.4 per cent. in 1990.
Mr. Fallon rose—
Mr. Andrew Tyrie rose—
Mr. Robinson: I shall give way, but not to the hon. Member for Chichester (Mr. Tyrie) who was not here during the debate. Johnnies-come-lately do not get in; he should know that by now.
Mr. Fallon: Of all the organisations that the Paymaster General cited as giving some support to the Government's proposal, can he name one that says that the £50,000 limit should stay?
Mr. Robinson: We have held consultations with all of them. I do not know why the hon. Gentleman is smirking, as if he had said something terribly clever. If the previous Government had gone out to consultation, as we have, they would not have got into the frightful muddle that I shall talk about in a moment when the right hon. Member for South Norfolk (Mr. MacGregor) first launched PEPs.
Mr. Loughton: Will the Paymaster General give way?
Mr. Robinson: I will, because I know that the hon. Gentleman was here throughout the debate and did not get the chance to make his own speech.
Mr. Loughton: I am very grateful to the Paymaster General, but when he is quoting from authorities in the City, he should give the whole quotation. Richard Branson, to give the whole sentence, said:
906
"The £50,000 limit also sends the wrong signal to potential savers—it says that rules can be changed retrospectively."
Fidelity said of the £5,000 annual limit that it
"represents a 53% reduction in the total tax-privileged investment … it removes an incentive for"—
Mr. Deputy Speaker (Mr. Michael Lord): Order. That is far too long for an intervention.
Mr. Robinson: I had hoped that the hon. Gentleman, who is not usually short of words, would have something to say for himself, rather than reading. It was clearly a waste of time for me to give way.
I was dealing with the shadow Chancellor, who was so proud of his record in the 1980s; in fact, it was a terrible record on savings, as he well knows. It is worth recalling that stability is the key to economic growth and to savings. When he was in the Treasury, interest rates were at 10 per cent. and inflation at 5 per cent. in 1988. Interest rates peaked at 15 per cent. and inflation at nearly 10 per cent. in 1990. That did not promote growth or stability or encourage savings. That is why we had negative savings rates in the last five years of the 1980s. That is not a record to be proud of.
The right hon. Member for South Norfolk, a former Chief Secretary, made a good contribution to the debate, but he did not tell us that the pension fund of which he is a director was fined £545,000 for mis-selling. He courteously informed me that he would have to leave before the end of the debate, but I wish that he was here to hear this, because he might have been able to tell us something about why, in that context, he recommended a light regulatory touch for the new system. We shall ensure that no such problems happen again, and we are consulting to that effect.
The right hon. Member for South Norfolk mentioned the problems that the Conservative Government had with the introduction of PEPs, and the number of goes that they needed to clear it up. They had a go when they introduced them in 1987; a go in 1988; and another go in 1989. They had to keep trying to simplify the rules and get rid of the anomalies, for the simple reason that they did not consult beforehand.
The right hon. Gentleman also mentioned kitemarking or benchmarking products, with a view to bringing down the costs of administration. That is a matter to which both Government and Opposition Members have alluded in a serious vein, and we are consulting on it. We are attracted by the concept, but we tend to favour benchmarking rather than kitemarking, as the latter might imply that the Government were totally committed to a given product. The hon. Member for Gosport (Mr. Viggers) spoke about that. It is a matter of interest, and my right hon. Friend the Chancellor will consider it in the Budget process.
My hon. Friend the Member for Hove (Mr. Caplin) spoke with the background of much personal and professional experience. He pointed out exactly what had gone wrong in the mis-selling of pensions, and he is keen that we should not follow in the misbegotten, badly thought out footsteps of our predecessors.
The hon. Member for Twickenham (Dr. Cable) made a serious contribution and we hope that, when my right hon. Friend the Chancellor has decided on his proposals, we shall be able to secure his support in the Lobby on the new savings proposals. He was especially concerned, as

907
were the hon. Member for Grantham and Stamford and some of my right hon. and hon. Friends, about the savings disregard and the problems of those on benefit.
The problems go much wider than that, and it is ironic in the extreme that they should be raised by Conservative Members, who have a record second to none in living memory on means-tested benefits that cut right against the principle of people being able to work and save; working and saving is clearly the logical order of events.
I agree with my hon. Friend the Member for Northampton, North (Ms Keeble) that there are considerable advantages in the idea of a one-stop account. I hope that those will be contained in the decisions that my right hon. Friend the Chancellor will make. Opposition Members attempted some ill-founded irony about how retailers could deal with those accounts, but the fact is that many retailers have already moved into financial products and are doing well and giving advice. The exact arrangements are a matter for them, but when companies such as Tesco, Safeway, Marks and Spencer and others—
Mr. Gerald Howarth: Will the Paymaster General give way?
Mr. Robinson: No. The hon. Gentleman was not here during the debate and I have no intention of giving way to him, as I have very little time left and I want to make some more points.
Mr. Howarth: On a point of order, Mr. Deputy Speaker. The Paymaster General said that I was not here during the debate. I was here for the opening speeches, after which I attended a Defence Export Services Organisation symposium with the Minister for Defence Procurement. I will not be told that I have not participated in this debate.
Mr. Deputy Speaker: Order. That is not a point of order for the Chair. It is for the Minister himself to decide whether to give way.
Mr. Robinson: I am sure that the hon. Gentleman was spending his time very well with my noble Friend, but he was not here, so it is better for me to reply to those who spoke in the debate and attended it throughout.
The hon. Member for Gosport made several points, as did my hon. Friend the Member for Dudley, North (Mr. Cranston), who speaks with great erudition on these matters. He is one of the biggest contributors to Committees on finance-related Bills. I hope that he will participate in more this year. His remark about Lord Lawson's purpose in introducing PEPs was one of the most perceptive of the debate. My hon. Friend is a keen observer of such matters and realises the motivation behind the introduction of PEPs. Lord Lawson introduced them not as an incentive to save or to increase aggregate savings, as has been claimed, but as a way to spread share ownership. That is a welcome objective, but it has nothing to do with savings.
The main issue is stability. We have acted on tax credits and on advance corporation tax. We have introduced a deficit reduction plan and a code of fiscal stability. We
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have reintroduced the golden rule. Which of those measures, if any, do the Opposition support, or would they repeal them? They should come clean. Would they repeal the provisions of the Bank of England Bill? Would they return to the imputation system of corporation tax? Would they reintroduce advance corporation tax or tax credits? All those measures are intended to have long-term effects, and they will generate savings.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 142, Noes 329.*
*[This Division was incorrectly recorded. See Col. 962]

Division No. 187]

[7 pm

AYES

Ainsworth, Peter (E Surrey)

Grieve, Dominic

Amess, David

Hague, Rt Hon William

Ancram, Rt Hon Michael

Hamilton, Rt Hon Sir Archie

Arbuthnot, James

Hammond, Philip

Atkinson, David (Bour'mth E)

Hawkins, Nick

Atkinson, Peter (Hexham)

Hayes, John

Baldry, Tony

Heald, Oliver

Bercow, John

Heathcoat—Amory, Rt Hon David

Beresford, Sir Paul

Horam, John

Blunt, Crispin

Howard, Rt Hon Michael

Boswell, Tim

Howarth, Gerald (Aldershot)

Bottomley, Peter (Worthing W)

Hunter, Andrew

Bottomley, Rt Hon Mrs Virginia

Jack, Rt Hon Michael

Brady, Graham

Jenkin, Bernard

Brazier, Julian

Johnson Smith, Rt Hon Sir Geoffrey

Browning, Mrs Angela

Bruce, Ian (S Dorset)

Jones, Ieuan Wyn (Ynys Môn)

Burns, Simon

Key, Robert

Cash, William

King, Rt Hon Tom (Bridgwater)

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

Clarke, Rt Hon Kenneth (Rushcliffe)

Letwin, Oliver

Lewis, Dr Julian (New Forest E)

Clifton—Brown, Geoffrey

Lidington, David

Collins, Tim

Lilley, Rt Hon Peter

Colvin, Michael

Lloyd, Rt Hon Sir Peter (Fareham)

Cormack, Sir Patrick

Llwyd, Elfyn

Cran, James

Loughton, Tim

Curry, Rt Hon David

Luff, Peter

Dafis, Cynog

Lyell, Rt Hon Sir Nicholas

Davies, Quentin (Grantham)

MacKay, Andrew

Davis, Rt Hon David (Haltemprice)

Maclean, Rt Hon David

Day, Stephen

McLoughlin, Patrick

Duncan, Alan

Madel, Sir David

Duncan Smith, Iain

Maginnis, Ken

Emery, Rt Hon Sir Peter

Major, Rt Hon John

Evans, Nigel

Malins, Humfrey

Faber, David

Maples, John

Fallon, Michael

Mates, Michael

Forsythe, Clifford

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

Norman, Archie

Gale, Roger

Ottaway, Richard

Garnier, Edward

Page, Richard

Gibb, Nick

Paice, James

Gill, Christopher

Paterson, Owen

Gillan, Mrs Cheryl

Pickles, Eric

Goodlad, Rt Hon Sir Alastair

Randall, John

Gorman, Mrs Teresa

Redwood, Rt Hon John

Gray, James

Robertson, Laurence (Tewk'b'ry)

Green, Damian

Ruffley, David

Greenway, John

St Aubyn, Nick

909

Sayeed, Jonathan

Trend, Michael

Shephard, Rt Hon Mrs Gillian

Tyrie, Andrew

Shepherd, Richard

Viggers, Peter

Simpson, Keith (Mid—Norfolk)

Walker, Cecil

Smyth, Rev Martin (Belfast S)

Wardle, Charles

Soames, Nicholas

Waterson, Nigel

Spelman, Mrs Caroline

Whitney, Sir Raymond

Spicer, Sir Michael

Wigley, Rt Hon Dafydd

Spring, Richard

Wilkinson, John

Stanley, Rt Hon Sir John

Wilshire, David

Steen, Anthony

Winterton, Mrs Ann (Congleton)

Swayne, Desmond

Winterton, Nicholas (Macclesfield)

Syms, Robert

Yeo, Tim

Tapsell, Sir Peter

Young, Rt Hon Sir George

Taylor, Ian (Esher & Walton)

Tellers for the Ayes:

Townend, John

Mr. John Whittingdale and

Tredinnick, David

Mr. John M. Taylor.

NOES

Abbott, Ms Diane

Clelland, David

Ainger, Nick

Coaker, Vernon

Ainsworth, Robert (Cov'try NE)

Coffey, Ms Ann

Allan, Richard

Cohen, Harry

Anderson, Donald (Swansea E)

Colman, Tony

Anderson, Janet (Rossendale)

Connarty, Michael

Ashton, Joe

Cook, Frank (Stockton N)

Atkins, Charlotte

Cooper, Yvette

Austin, John

Corbett, Robin

Baker, Norman

Cotter, Brian

Ballard, Mrs Jackie

Cousins, Jim

Banks, Tony

Cranston, Ross

Barron, Kevin

Crausby, David

Battle, John

Cryer, Mrs Ann (Keighley)

Bayley, Hugh

Cryer, John (Hornchurch)

Beard, Nigel

Cunliffe, Lawrence

Beckett, Rt Hon Mrs Margaret

Cunningham, Rt Hon Dr John (Copeland)

Begg, Miss Anne

Bennett, Andrew F

Cunningham, Jim (Cov'try S)

Benton, Joe

Dalyell, Tarn

Bermingham, Gerald

Darling, Rt Hon Alistair

Betts, Clive

Darvill, Keith

Blackman, Liz

Davey, Valerie (Bristol W)

Blears, Ms Hazel

Davidson, Ian

Blizzard, Bob

Davies, Rt Hon Denzil (Llanelli)

Boateng, Paul

Davies, Geraint (Croydon C)

Bradley, Keith (Withington)

Davies, Rt Hon Ron (Caerphilly)

Bradley, Peter (The Wrekin)

Davis, Terry (B'ham Hodge H)

Brake, Tom

Dawson, Hilton

Brand, Dr Peter

Dean, Mrs Janet

Breed, Colin

Denham, John

Buck, Ms Karen

Dismore, Andrew

Burden, Richard

Dobbin, Jim

Burgon, Colin

Donohoe, Brian H

Burnett, John

Doran, Frank

Burstow, Paul

Dowd, Jim

Byers, Stephen

Drew, David

Cable, Dr Vincent

Drown, Ms Julia

Caborn, Richard

Dunwoody, Mrs Gwyneth

Campbell, Alan (Tynemouth)

Edwards, Huw

Campbell, Mrs Anne (C'bridge)

Ellman, Mrs Louise

Campbell, Menzies (NE Fife)

Ennis, Jeff

Campbell, Ronnie (Blyth V)

Etherington, Bill

Campbell-Savours, Dale

Fearn, Ronnie

Cann, Jamie

Field, Rt Hon Frank

Caplin, Ivor

Fisher, Mark

Chapman, Ben (Wirral S)

Fitzpatrick, Jim

Chidgey, David

Fitzsimons, Lorna

Chisholm, Malcolm

Flint, Caroline

Clapham, Michael

Follett, Barbara

Clark, Rt Hon Dr David (S Shields)

Foster, Rt Hon Derek

Clark, Dr Lynda (Edinburgh Pentlands)

Foster, Don (Bath)

Foster, Michael Jabez (Hastings)

Clark, Paul (Gillingham)

Foster, Michael J (Worcester)

Clarke, Eric (Midlothian)

Fyfe, Maria

Clarke, Tony (Northampton S)

Galloway, George

910

Gapes, Mike

McAvoy, Thomas

Gardiner, Barry

McCabe, Steve

George, Andrew (St Ives)

McCartney, Ian (Makerfield)

George, Bruce (Walsall S)

McDonagh, Siobhain

Gerrard, Neil

McDonnell, John

Gibson, Dr Ian

McGuire, Mrs Anne

Gilroy, Mrs Linda

McIsaac, Shona

Godman, Norman A

McKenna, Mrs Rosemary

Golding, Mrs Llin

Mackinlay, Andrew

Gordon, Mrs Eileen

McLeish, Henry

Gorrie, Donald

McNamara, Kevin

Griffiths, Jane (Reading E)

McNulty, Tony

Griffiths, Nigel (Edinburgh S)

Mactaggart, Fiona

Griffiths, Win (Bridgend)

McWilliam, John

Grocott, Bruce

Mahon, Mrs Alice

Grogan, John

Marek, Dr John

Gunnell, John

Marsden, Gordon (Blackpool S)

Hain, Peter

Marshall, David (Shettleston)

Hall, Mike (Weaver Vale)

Marshall, Jim (Leicester S)

Hall, Patrick (Bedford)

Martlew, Eric

Hamilton, Fabian (Leeds NE)

Maxton, John

Hanson, David

Meale, Alan

Harris, Dr Evan

Michael, Alun

Heal, Mrs Sylvia

Michie, Bill (Shefld Heeley)

Healey, John

Michie, Mrs Ray (Argyll & Bute)

Heath, David (Somerton & Frome)

Milburn, Alan

Henderson, Ivan (Harwich)

Miller, Andrew

Heppell, John

Mitchell, Austin

Hesford, Stephen

Moffatt, Laura

Hinchliffe, David

Moore, Michael

Hodge, Ms Margaret

Moran, Ms Margaret

Hoey, Kate

Morgan, Ms Julie (Cardiff N)

Home Robertson, John

Morley, Elliot

Hoon, Geoffrey

Morris, Ms Estelle (B'ham Yardley)

Hope, Phil

Mudie, George

Hopkins, Kelvin

Mullin, Chris

Howarth, George (Knowsley N)

Murphy, Denis (Wansbeck)

Hughes, Ms Beverley (Stretford)

Murphy, Jim (Eastwood)

Hughes, Kevin (Doncaster N)

Oaten, Mark

Hurst, Alan

O'Brien, Bill (Normanton)

Hutton, John

O'Hara, Eddie

Iddon, Dr Brian

Olner, Bill

Illsley, Eric

Öpik, Lembit

Ingram, Adam

Organ, Mrs Diana

Jackson, Ms Glenda (Hampstead)

Palmer, Dr Nick

Jackson, Helen (Hillsborough)

Pearson, Ian

Jamieson, David

Pendry, Tom

Jenkins, Brian

Perham, Ms Linda

Johnson, Alan (Hull W & Hessle)

Pickthall, Colin

Johnson, Miss Melanie (Welwyn Hatfield)

Pike, Peter L

Plaskitt, James

Jones, Helen (Warrington N)

Pope, Greg

Jones, Ms Jenny (Wolverh'ton SW)

Powell, Sir Raymond

Prentice, Ms Bridget (Lewisham E)

Jones, Jon Owen (Cardiff C)

Prentice, Gordon (Pendle)

Jones, Dr Lynne (Selly Oak)

Primarolo, Dawn

Jones, Nigel (Cheltenham)

Prosser, Gwyn

Jowell, Ms Tessa

Purchase, Ken

Keeble, Ms Sally

Quinn, Lawrie

Keen, Alan (Feltham & Heston)

Rammell, Bill

Keen, Ann (Brentford & Isleworth)

Raynsford, Nick

Keetch, Paul

Reid, Dr John (Hamilton N)

Kelly, Ms Ruth

Rendel, David

Kemp, Fraser

Robertson, Rt Hon George (Hamilton S)

Kennedy, Charles (Ross Skye)

Kidney, David

Robinson, Geoffrey (Cov'try NW)

Lawrence, Ms Jackie

Roche, Mrs Barbara

Lepper, David

Rogers, Allan

Levitt, Tom

Rooker, Jeff

Lewis, Ivan (Bury S)

Rooney, Terry

Liddell, Mrs Helen

Ross, Ernie (Dundee W)

Linton, Martin

Roy, Frank

Livingstone, Ken

Ruane, Chris

Lock, David

Russell, Bob (Colchester)

Love, Andrew

Ryan, Ms Joan

McAllion, John

Salter, Martin

911

Sanders, Adrian

Trickett, Jon

Sarwar, Mohammad

Truswell, Paul

Sawford, Phil

Turner, Dennis (Wolverh'ton SE)

Sedgemore, Brian

Turner, Dr Desmond (Kemptown)

Sheerman, Barry

Turner, Dr George (NW Norfolk)

Sheldon, Rt Hon Robert

Twigg, Derek (Halton)

Shipley, Ms Debra

Tyler, Paul

Simpson, Alan (Nottingham S)

Vis, Dr Rudi

Singh, Marsha

Wallace, James

Skinner, Dennis

Walley, Ms Joan

Smith, Angela (Basildon)

Ward, Ms Claire

Smith, John (Glamorgan)

Wareing, Robert N

Smith, Llew (Blaenau Gwent)

Watts, David

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

Webb, Steve

Snape, Peter

Whitehead, Dr Alan

Soley, Clive

Wicks, Malcolm

Spellar, John

Williams, Rt Hon Alan (Swansea W)

Squire, Ms Rachel

Stevenson, George

Williams, Alan W (E Carmarthen)

Stewart, Ian (Eccles)

Williams, Mrs Betty (Conwy)

Stinchcombe, Paul

Willis, Phil

Stott, Roger

Winnick, David

Strang, Rt Hon Dr Gavin

Winterton, Ms Rosie (Doncaster C)

Straw, Rt Hon Jack

Wise, Audrey

Stringer, Graham

Wood, Mike

Sutcliffe, Gerry

Worthington, Tony

Taylor, Rt Hon Mrs Ann (Dewsbury)

Wray, James

Wright, Anthony D (Gt Yarmouth)

Taylor, David (NW Leics)

Wright, Dr Tony (Cannock)

Thomas, Gareth (Clwyd W)

Wyatt, Derek

Thomas, Gareth R (Harrow W)

Tellers for the Noes:

Tipping, Paddy

Mr. Graham Allen and

Touhig, Don

Mr. John McFall.

Question, accordingly negatived
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes the Government's commitment, set out in the pre-Budget report, to consult on tax proposals, including the proposed ISA; believes that the ISA will extend the opportunity to save and invest and that the Government's proposals will ensure a stable and fair savings environment; commends the Government for its commitment to long-term economic stability and low inflation which is good for savers; and rejects any return to the boom and bust policies of the past which were so damaging to those on low incomes, savers and investors.

Listening to the Countryside
Mr. Deputy Speaker (Mr. Michael Lord): We now come to the debate on listening to the countryside. I have to inform the House that Madam Speaker has selected the amendment in the name of the Prime Minister.
7.14 pm
Mr. Michael Jack: I beg to move,
That this House recognises the concern of those marching in London on 1st March that the voice of the countryside should be listened to by all politicians but regrets the attempts by non-attending Agriculture Ministers to undermine the credentials of the march with claims of it being hijacked by political and overseas interests; calls upon Her Majesty's Government, in acknowledging that a viable agricultural industry lies at the heart of a successful rural economy, to recognise properly the fears and concerns of farmers over dramatically falling farm incomes, rising levels of food imports, the continued imposition of the beef ban, the introduction of the Minimum Wage, the Working Time Directive and Agenda 2000, by now making a clear statement of how it proposes to address these concerns; deplores the threat to life in rural Britain resulting from a revenue support grant settlement which has removed resources from rural local authorities; and calls upon the Government not only to strengthen the protection for the countryside while encouraging the renewal of towns and cities, but also to respect the patterns and fabric of rural life by removing the threat to land owners of a statutory right of access.
I move this motion as the spokesman of the true party of the countryside in the House. [Interruption.] The guffaws of Labour Members are typical of people who have not done their homework.
Mr. Hilton Dawson: Can the right hon. Gentleman, my parliamentary neighbour, explain why his party is regarded as the true party of the countryside when, in all their 18 years in government, they did nothing to resolve the problem of the moss roads, which so afflict both my rural constituents and his?
Mr. Jack: When the hon. Gentleman and I join forces perhaps something will be done on that. I am grateful to him because he usually leads with his chin. I will take advantage of that by noting that Professor John Curtice of Strathclyde university, using data from the 1991 census to classify seats as rural on the basis of the number of people directly involved with agricultural production, classifies 54 of the 100 most rural seats as Conservative and 21 as Liberal; in third place comes the Labour party with 15, there are nine for the nationalists and one other. That conclusively shows that when it comes to the real rural voice of the United Kingdom, it is the Conservatives who speak for rural Britain.
The first thing that our motion does is to recognise the significance of Sunday's march. The first thing that the Government's amendment does is to ignore the march and its clear message. Its message was that every hon. Member should listen to the voice of the countryside. Our motion recognises the importance of that listening exercise; the Government's amendment does not.
Let us spend a moment considering the amendment. It is a slap in the face for the voice of the countryside, which was heard in London. More than 280,000 people came to a dignified, positive demonstration to speak on behalf of the countryside. I and many of my right hon. and hon. Friends were proud to walk with our constituents and help their voice to be heard. There is nothing about

913
listening in the Government amendment. Most of it condemns the previous Administration. Has it not dawned on Labour Members that, in 18 years, in spite of some things that we may have done that upset some people some of the time, we never provoked a reaction that filled London's streets like the country people did on Sunday? Let that be a lesson to the Labour party.
We recognised the need to do more for the people of the countryside. That is why, in 1995, we published a countryside White Paper, the first such document since 1945. We published a follow-up in 1996 to say what we had done. It included initiatives on matters such as rural transport and housing. The Government amendment says that they have policies for the reform of the common agricultural policy. I did not know that the Government were the Commission in disguise; perhaps we have discovered something new. The Community is responsible for that policy.
If the Government have ideas for successful sustainable agriculture, why did the Select Committee on Agriculture, which consists of seven Labour Members, three Conservatives and one Liberal, say in its recent report on Agenda 2000 that the Government should produce
"a comprehensive and clear vision of the future for UK agriculture"?
Only today, the same Select Committee, dominated by Labour Members, pointed out that it was the same lack of strategy and forward planning which had contributed to the problems of the beef industry. It states:
"We concede that valuable time and money that could have been spent on restructuring the industry has been wasted for lack of a clear Government long-term strategy which would have assisted farmers to recognise the need for change."
On two counts, the Select Committee condemns the Government's approach to the future of agriculture.
Several hon. Members rose—
Mr. Jack: It is hardly surprising to discover the Government's priorities. The Prime Minister dropped agriculture as a priority for one of the presidency priorities, about which he boasted so much.
Mr. Paddy Tipping: The right hon. Gentleman spoke about the BSE crisis. Will he acknowledge that this Government are to spend £70 million on introducing a cattle traceability scheme? What did his Government do? Nothing.
Mr. Jack: With respect to the hon. Member for Sherwood (Mr. Tipping), when we were in government we promised that, on its introduction, such a scheme would be free to farmers in terms of its establishment costs. His right hon. Friend decided only later to join that party.
The motion refers to the minimum wage. I shall return to that, as it poses a serious threat to agricultural employment for temporary and casual people.
Mr. Gordon Prentice: Is it not the case that the Agricultural Wages Board, which survived despite the attempted abolition in 1994, gives a minimum wage of £4.12 and an average—
Mr. Ian Bruce: No, it does not.
Mr. Prentice: The hon. Gentleman contradicts me from a sedentary position. I have the figures. The minimum rate
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is £4.12, and the actual rate is £4.69 per hour. How can the right hon. Gentleman speak of minimum wages devastating the agricultural industry, when the wages board is protecting minimum wages in that industry?
Mr. Jack: I shall deal with that when I come to the fruit industry later in my speech.
It would be interesting to hear from the Minister of Agriculture, Fisheries and Food whether he can give the House an assurance, when he talks about rural prosperity, that he has made a Budget submission to the Chancellor, asking him to ensure that no one in the countryside will be worse off as a result of the up-coming Budget. I expect that he will be unable to do that.
The march on Sunday was described in a recent magazine article in these words:
"But the march is also about ordinary people coming from communities across Britain coming together to show their concern about the future and help to raise awareness throughout the country of the vital role that farming and the wider rural community plays."
It is a great pity that the right hon. Member for Copeland (Dr. Cunningham), his Minister of State, the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and others on the Front Bench spent so much time rubbishing the march as having been hijacked by politicos and the American gun lobby—points that the organisers of the march forcefully rebutted. The right hon. Gentleman may not have realised that the words that I quoted, which welcomed the march, were those of the Prime Minister. It will not have done the right hon. Gentleman's career any good to have departed from the Prime Minister's line on the march.
The only Minister who seemed to get it right was the Minister for the Environment, who was brave enough to turn up and be counted. We can draw our own conclusions. We see a Government divided on the question of the countryside, as witnessed by their attitude to the march.
The march illustrated how out of touch with the countryside the Government have become in nine short months. In a panic response to the force of argument deployed by Conservative Members and others speaking for the countryside, the Deputy Prime Minister tried to convince us that, all of a sudden, his free-for-all on the green belt had come to and end. My hon. Friend the Member for South Suffolk (Mr. Yeo) soon rumbled that, by pointing out that in that announcement there was no evidence that any of the controversial housing developments in the green belt had been stopped.
Mr. Ronnie Campbell: I thank the right hon. Gentleman for giving way. I cast my mind back to the hundreds of thousands of miners and their families who came down in the Tory Government years when we fought for our communities and to save our pits. The Tory Government did not take a blind bit of notice, and the former President of the Board of Trade, who led the great march on Sunday, put one finger up to us. Where was the Tories' support when we were trying to save our communities in those days?
Mr. Jack: I am flattered that the hon. Gentleman still calls me the Minister.
Mr. Campbell: Shadow Minister.
Mr. Jack: I remind the hon. Gentleman that the Government are in charge and will be replying to the debate tonight.

915
A farming concession followed on the Deputy Prime Minister's announcement.
Mr. Campbell: On a point of order, Mr. Deputy Speaker. I asked the right hon. Gentleman a question and I have not got the answer yet. I and the mining communities are entitled to an answer. When they came down—
Mr. Deputy Speaker: Order. [Interruption.] Order. The House must calm down a little. It is for hon. Members on the Front Bench to answer questions as they see fit.
Mr. Jack: If this was a debate about mining, perhaps we could debate the hon. Gentleman's point, but it is a debate about the countryside. [Interruption.] It is typical of Labour Members, who want to raise everything other than the countryside. They are deeply embarrassed about their miserable record, as I am teasing out in front of the House.
Mr. Campbell: Hypocrite!
Mr. Deputy Speaker: Order. The hon. Gentleman should not use words like that, and I must ask him to withdraw that word. [Interruption.] The hon. Gentleman is an experienced—
Mr. Campbell: I will not withdraw the word hypocrites, Mr. Deputy Speaker, because that is what the Tories are.
Hon. Members: Withdraw.
Mr. Deputy Speaker: I remind the hon. Gentleman, as an experienced Member of the House, that the debate is about the countryside. I understand his feelings, but he must withdraw the word hypocrite. I ask him to do that.
Mr. Campbell: I am sorry, Mr. Deputy Speaker, I will not withdraw it. They are nothing but hypocrites. I remember the miners fighting for their communities in the countryside, and they got nothing.
Mr. Deputy Speaker: I have given the hon. Gentleman every chance to withdraw the word hypocrite.
Mr. Campbell: I will not withdraw.
Mr. Deputy Speaker: In that case, I must ask the hon. Gentleman to leave the House for the remainder of the sitting.
Mr. Jack: Before that interruption, I was pointing out to the Minister of Agriculture that he was second in line with a concession to the voice of the countryside. It is remarkable that the right hon. Gentleman has told us on umpteen occasions in the past few months that there was no new money for agriculture. He said that the cupboards were bare. We pointed out that money was there. Suddenly, in the week running up to the march, we find new money coming out to deal with the higher charges for the Meat Hygiene Service and the cattle passport
916
scheme. Is it not remarkable how, under a whiff of grapeshot coming in the direction of MAFF, the Minister panics and finds £70 million?
The Minister tried to put about the myth that the Government were giving money to farmers. They were not. All that he had decided to do was not to charge them for those schemes. It is about time that he acknowledged that fact, which we have pointed out.
Not to be outdone in the rush to concessions, the Minister for the Environment produced his much-delayed consultation document on the so-called right to roam. The document is a mailed fist in a velvet glove. Paragraph 5 of the introduction tells us:
"If we could be certain of achieving our objectives entirely by voluntary means, there would be no need to legislate at all".
So much for the spin that it would be voluntary—there is an implicit threat of legislation. Who is the judge and jury? None other than the Minister.
Mr. Barry Sheerman rose—
Mr. Jack: I think that we have had enough interruptions from Labour Members for the time being. The House wants to hear our message on behalf of the countryside, because last Sunday Labour Members were too frightened to turn up and march with country people and, more important, to listen to what they had to say.
The Government have pledged to protect village schools. However, when we examine the fine print, we find that the closure decisions will be called in for further consideration. There is no guarantee whatsoever that no rural schools will close in future. The question regarding the Department for Education and Employment's proposal to stop parish councils nominating governors of rural schools remains unanswered. I must conclude that this rag, tag and bobtail collection of piecemeal policy concessions does not add up to a comprehensive policy for the countryside. People were crying out on Sunday to hear that policy from the Government, but they were met with silence.
I suppose that is not surprising when we consider the true priorities of the Minister of Agriculture. Rather than concentrating on the countryside, the wallpaper fetish from which this Government are suffering has really taken hold in the Ministry of Agriculture. The Guardian revealed this week that the Minister has spent £2.3 million on his office move. Did that move have anything to do with the priorities and problems of farming? No, it took place because the Minister needed new accommodation to
"send a strong signal that the department should have a new aim, focus and objectives."
What are the Government's new aims, focus and objectives? If their main aim is not looking after farmers in their present plight, I do not know what their priority is. We also discover that the Minister spent £10,409 on an antique reproduction desk—he cannot recognise the real thing when he sees it, so he must buy a reproduction. I suppose that that is typically new Labour.
The Minister of Agriculture, Fisheries and Food (Dr. John Cunningham): Before the right hon. Gentleman digs himself into a bigger hole of myth and inaccuracy, I shall tell him one or two truths. The Guardian revealed nothing: all that information was published in the MAFF bulletin in January this year. That is my first point.

917
Secondly, the accurate figures for the cost of transferring the headquarters of MAFF, not just my office, to Nobel house—and I remind the House that the previous Government took the lease on that property; it was already a MAFF building—were provided in answer to a parliamentary question from the hon. Member for Totnes (Mr. Steen) last month. Incidentally, that information was also given to the Agriculture Select Committee. If the right hon. Gentleman checked the facts in Hansard, rather than the inaccuracies in The Guardian, he might be worth listening to.
Mr. Jack: That reveals that nobody reads the MAFF bulletin. I would be wary if I were in the Minister's boots. My hon. Friend the Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Agriculture Select Committee, told The Guardian:
"We were told £930,000, you have got figures saying £2.3 million. We are very concerned and we will be investigating."
My hon. Friend would not have said that if he was not sure of his facts.
Mr. Peter Luff: This is a matter of considerable importance to the House. The Guardian obtained those figures under the access to information code. MAFF did not deny those figures until the Minister came to the Dispatch Box tonight. My right hon. Friend may wish to know that the Select Committee is writing to MAFF seeking clarification of how the discrepancy between the figures is accounted for.
Mr. Jack: That answer will be very interesting. I had thought that the Minister had installed a naff kitchen, but it turns out to be a Neff kitchen.
That is typical of what has been happening in MAFF. Irrespective of the Minister's denials, the authoritative article in The Guardian shows where the Ministry's priorities lie—and they are not with farming issues and the countryside. The Select Committee summed up the situation currently facing farming in its report on Agenda 2000, which states:
"UK farmers are experiencing a uniquely difficult time, with structural problems compounded by the strength of sterling. It is unusual for all sectors of fanning to be confronting sharply reduced incomes simultaneously. So it is understandable if many farmers are concerned about radical change."
It is sad that the Minister has not responded humanely to what the farmers have said. Those who attended the annual general meeting of the National Farmers Union heard one of the most chilling addresses ever made to a farming audience. The Minister talked about partnership at the start of his speech and then lectured farmers saying, "You will do this and that". In no sense did he appear to share the current burden in agriculture.
Two columns of figures published by MAFF highlight the seriousness of the income situation facing farming. It has been said that times improved for agriculture in 1992–93. Compared with an average net farm income at 100 per farm between 1989–90 and 1991–92, the index shows that net farm income for the dairy sector stood at 116 in 1992–93. However, the provisional figure in that sector for 1997–98 is 60—which is a 50 per cent. fall. Net farm income for cattle and sheep in less favoured areas was 129, but it is projected to be 80—a fall of 38 per cent. There will be a fall of 75 per cent. in projected net income for cattle and sheep in the lowlands. There is a
918
level picture for cereals. General cropping will be down 12 per cent., pigs and poultry will be down 40 per cent., and mixed farming will be down 48 per cent.
Those chilling statistics reveal that if farm incomes had accumulated over a series of good years—as was said in a recent Adjournment debate—any accumulated surpluses will be used up by the end of this year.
Mr. Mike Hall: Will the right hon. Gentleman give way?
Mr. Jack: Agriculture will truly face a frightening financial crisis to which the Minister has provided no solutions so far.
Mr. Hall: Will the right hon. Gentleman give way?
Mr. Jack: I pointed out to the Minister some time ago that there were opportunities for the Government.
Mr. Hall rose—
Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The right hon. Gentleman is not giving way.
Mr. Jack: I pointed out some time ago that there were things that the Government could do. The Opposition highlighted the fact that hill farmers needed help. The Minister provided a sort of increase in funds, but he botched that as well. As a result of his announcement in December, hill farmers will receive not £65 million but £57 million. The sum total of the Minister's assistance for agriculture to date is plus £21 million.
The Minister has often challenged us to say where the money would come from to deal with the question of agrimonetary compensation, for example. I remind the Minister that the Treasury has confirmed that there was a surplus in the European Agricultural Guidance and Guarantee Fund in 1996. That resulted in Britain's achieving a higher Fontainebleau rebate which assisted the Government in terms of the Chancellor's Budget statement. I hope that the Minister will confirm that that same fund is under-spent for the calendar year 1997. In which case, will he be prepared to go to the Chancellor, in light of the figures that I have put before the House, and ask for at least some compensation for our farmers? That could be done within the bounds of public expenditure. After all, we did not ask the Government to adopt our plans, but they have adopted them. I have pointed out from where money could come to assist our hard-pressed farmers.
Dr. John Cunningham: How much?
Mr. Jack: The Minister is aware of the figures. If he has done his homework, he will be able to put before the House the detail that it requires and, once and for all, answer the questions that I have asked. Underspends on United Kingdom Community-funded agricultural schemes could enable him to recycle to the areas that are hardest pressed.
Dr. Cunningham: How much?
Mr. Jack: The Minister asks me questions. He is supposed to give answers. I have done my homework. I know that the EAGGF fund is underspent.
Dr. Cunningham: Since, as always, the right hon. Gentleman never fails to demand more public

919
expenditure, more taxpayers' money, let me remind him and the House that £86 of every £100 of agrimonetary compensation comes from Her Majesty's Treasury. How much more public expenditure is he demanding?
Mr. Jack: If that is an example of the Minister's preparation, he has not listened to what I have said. I said that I wanted him to use the underspend, which would enhance our rebate, to give money back to farmers, within public expenditure guidelines. That is not more public expenditure. The guideline for agriculture is 41.8 becu. The spend is 40.374 becu. He should have known those facts. If I can get them, why could not he?
On a serious point—[Laughter.] The guffaws of laughter to questions that affect the very fabric of rural life in this country clearly show that the Minister's priorities really are his wallpaper and his plants, and not the needs of the countryside in the United Kingdom.
I should like the Minister, if he will be kind enough, to tell the House what will happen at the end of this year when the freeze on the livestock and arable area payments ends. Those payments are worth some £400 million to United Kingdom agriculture and farming. Farmers would like to know what the situation is.
The Minister has shown scant regard for the effect of his policies on rural communities. I quote from a survey undertaken in west Wales by the NFU, as reported in the Farmers Guardian of 20 February. The area is represented by Labour Members of Parliament, who claim to speak for the countryside. The report says:
"Trade down 50 per cent, staff being laid off, debts still unsettled 12 months on, veterinary practitioners surviving largely on cat and dog treatments and even a vicar praying hard that the depression within the farming industry would not turn into a wave of suicides."
Those are the real issues that face farming and countryside communities. The Minister must address those fears and concerns when he replies.
Mr. Lembit Öpik: I thank the right hon. Gentleman for giving way at last.
Is the right hon. Gentleman saying in all honesty that his former Administration take absolutely no responsibility for the crisis in the countryside in mid-Wales?
Mr. Jack: I said earlier that we take some responsibility for the need to improve. That is why we produced two White Papers on the countryside.
I have put before the House the Labour Government's record of neglect on the countryside. I gave information on incomes in farming, and its knock-on effects on the rural community. When one considers all the other things that are going on as far as the countryside is concerned, it is hardly surprising that the countryside feels under siege: no early lifting of the beef ban in sight; the ending of the Rural Development Commission; the beef on the bone ban; the efforts to ban green-top milk; an assault on country sports; the reference to the Monopolies and Mergers Commission of the milk industry; the Krebes report, leaving large parts of the countryside vulnerable to tuberculosis from badgers; and a raft of Labour private Members' Bills on pigs and poultry, which would leave our industry seriously disadvantaged compared with our European competitors.
920
It is no wonder that country people cry out to be listened to, but not, it seems, by the Government. The listening will be done by Opposition Members. I beg to support our motion.
7.44 pm
The Minister of Agriculture, Fisheries and Food (Dr. John Cunningham): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"condemns the previous administration for its persistent neglect of the countryside over the past eighteen years which resulted in rural unemployment and deprivation and the collapse of the rural transport system; and congratulates the Government on its emphatic commitment to comprehensive countryside policies, to reform of the Common Agricultural Policy, to successful, sustainable United Kingdom agriculture, and on its vision for a countryside that is strong, fair and modern, with a programme for social justice, inclusiveness, welfare reform, improving services, the national minimum wage, education and skills which will ensure prosperity for all in rural areas as well as in the towns.".
It is an easy task to deal with the rag bag of a motion that stands in the name of the Leader of the Opposition, particularly since it is as incoherent as it is inaccurate. After the long, boring and convoluted speech of the right hon. Member for Fylde (Mr. Jack), the task should not take too long. The Opposition motion refers to the need to recognise concerns over farm incomes, yet it opposes the minimum wage. In fact, farm incomes fell consistently throughout the period in which the Conservative Government were in office. The Opposition motion refers to concerns about the Agenda 2000 proposals, which the National Farmers Union, the Country Landowners Association and the Government support. The motion talks of rising levels of food imports. It is pretty easy to dismiss that, too, because they were lower in 1997 than in 1996. It talks of the need to strengthen protection for the countryside and the fabric of rural life, which Tory policies disastrously undermined over 18 years and left in tatters.
On access to the countryside, the Government have listened and responded to the dialogue and a request for a voluntary approach. The Opposition motion contains no new proposals for a better future for agriculture or for rural communities. It is devoid of coherence and content. As The Scotsman asked on 7 April last year, speaking of the Tories,
"Do their plans for the future of farming really matter when we know perfectly well what they have done in the past 18 years or even the past year?"
That simple quote says it all about the failure of the Tories' stewardship of the countryside.
Mr. Geoffrey Clifton-Brown: The motion asks the Government to consider properly the fears and concerns of farmers over falling incomes. If the Minister doubts those fears and concerns, he has only to look at the tragic case, detailed on "Panorama" last night, of a farmer who committed suicide. Will the Minister now tell the House that there will be a proper green pound compensation scheme for our farmers, which every other Government in Europe have given to theirs? Our farmers have to compete with those farmers in the same marketplace.
Dr. Cunningham: The latter part of the hon. Gentleman's statement is not only inaccurate but untrue.

921
In case he has not noticed or does not understand, virtually all the agrimonetary compensation available to beef and livestock farmers has already been given to them.
The Opposition's motion represents another attempt by the Conservatives to deny their past: their record of taking rural communities for granted for almost two decades; their disastrous record of betrayal of millions of people in the countryside, which culminated in swings to new Labour in rural areas every bit as powerful as they were in the urban areas. That is why Labour has so many Members of Parliament representing rural communities, and they are doing it well.
The right hon. Member for Fylde struggled to find a Scottish academic who had produced a paper saying that the Tories represent rural areas. They do not represent a single seat in Scotland, so that is stretching credibility just a little bit. Nor do they represent any constituency, urban or rural, in Wales.
Since last May, the Labour party has had more Members in rural constituencies than the Tories and the Liberal party put together.
Mr. Paul Tyler: May I draw to the Minister's attention the fact that, like Scotland and Wales, Cornwall is now a Tory-free zone?
Mr. Charles Kennedy: And the list goes on.
Mr. Tyler: We shall do the infilling later.
I invite the Minister to ignore Conservative Members' absurd amnesia and deal with the concerns of those who really represent rural areas—the farming unions and all those concerned with the future of the countryside. The Agriculture Committee's report, which was published today and which Labour Members support, makes it clear that long-term problems face the farming community. Will the Minister ignore the ridiculous speech that we have just heard?
Dr. Cunningham: I shall do my best to satisfy the hon. Gentleman, although I am sure that I shall not succeed totally. I warmly welcome the Agriculture Committee's report, which is an important and constructive contribution to the debate about the problems in the beef industry. I congratulate the hon. Member for Mid-Worcestershire (Mr. Luff) and his colleagues on the Committee—of all parties—on their serious piece of work.
As I was saying, last May people in rural areas put their trust in Labour—for the first time, in many cases. They did so because they felt betrayed by successive Tory Governments, and we all know why: bus deregulation has meant no public transport for many communities. The closure of rural schools—450 closed in just over a decade—has torn the heart out of rural communities. Health care is inadequate and inaccessible: many of my constituents in rural west Cumbria cannot gain access to a national health service dentist as a result of Conservative policies. Low pay is a chronic problem in rural communities. Even recognising that, the Conservatives tried to abolish the agricultural wages board—in the teeth of the opposition of farmers, incidentally. They left us and the farmers with the tragic consequences of BSE and the beef crisis.
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The list of Tory failures is almost endless. Rural parishes were destroyed: 75 per cent. were left with no daily bus service; 82 per cent. were left with no food-only shop; 70 per cent. were left with no general store; 43 per cent. were left with no post office—and the Conservatives tried to privatise that, too. In addition, 93 per cent. were left with no public nursery provision; and 91 per cent. were left with no access to day care, banks or building societies. That is the Tory party's record. What a legacy, yet they have the gall—the brass neck—to table such a motion.
Mr. John Hayes rose—
Mr. Chris Ruane rose—
Dr. Cunningham: I give way to my hon. Friend.
Mr. Ruane: Would my right hon. Friend consider adding to that list Alar in the apple industry, anthrax in the pig industry, botulism in the food processing industry, salmonella in the chicken industry, listeria in the dairy industry, E. coli in the meat industry and BSE in the beef industry?
Dr. Cunningham: As I said, the list is almost endless.
As the Agriculture Committee points out in its good and constructive report, the previous Government bequeathed an "unenviable inheritance" to this Government on BSE. In short, the previous Government presided over the worst crisis in British agriculture this century, destroying beef farming and loading colossal costs on to taxpayers, culminating in the tragedy of new variant CJD. It is an appalling record.
The election of a Labour Government last May signalled a clear break with the past right across Britain. That is as true in rural areas as it is in towns and cities. The Labour party is effectively—indeed, formidably—represented in rural areas and I am proud to have represented a rural constituency in west Cumbria for almost 28 years.
Mr. Nigel Evans: I do not know whether the right hon. Gentleman is proud to be the Minister of Agriculture, Fisheries and Food. Mrs. Wright, whose family farm is in Salmesbury in my constituency, telephoned me today and wanted to know the answer to two questions. First, what is the Minister's response to last night's "Panorama" programme? Secondly, does the Minister fully appreciate the number of hours that farmers put in every day, seven days a week, to make a small return? The Minister heard what my right hon. Friend the Member for Fylde (Mr. Jack) said about the returns that farmers get. Will he answer both those questions, please?
Dr. Cunningham: My response to the "Panorama" programme is that I was in it and gave my response at the time. On the second question, the hon. Gentleman can tell his constituent that I am well aware of how hard-working and industrious farmers are.
Mr. Evans: My constituent does not think so.
Dr. Cunningham: The hon. Gentleman had better tell his constituent that I have represented people like her for

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much longer than he has. I represent many, many farmers in west Cumbria. Nothing changed under Tory policies for hill farmers with incomes in the lowest decile of farm incomes.
Mr. Evans: Will the Minister visit my constituency?
Dr. Cunningham: No, I shall not promise to visit the hon. Gentleman's constituency.
Rural people voted for our policies, which are putting more money into health care in rural areas and, for the first time, making allowances for the extra costs of emergency ambulance care in rural areas. They voted for our new deal, which the Conservative party opposes. That is bringing quality jobs and training to young people. Pilot schemes of that £3.5 billion initiative in counties such as Cumbria and Cornwall are already showing the potential for benefiting rural as well as urban areas. Those same people voted for a Government who would understand the need throughout the country for regional development agencies that could understand different regions' unique needs.
The difficulties in British farming and the concerns for the future felt by people in rural areas are the result not of 10 brief months of the new Labour Government but of 18 years of failure by the Tory party in office.
Action for Communities in Rural England said of the Conservative record:
"Our main perception is one of neglect."
The NFU and the Country Landowners Association also complained about Conservative neglect of their interests. The Conservative party's attempts to proclaim itself as the party of the countryside just do not wash. It should credit the public with a longer memory of its record in government, although we all understand why it wishes to forget that record.
Mr. Ian Bruce: Will the Minister give way?
Dr. Cunningham: No, not for the moment.
Farm incomes have been in long-term decline for more than two decades, apart from the brief period between 1992 and 1996. The situation then changed temporarily only because sterling's weakness gave British farmers bigger rises in income than those in any other European country. Naturally, European farmers then complained that the playing field had been tilted too far in Britain's favour.
We have already promised more essential help for farmers who need it most—certainly more than the Tory Government were prepared to plan for or provide. The package of measures that I announced in December, which was targeted at livestock farmers who have particular disadvantages, was worth an extra £85 million. The measures that I announced last week were worth £70 million to the same sector. A further £9 million, which is not new money but money that has been recycled from a scheme under which some farmers were paid too much and others too little, will go principally to suckler cow farms.
We are working consistently to lift the beef ban. Indeed, the scheme is being considered today and tomorrow in the Standing Veterinary Committee in
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Brussels. We are working constructively with our European partners, the member states and the institutions of the European Union, within which Britain is no longer reviled and mistrusted as it was when the Conservative party was in power.
Mr. Tim Collins rose—
Dr. Cunningham: I give way to my constituency neighbour.
Mr. Collins: The right hon. Gentleman has mentioned the income of hill farmers several times. Many hill farmers in his constituency and in mine are on incomes of much less than £10,000 a year. How can he justify spending more than £10,000 on a desk?
Dr. Cunningham: I am sorry that I took the hon. Gentleman seriously. I did not spend £10,000 on a desk, let alone more than £10,000. The hon. Gentleman should look at the figures. I shall not be sidetracked, but if the hon. Gentleman wants to read something accurate in The Guardian, he should read today's editorial, and not refer repeatedly to yesterday's misleading and inaccurate article. I regret inviting that particular journalist into the Ministry and taking him through—[Interruption.] I want to be open about what is going on.
Mr. Jack: What about the £2.3 million?
Dr. Cunningham: There is no such expenditure figure. We are reorganising the Ministry, because the previous Government left it in a shambles. Many buildings used by the Ministry are decrepit, dilapidated and under-utilised. [Interruption.] As my hon. Friend the Minister of State says from a sedentary position, others are unsafe.
Today, I decided to bring our civil servants into the centre of London from places such as Tolworth, where the previous Administration left them, and to dispose of surplus sites and assets. The taxpayer will see a substantial profit from that exercise.
Mr. Charles Kennedy: I am anxious to hear more about the possible internal reorganisation of MAFF, the Department of the Environment, Transport and the Regions and other Departments, because that is slightly more significant in the long term than the cost of office furniture. The rueful smile crossing the right hon. Gentleman's face has perhaps given me the answer before he has said anything. Can he put further flesh on the bones of weekend press reports, and tell us the time scale for reaching any decisions?
Dr. Cunningham: I cannot provide more flesh off the bone, let alone on the bone.
The Prime Minister asked me to do several things at the Ministry of Agriculture, Fisheries and Food, one of which was to set up the Food Standards Agency. We are making good progress, and the White Paper has been exceptionally well received. We are reorganising, redirecting and slimming down the Ministry—many civil servants will leave as a result—and giving it a new open culture, but the Prime Minister will make the final decisions.

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The right hon. Member for Huntingdon (Mr. Major) is smiling benignly at me. He rarely does so, but he is welcome to continue, for a while at least. The right hon. Gentleman knows that decisions about changes to Ministries and the machinery of government in Whitehall are for Prime Ministers, not individual Ministers. I have noted what the Select Committee on Agriculture and the Country Landowners Association have said on the subject, but no decisions have been taken. I will not be tempted any further on that issue.
Mr. Christopher Gill: Will the right hon. Gentleman give way?
Dr. Cunningham: No, I want to deal with the nonsense that we heard from the right hon. Member for Fylde.
The prudent control of public expenditure is a Government commitment. Every time the right hon. Gentleman comes to the Dispatch Box, he demands more support and public expenditure, but never puts a figure on it or says where the money should come from. He is almost always misleading, as he was today. The right hon. Gentleman knows this well, but the record should be set straight: the Conservative Government never once in 18 years recycled money from European budgetary contributions back into Ministries—MAFF or any Ministry. His argument is a complete fraud.
The Conservative party never once paid agrimonetary compensation when in office, probably because the previous Prime Minister, as a former Chancellor of the Exchequer, knew that £86 out of every £100 would have to come from the Exchequer.
Mr. John Bercow: Will the right hon. Gentleman give way?
Dr. Cunningham: No, not on that point.
Let us hear no more of those fraudulent arguments. The right hon. Member for Fylde knows, as we do, that easy, no-cost money from Brussels is not available to the Government or to farmers.
Mr. Jack: My figures are based on Treasury figures. Is the right hon. Gentleman saying that the Economic Secretary's answer about the £400 million that the Chancellor gave away in his July Budget is wrong, and that underspend on the EAGGF did not help to provide that £400 million?
Dr. Cunningham: Not at all; I am saying something completely different. If the right hon. Gentleman does not understand, he clearly has a problem with understanding what goes on in the Treasury and in Brussels.
The Government have provided an extra £447 million for shire counties to raise school standards and to repair school buildings which were neglected under the previous Administration; £900 million of capital receipts is being released for new homes in urban and rural areas; and an extra £1.5 billion has been made available for the national health service in all areas of the country. Work opportunities for young people are being created through the biggest welfare-to-work programme in history, and pathfinder schemes are already operating in rural areas in Cornwall and Cumbria; £300 million has been provided for child care, and pilot programmes have been set up in
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rural as well as urban areas. Rural transport needs are being examined by my right hon. Friend the Deputy Prime Minister and his ministerial team—I am delighted to welcome my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) to the Front Bench this evening—as part of the Government's integrated transport strategy. A rate relief scheme will give sole post offices and general stores in small rural villages 50 per cent. off their rates bills.
We have released a consultation paper on access that balances the needs of landowners—[Interruption.]
Mr. Deputy Speaker: Order. The House must come to order. There is far too much noise in the Chamber.
Dr. Cunningham: I think, Mr. Deputy Speaker, that some Conservative Members have spent too much time recently in the vicinity of hunting horns.
Last week's announcement about the green belt will help to protect the countryside, as will the extension of the green belt that has been agreed since the Government were elected. We have found extra resources for hill and livestock farmers as well as the additional £70 million in costs which we removed last week. [Interruption.]
Mr. Deputy Speaker: Order. The hon. Member for South Dorset (Mr. Bruce) must be quiet. I demand silence.
Dr. Cunningham: Farmers will begin to receive those payments next week.
Yesterday, I visited the A1nwick district in the constituency of the right hon. Member for Berwick-upon-Tweed (Mr. Beith).
Mr. James Gray: Did the right hon. Gentleman have lunch with the Duke of Northumberland?
Dr. Cunningham: I met the Duke, and he was a welcoming and generous host.
I was greeted warmly by the leader of the council—who, incidentally, was not a Labour party councillor—and was astonished when he announced to the gathering of farmers, farmers' wives and other people from rural communities that, in the history of the district council and in the past 18 years, in one of the most rural parts of one of the most rural counties in England, no Conservative agriculture Minister had shown his face.
That is indicative of the Conservative party's betrayal of rural areas. It is a record which we and the country roundly condemn. It is a record which we shall erase, while demonstrating that we are genuinely committed to all the people of this country.
8.10 pm
Mr. Charles Kennedy: At the end of his speech, the Minister made a point in passing. The Government—and the Liberal Democrats, for that matter—rightly point to the 18 years that preceded the events of last May, and it is fanciful nonsense to suppose that the British public are so thick that they imagine that all the problems of the countryside began on the stroke of midnight on 2 May. The truth is, however, that ever since the days of "dig for victory" during the second world war, thanks to social, economic and

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technological changes, the country has seen almost the reverse of the industrial revolution. That is behind many of the problems of the countryside as much as specific policy controversies, or the shortcomings of Administrations of one hue or another.
One hundred years ago, people were moving from the country into the city—into conurbations—in search of work. Now, owing to technology, greater social mobility and increased disposable income, more and more people are moving to the country, taking with them pressures that are attitudinal as well as infrastructural. I feel that, given the seriousness of the subject, it is worthy of a slightly greater sense of perspective in regard to time than has been allowed for by the Conservative party.
The right hon. Member for Fylde (Mr. Jack) produced a selective series of statistics showing how well his party was doing, on the basis of a sample of 100 rural seats. It would be interesting to be given the same statistics on the basis of a sample of 200 seats. We would then find that Labour and the Liberal Democrats handsomely outnumber the Conservatives in terms of rural representatives. I empathise with the right hon. Gentleman, however. For four years, I was something called the president of my party, and I always took the view that the difference between the leader and the president was this: when the party won a by-election on a sensational swing, my right hon. Friend the Member for Yeovil (Mr. Ashdown) would be seen on "Newsnight" saying what a great breakthrough it had been, but when a by-election was lost—and the candidate's deposit with it—the president would be seen on "Newsnight" telling Jeremy Paxman that, in fact, the lost deposit was a very encouraging base on which to build for the future. I felt that there was a hint of that in the opening analysis of the right hon. Member for Fylde.
Mr. Ian Bruce: I was elected by only 77 votes; the Liberals were pushed into third place by the Labour party. I congratulate the Minister, who, in 10 months, has converted my local farmers from being very anti-me and the Conservative Government to being totally against him. Surely the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) does not support that lot, who have made such a disastrous job of the past 10 months.
Mr. Kennedy: My colleagues and I are immensely encouraged by that tale. If the farmers began by hating the hon. Gentleman and now hate the Government as well, that must mean that we are set for another appearance on "Newsnight" by my right hon. Friend the Member for Yeovil. What a great day for us that will be.
It is interesting that the Conservatives entitled the debate "Listening to the Countryside". Listening is a faculty that we did not associate with them during their period in office. As my hon. Friend the Member for North Cornwall (Mr. Tyler) pointed out, if we were concerned about the Conservatives' faculties in general, we would be concerned not just about their capacity to hear, but about their capacity to remember even recent history in this context.
I do not think that the amazing scenes in London on Sunday—in which a number of us were very pleased to participate—should be interpreted by the Conservatives as
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an overwhelming endorsement of all that they stand for. I think that they should be interpreted as a rainbow coalition of contradictory viewpoints sending a common signal. There was a general concern for the countryside as a whole. The march was disparaged in some ministerial quarters, although not in others. I have to say that, for once, I agreed with the Minister for the Environment. I felt that he was entirely right, as Minister for the Environment, to turn up and to make it clear that he disagreed with one of the central tenets of the march. I consider that not an inconsistent position, but a perfectly sensible one. [Interruption.] I am interested by the running commentary that I am hearing from Conservative Members.
The march achieved one thing apart from the tremendous image that it presented. It led to a raft of policy statements during the week. If the threat, or the approach, of the march could achieve that, let us hope that its aftermath will achieve even more.
I note that the Under-Secretary of State for Wales, the hon. Member for Bridgend (Mr. Griffiths)—the Welsh agriculture Minister—looked as rueful as the Minister himself over departmental reorganisations. I do not refer only to the original reorganisations applying to the Minister's Department—the Food Standards Agency and all the rest. I am thinking of changes elsewhere in Government that are being implemented under—I fear—the none-too-sensitive hand of the Deputy Prime Minister, affecting both the structure and the funding of the Rural Development Commission and its absorption into the regional development agencies.
I should have thought that, if the Government are having something of a turf war in Whitehall on what kind of rural-agricultural agency may yet emerge, they would take a fresh look at their own legislation. They might ask themselves whether it would make more sense, if such an agency is established, not to subsume the RDC in the original RDAs—where many of us feel that the voice of rural Britain will not be heard sufficiently—but to merge it with the Countryside Commission and make it answerable to a rural and agricultural Ministry. I think that that would be a much more sensitive approach than the approach that we might see if the agency ends up in the Deputy Prime Minister's super-glorified Department.
Dr. John Cunningham: The budget of the Rural Development Commission will be ring-fenced within RDAs, and at least one member of the agency will be given specific responsibility for rural areas and rural enterprise. As for the wider argument, the important thing is to get the decisions right if there is to be any reorganisation in Whitehall. Turf wars usually result in people not getting things right. In politics, it is important not to engage in a turf war in the first place.
Mr. Kennedy: I do not think that that last comment was directed at me. I hope that those at whom it was directed will read it in Hansard, and will act accordingly. Liberal Democrats are always willing to act as a useful conduit for the Minister to engage in megaphone diplomacy with some of his ministerial colleagues.
Mr. David Curry: Is the hon. Gentleman aware—given the intervention by the Minister of Agriculture—that, in the Standing Committee debating the Regional Development Agencies Bill, the Government

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specifically rejected the idea of giving one person in the regional development agencies a mandate to deal specifically with rural issues? The Government are, therefore, doing exactly the opposite of what the Minister said in this debate that they wanted to do. Does the hon. Gentleman agree that the sensible thing would be if the entire membership of the agencies were mandated to keep an eye specifically on rural interests? Would he also be interested to know that the Government plan to incorporate the rump of the Rural Development Commission into the Countryside Commission—unless the Government's fundamental spending review cuts all the commission's remaining money, as is entirely possible?
Mr. Kennedy: I thank the right hon. Gentleman for that intervention. I think that it was T. S. Eliot who wrote:
"In a minute there is time for decisions and revisions,
Which a minute will reverse."
It may well prove to be the case that the confusion on the issue that we saw spilling out in column inches from different bits of the Government over the weekend has not yet been fully clarified.
Regardless of whether there is to be ring fencing of funding or only one person designated to deal with countryside matters, the fact is that one person would not be sufficient to deal with them. Although the RDC's impact on the rural areas that it covers—in the north of England and Cornwall, for example—is very important, the totality of its budget compared with those that will be available to RDAs will be sufficiently small—significant though those funds will be for the areas that they cover—that ring fencing will not act as a sufficient safeguard. I should prefer wider consideration to be given to the matter.
In a very good letter in today's The Daily Telegraph, Lord Barber of Tewkesbury said that—of all people—the late Nicholas Ridley, who may not have had the greatest credentials in countryside matters, had a blueprint ready to go as far back as 1987 to deal with those matters. It might be worth revisiting that blueprint to discover whether it is applicable to current circumstances.
Mr. Luff: May I be clear about the hon. Gentleman's comments? Is he suggesting that Liberal Democrat party policy is now to support the creation of a Department of rural affairs, along the lines suggested by the Agriculture Select Committee in its first report, which was endorsed in an early-day motion signed by 60 Labour Members?
Mr. Kennedy: No; we shall have to wait and examine the Government's proposals. I am trying to say that if the Government are examining the matter—as the Minister, in his interventions, has clearly confirmed that they are—they will have to consider the implications of other bits of legislation that are being passed in parallel with that Bill.
Ministers will have to consider two issues. First, if a post were created at Cabinet level, they would have to determine how to prevent it from being regarded as a rural ghetto for all rural issues, allowing other Ministers completely to switch their attention from the rural implications of their policies. If that were to happen, it would be a setback rather than a step forward. Secondly, Ministers will have to deal with the extremely
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vexed issue of planning, and decide who will responsible for it. The planning issue will have to be examined very carefully.
Many of the issues that have been raised in this debate, as detailed in the Conservatives' motion and in the Government's amendment, show that—as the Minister knows that we have argued—there is now an overwhelming case for a royal commission to examine countryside issues.
The flashpoint for recent concerns—leading to last summer's protest in Hyde park, and to this weekend's events—may have been the Wild Mammals (Hunting with Dogs) Bill, and perhaps the post-Dunblane gun legislation. Those were rightly regarded as free-vote issues in the House and divided all parties. If there is to be a royal commission, surely it is sensible that it should encompass not only the types of issue that I mentioned earlier, but those more recent issues, and determine—as it looks as though that private Member's Bill will die a death on Friday—whether we can find a way forward.
Mr. Gray: Is the hon. Gentleman interested to note that the hon. Member for Worcester (Mr. Foster) has not been in the Chamber for any part of this debate?
Mr. Kennedy: The hon. Gentleman makes his point. We may hear in Friday's debate why the hon. Member for Worcester (Mr. Foster) has not attended.
Liberal Democrat Members commend the idea of a royal commission to examine overall countryside concerns. A commission could also examine the other issues that have been raised in this debate, the first of which is the catastrophic situation vis-a-vis farm incomes.
A couple of weeks ago, hon. Members may have heard on "Farming Today" a representative of Barclays bank say that farmers are perhaps in for a better year. However, in the recent edition of Farmers Weekly, another representative of Barclays pointed out that, in the most extreme cases, farm incomes would fall from £47,500, in 1996, to only £2,485 this year. That exceeds the traditional picture of farming in which one or two good years help to compensate for one or two bad years. That peak and trough will be disastrous not only for farmers, but for the rural economy.
The position of farmers was well summed up by a very entertaining barrister who spoke, a couple of weeks ago, at the National Farmers Union's annual dinner in London. He said that he spoke to a wholesaler in Yorkshire, who said that farm incomes were now so bad that even the blighters who did not pay had stopped ordering. [Laughter.] That was a graphic illustration of just how bad things have become.
We must undoubtedly deal with the issue of farm incomes. Equally, there is no doubt that the continuing unjust ban on British beef is contributing significantly not only to depressed morale, but to depressed income and depressed opportunities to enhance income. In his reply, perhaps the Minister will reflect on reports in today's Evening Standard that the Department has issued further clarification to inspectors on policing the ban, and that meat inspectors are being encouraged to act as agents provocateurs in many respects. If that is not the case, we would like clarification of the matter—which has been well spelt out in the Evening Standard, with attendant supporting quotes.

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The Minister of Agriculture currently holds the presidency of the Council of Agriculture Ministers. The Government have also placed great emphasis on reforming the common agricultural policy. The emphasis on that reform has undoubtedly changed significantly since the beginning of year—reflecting, we believe, Germany's upcoming elections, in September, and the fact that Chancellor Kohl does not want to open up that Pandora's box in immense detail, especially after this weekend's election results, which he will have to consider.
One wonders, therefore, whether the Government are not putting the cart before the horse. Last night on "Panorama", the Minister was at pains to stress the need to get away from the subsidy regime and to restructure the policy. Reform is part of a bigger debate. However, surely it is better not to restructure on a United Kingdom-wide basis until we know what shape and form Agenda 2000 will take; it may cause even more dislocation.
Dr. Cunningham: The hon. Gentleman is making an important point. Surely we can all see that the policies that have been pursued for the past couple of decades have not well served farmers, let alone consumers or the environment. There is an overwhelming case for change; the question is how and to what time scale we shall manage that change. The hon. Gentleman was, of course, right to say that one of the first proposals that we shall see from the Fischler package of reform will be on restructuring the beef sector throughout Europe. He was right also to say that we must insist that the brunt of the burden of restructuring the beef sector does not continue to be borne by British beef farmers—as it has been for the past three or four years—but is shared equally across the European Union.
Mr. Kennedy: I thank the Minister for that response. I tell him constructively that, if that attitude were being expressed more strongly by him and the Ministry—
Dr. Cunningham: It is.
Mr. Kennedy: As the Minister well knows, politics—he has been in this business a long time; a lot, lot longer than I—is about perceptions as much as anything else. The current perception outside the House is that such restructuring is not the Government's priority. Farming sectors will be more reassured if he and his colleagues take more opportunities to emphasise that that is the Government's priority. Hon. Members who represent those sectors would be significantly assisted in our jobs, when dealing with local farmers, if they were to do so.
On the CAP reform, given the general consensus that there should be greater emphasis on environmentalism, if we allow the baby to be thrown out with the bath water, there will not be sufficient personnel on the land to carry out the husbandry that will be essential to the environmental protection enhancement that we all support. If we allow it to go wrong, it will also defeat Europe's stated objectives.
On the right to roam, I welcome the fact that, last week, the Government opted for local voluntary agreements, although there is a different legal and traditional
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framework in Scotland which works rather well, albeit in a rather piecemeal fashion. There is no reason why it should not be extended south of the border, although it might be helpful to remove the continuing uncertainty. As for the squeeze on local authority funding, the worry is not that the landlords will create problems, but that local authorities are likely to say, "Let us sit back and do nothing for 18 months or two years. We know that there will be legislation at a later date that will allow us to proceed from a statutory position rather than have to make the time and effort to deploy personnel to negotiate local voluntary agreements".
In respect of the local authorities, our principal disagreement with the Government remains, and it impacts on the countryside as much as on everything else. By accepting the rather arbitrary Conservative spending limitations which, in the unlikely event that the Tories had won the election, the previous Chancellor would have broken on day one—of that there can be no realistic doubt—
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Kennedy: No. I am concluding my remarks. The Government are making it almost impossible to meet the laudable objectives that would unite a considerable body of opinion in different parties in the House in respect of countryside concerns and the rural environment. Although the Government have taken some initial positive steps, they clearly have a long way to go, largely because they are hamstrung by an item of their own making—accepting their predecessors' artificial constraints and sticking to them unrealistically. Due to that and other disagreements of principle with the Government, we shall not support them tonight. Nor shall we be giving our endorsement—[Interruption.] It takes a particular acumen to know when both parties are wrong.
As I was saying, our disagreement with the Government is on principle, but we disagree with the Conservatives because we are not prepared to be unprincipled, as their amendment is tonight.
8.31 pm
Mr. Colin Pickthall: I represent a large rural constituency and I am also the patron of Country Guardian, of which the hon. Member for Ribble Valley (Mr. Evans) is president. It is an organisation which exists to prevent country-loving landowners from putting wind turbines all over choice upland areas.
It is interesting that the Conservatives—the "true party of the countryside"—have not been able to muster a dozen Back Benchers to attend their own debate. That shows how much interest they have in the countryside. Only eight Conservative Back Benchers are present in the Chamber.
A few weeks ago, my hon. Friend the Member for Forest of Dean (Mrs. Organ) initiated a debate on rural poverty that was well attended by Labour and Liberal Democrat Members. For the Conservatives, there was a brief appearance by the right hon. Member for Kensington and Chelsea (Mr. Clark), who made a short speech about his rural constituents and then left. The only Back-Bench Member present was the hon. Member for Totnes (Mr. Steen). The Conservative Whip wound up the debate as no Front-Bench representative was present. That was

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emblematic of the Conservatives' true concern for the countryside. They have no interest whatever in rural poverty, isolation in the countryside or the regeneration of the rural economy. They are interested only in the continuation of blood sports, which are opposed by 57 per cent. of rural dwellers, the preservation of privileged enclaves in the countryside and, most seriously, the creation of a false division between town and country.
Mr. Alan Clark: First, the hon. Gentleman is completely wrong to say that I attended the debate only briefly. I was present for virtually the entire debate. If the hon. Gentleman was there, he will have heard what I said. Secondly, I made none of the points that he identified with the Conservative party. I said exactly the reverse and many of his colleagues praised my speech. I do not know whether or not the hon. Gentleman was in the Chamber throughout, but if he reads Hansard he will see that I am correct.
Mr. Pickthall: I do not remember the right hon. Gentleman's speech being praised by my colleagues, but I remember him leaving shortly after making his speech.
The Tories and the Countryside Alliance seem to assume that the United Kingdom is made up of rolling countryside occupied by real British people—a squirearchy served by cheerfully toiling peasants, farmers and hunters—and opposed by huge urban conurbations such as Greater Manchester—full of alien masses that are eager to burst out and swamp merry England. They do not address the reality of much of Britain—the complex interpenetration of rural areas, market towns, large villages, suburbs and, of course, larger towns and cities. They consider urban dwellers visiting the countryside or seeking to live there to be alien interlopers, but feel that it is perfectly natural for rural dwellers to penetrate urban areas for work, services or leisure activities.
It is airily forgotten by many Conservatives that the industrial, commercial and tax base of our economy is largely urban and that if it were the collective will to end all agricultural subsidies, each taxpayer would save £4 a week and most farmers would be bankrupt. They forget that a child in a rural school costs the taxpayer in Lancashire, for example, four times as much as a child in an urban school and that does not include school transport. They forget that without urban links all rural rail services would cease and that local authority transport subsidies are almost all that keep rural services going.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Pickthall: No. I am trying to be brief, as many of my hon. Friends are waiting to speak.
It is forgotten that the opponents of overdevelopment in the countryside—of whom I am emphatically one—are not just those who come from 10 generations of green wellies and Barbours. They are often urban escapees, whose first priority, having grabbed a chunk of rural Britain, is to pull up the drawbridge so that other townies cannot get anywhere near them.
The underlying presumption by my right hon. Friend the Secretary of State for the Environment, Transport and the Regions that the health and prosperity of the countryside is inextricably bound up with the health and prosperity of urban areas is exactly right. The right
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hon. Member for Skipton and Ripon (Mr. Curry) has expressed the same view on several occasions, and I agreed with him each time.
I recite all that, not to attack the countryside in which I live, but to assert the need for balance as opposed to the recent drive to create enmity and rivalry. Town and country should forge alliances against their common problems, as is the case in many shires, although some of those alliances have been badly damaged by the creation of unitary authorities.
The stirring up of hatred by the Countryside Alliance and the killing wing of the Conservative party is extremely dangerous and threatens every rational attempt to address the genuine needs of the countryside.
Mr. Gray: Will the hon. Gentleman give way?
Mr. Pickthall: No. The Conservative motion begins by recognising the concern of those marching on London, and that is fair enough. It then attacks falling farm incomes, rising food imports, the beef ban—which was achieved by the Conservatives—the minimum wage, the working time directive, Agenda 2000, the rate support grant settlement and the right of access to the countryside. It makes not one mention of hunting. Yet Robin Hanbury-Tenison, a well known hyphen and chief executive of the Countryside Alliance said in a press release yesterday:
"Yesterday's march demonstrated … the concerns of rural people. Fears for the future of hunting and field sports, and deep concern at the problems facing livestock farmers were undoubtedly the issues that brought the majority of the crowd to London."
He goes on:
"Yesterday's march could not have happened without hunting."
So why is there no mention of it in the Conservative motion? Could it be that it has finally sunk into the brain of the Leader of the Opposition that more than 70 per cent. of the population support the Bill proposed by my hon. Friend the Member for Worcester (Mr. Foster)? If they decided to march through London, they would take about a week to march past Nelson's column.
The central concern of the countryside is the difficulty faced by many farmers. After a number of good years, they are having a bad year, largely as a result of the level of the pound, but also because of the problems with beef. It is worth reiterating that no other sector of the economy has had so much subsidy or compensation in hard times. My hon. Friend the Member for Blyth Valley (Mr. Campbell) has had to leave the Chamber because of his feelings about mines. Many of us share those feelings.
We are constantly told that the Government are doing nothing for farmers. The Government were right to remove the cost burden of cattle identification and meat hygiene inspection, but they should expect no thanks for that—and they got none from the right hon. Member for Fylde (Mr. Jack). Rather, they should expect further demands.
I did not notice many banners on Sunday attacking supermarket buying policies, which can have as debilitating an effect on farming as BSE. Safeway in my constituency recently announced that it was ceasing to buy locally grown produce. Farmers have rightly complained that lower prices for their meat are not reflected in lower prices on supermarket shelves. I saw no banners saying, "Growers against the Government",

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although they are having a hard time, too. I represent many growers. There is more to agriculture than beef, although one would not think so listening to the Conservatives. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) once memorably said, he is not just the Minister for meat.
The National Farmers Union bravely addressed the long-term structural problems of agriculture in its document, "Options for Change" a couple of years ago. The NFU and the Government agree on the need for common agricultural policy reform and the steady removal of subsidy and quotas. We should be working on that agenda, not one designed to provoke the majority in this country to say, "A plague on farmers and on the countryside."
The Government should look closely at the labelling of foodstuffs so that the consumer can choose British meat—and other products—with confidence. We should also examine the distribution of beef cattle compensation. It is logical that there should be much greater compensation for a pedigree beef animal than for a finished dairy cow.
My right hon. Friend the Deputy Prime Minister has effectively addressed my concerns about building development in the countryside and the need to protect the green belt in particular. However, I urge him not to have a blanket policy on urban brown-field sites. We must not forget that towns need open spaces, too. The ending of predict and provide and the policy to take more planning decisions regionally represent an important breakthrough, marking a major change from the previous Government's attitude to planning in the countryside, which all too often was just to let it rip.
Governments cannot achieve the same services, leisure facilities, transport systems and choice of occupation for people in rural areas as are available for those in urban areas, contrary to what the Country Landowners Association foolishly asserted in the handout that it sent us today. Similarly, it is not possible to achieve for people in urban areas the benefits of clean air, open landscapes and small, quiet communities enjoyed by most people in rural areas. Government, local and national, must ensure that each is available to the other as easily as possible without damaging either. Public transport systems through rural areas provide a crucial means of achieving that. Government policy is moving in the right direction on that.
It is disturbing that a vociferous minority, purporting to represent rural areas, is seeking to brand the towns as predatory and privileged and to keep townspeople out of large chunks of the countryside if possible. Most people in rural areas feel no antagonism towards the towns. If anything, they feel sympathy, sometimes even pity. Most of my rural constituents have not been impressed by the motives of many involved in Sunday's demonstration, sympathetic though they are to the concerns of farmers and some of the other groups represented on the march.
When the Countryside Alliance shouts, "Listen to us"—not, "Please listen to us"—they really mean, "Don't listen to anyone else." The Conservatives—devastated at the election result in rural and urban areas—are desperately seeking to claw back support in what they have always regarded as their heartlands. If they cannot do that, they have no hope of ever forming a Government
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again. In the process, they are trying to obliterate from the public memory 18 years in which they presided over the devastation of rural areas such as mine in matters ranging from housing, transport and schools to BSE. They should remember that the march on Sunday may not have been the tip of the iceberg, but the whole of it and that the ship of state, to stretch the image, spotted it a while ago and has sailed on by.
8.45 pm
Mrs. Caroline Spelman: I am glad to have the opportunity to contribute to the debate. I am concerned from the speech of the hon. Member for West Lancashire (Mr. Pickthall) that we are being treated to a selective interpretation of what happened on Sunday. The great thing about Sunday's march was that it brought together such a wide range of interests—a patchwork of people with different concerns for the countryside. We have to be careful about selective interpretation. The Conservative party was careful not to abuse the request from the Countryside Alliance to keep the march apolitical. We tried our best to respect that.
I owe it to those of my constituents who participated in the march to use this opportunity to articulate their concerns in Parliament. I feel strongly that the Government amendment seriously misses the mark. At no point during 18 years of Conservative agricultural policy did more than 250,000 people find it necessary to descend en masse on the capital to express their fears for the future.
One had only to ask those taking part to discover the causes that brought them to London. Like me, many of them had sat at the back of the hall during the Minister of Agriculture, Fisheries and Food's address to the National Farmers Union annual general meeting. They became increasingly disappointed, then annoyed, by what they had to listen to. He did not uphold new Labour's promises of partnership. I was appalled by the mismatch between his statement on page one that
"the Government seeks a partnership with everyone involved in agriculture"
and the use of the word "we" shortly afterwards referring only to the Government. In most of what followed, he consistently used the word "you" to refer to the industry in phrases such as, "the challenge to you" and "yours is the choice".
Partnership requires co-operation and communication between two or more parties.
Mrs. Anne McGuire: Will the hon. Lady explain what partnership the previous Administration were involved in when they closed their eyes in the hope that BSE would go away between 1988 and 1996? What communication was there between the then Minister of Agriculture, Fisheries and Food and the farmers?
Mrs. Spelman: Practical partnership when facing a food scare established by the scientific community means listening to the advice of the scientific community and following it. The previous Government undertook that.

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In contrast, when the present Government were presented with scientific options, they selected one without consultation.
Mrs. McGuire: Will the hon. Lady give way again?
Mrs. Spelman: Not again. I should like to proceed. I think that I have described the professional partnership between the Government and scientific bodies adequately.
The greatest offence in that speech was the Minister's separation of the industry from the Government, again using the word "you", saying:
"Farmers need to he good business people."
Apart from stating the blindingly obvious, he was rather patronisingly suggesting that they are not good business people. The successful rationalisation and modernisation—a response to world market forces in agriculture—that has been achieved in this country is a tribute to the good business management of the majority of farmers.
The Minister's speech was full of hand-washing phrases designed to exonerate the new Government from blame for the farming crisis. Hiding behind Conservative spending plans or suggesting that farmers should have set more money aside in good times is an inadequate response to the crisis facing the countryside.
The farmer who built the beacon in my constituency on Thursday is not untypical. He has had to sell his farmhouse. Formerly, he and his brother farmed together and hired labour. His brother had to find a job in landscape gardening; they no longer hire labour. That is a typical example of the real crisis faced today. That was why he was so keen to have the beacon built on his land: as a statement of his practical experience.
Mr. David Drew: Is the hon. Lady aware of the Conservatives on North Yorkshire county council who have made known their intention to sell their farm estate? As the farm estate is the way in which most people without means come on to the land, does she agree that those Conservative county councillors deserve condemnation?
Mrs. Spelman: I am wisely advised by my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who has a better understanding of that part of Britain, that the council has to make such a move because the local government financial settlement, under a Labour Government, put the council in the financial position of having to realise an asset.
Why would the NFU, an organisation which has been commended by Labour, go to the lengths of producing slogans such as "Keep Britain Farming" and putting them on trailers and standing them over motorways if there were not a real threat? An empty threat would simply bring that organisation's reputation into disrepute.
The Government cannot wash their hands of the impact of their economic policies since they came to power. Allowing the Bank of England to raise interest rates has resulted in five separate rises since 1 May. It is to the immense frustration of farmers that the political instrument that the Minister has at his disposal under the common agricultural policy to compensate for such currency fluctuations just lies motionless on his table. It may be possible in the short term to "tough out" such
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times of strong currency, but do the Government envisage the pound weakening in the short term? Is it not rather more likely that Britain's position outside European monetary union—[Interruption. I am not making a comment on that stance. We must think about the consequences of the policy. It will attract speculation on our currency, result in a strong pound and aggravate the difficulties faced by agriculture. The instrument that could do something about that lies unutilised on the Minister's table.
It is not possible for the Government to wash their hands of the deepening crisis and ignore the way in which their policies have aggravated the situation for the beef industry. The Government's decision to impose a ban on beef on the bone was riddled with inconsistency. We find that the guiding principle of the new Food Standards Agency will be to give consumers the right information and allow them the freedom to decide. Yet precisely the opposite is true of the ban on beef on the bone. That is why the decision has attracted ridicule in the wider population—urban and rural. The nannying stance of deciding for others in the case of minimal risk is what has so irritated consumers.
The march sought not only to call the Government to account for such decisions but to draw attention to what is ahead. At the NFU annual general meeting, we saw a little of the Minister gazing into the future. I am concerned by the inexperience and naivety of his perspective on the future of British agriculture. He said that he
"wants to see changes … so that British farmers can take full advantage of growing world markets".
Although we all aspire to a reduction in agricultural support and want a reduction in protectionism in agriculture, it is unrealistic to think that British agriculture can survive on its own with reduced support in a market where competing countries would not hesitate to capitalise on a disadvantaged competitor.
A reduction in agricultural subsidy is a sincerely held objective among Conservative Members and has been progressively achieved in GATT rounds, but any comparative advantage that Britain enjoys with its relatively large farming structures pales into insignificance alongside the economies of scale of the prairies of the mid west, the plantations of South America and the low-wage farming of the far east. The new Government's policy direction of unilateral disarmament, particularly in relation to sectors that are experiencing an abnormal crisis, is irresponsible.
The Minister has been challenged on numerous occasions in the Chamber over his commitment to the beef industry. It was pointed out to him that, in Agenda 2000, there is a Commission intention to reduce the size of the beef sector in Europe by 30 per cent. It was put to him that the current situation in British farming and the inadequate support given to the beef sector in order that it might stabilise its position could result in the entire 30 per cent. reduction occurring in this country. Yet we have been given no adequate answer.
Mr. Hayes: Does my hon. Friend appreciate that, when the Minister was asked in the Select Committee on Agriculture whether he had a vision, a view, a projection for the amount of production or the number of producers in the British beef industry, he was sadly lacking?

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That lack of strategic vision, of targets, was pointed out in the Select Committee's reports on beef and on Agenda 2000—by all Committee members, not just Opposition Members.
Mrs. Spelman: Consequently, the Select Committee, which has a majority of Labour Members, concludes its report on the beef industry by saying that the UK beef industry
"could become too enfeebled to restructure itself rationally".
That is the very point that I have been making. With inadequate help, Britain will unilaterally disarm an otherwise profitable, competent and professionally run sector, which is handicapped by the Government's handling of it.
Mr. Peter Bradley: Are the hon. Lady and her colleagues aware that farming, deep though its crisis is, involves and employs a relatively small proportion of people who live in the countryside? Whether or not farming was in crisis, 56 per cent. of people in rural parishes would still be left without a shop of any kind, 45 per cent. without a post office, 53 per cent. without a school, 84 per cent. without a general practitioner and 86 per cent. without a rural bus service. What has she to say to people in rural constituencies such as mine and hers whom she and her colleagues continue to ignore—even though they have called for this debate?
Mrs. Spelman: We do not ignore the ancillary industries serving agriculture. At my surgeries, I have repeatedly received delegations from farmers and from ancillary industries. The crisis in farming has knock-on consequences for a far wider group of people than the hon. Gentleman would imply. Only last week, I learnt that Massey Ferguson—a well-known tractor producer outside Coventry, offering jobs to a large number of the population of the surrounding conurbation—has been forced to adopt a three-day week. That is an example of the way in which the difficulties in the agricultural sector knock on to a wider range of industries.
The countryside is in crisis because the country is governed by an Administration who do not really understand its ways and presume, with the audacity of a new Government, to know better than country people how they should maintain our rural heritage. The Government are not prepared to fight for the needs of the countryside and, in a curious modern double-speak, claim a vision of the countryside which is strong, fair and modern while presiding over its demise. That is why people marched on Sunday—to demonstrate their solidarity with the many ancient rural traditions under threat.
The small concessions and selective back-tracking are no substitute for forward vision. Blaming a past Administration is a feeble attempt to duck responsibility. In opposition, we call the new Government to account. In so doing, we keep alive the hopes of the countryside protesters, who have no confidence that the Government will fight their corner.
8.59 pm
Mr. Paddy Tipping: I am pleased to speak in this important and topical debate. I spend a lot of time listening to the voices of the countryside, and it is
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important to recognise first that there are different voices in the countryside. Countryside people are not a homogenous mass, and anyone who has had a meal around a farm kitchen table will recognise that.
I regularly speak to and arrange events with a range of countryside organisations—the Country Landowners Association, the National Farmers Union, the Council for the Protection of Rural England, the Countryside Commission, the Rural Development Commission, the National Trust, parish councils, the Council for National Parks, the Youth Hostels Association and the Ramblers Association. Let me make it clear to the House that I am a vice-president of the Ramblers Association.
Last weekend, I was tree planting and looking at erosion where people had been walking. The weekend before that, I was with the National Trust, looking at its positive policies in the High Peak. Not long ago, I spent a day on a hill farm, talking about the real problems that farmers have. Only yesterday, I was talking with people about traffic-calming measures and the powers of parish councils in rural areas.
Given all that, to be accused of not listening to the voice of the countryside, or of not understanding the delicate balances that exist there, is, to put it mildly, rather irritating. It is important to recognise that Labour Members representing county seats make up more countryside Members of Parliament than the Tories and Liberal Democrats put together.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Tipping: No, I will not give way. The hon. Gentleman will make his own speech, if he has the opportunity.
I am backed by a fine group of parish, county and district local councillors, who look after the needs of the rural community.
I watched the countryside march with great interest. What surprised me was that I was not certain under what banner those people were marching. I am extremely grateful to the chief executive of the Countryside Alliance for telling me what the march was about. In a press release on 2 March, he said that the march
"could not have happened without hunting. More than 70 percent of the coaches and trains bringing people to London were organised by the hunting community."
That is not top of the agenda in the countryside that I know and love. There are important issues, hard questions and difficult decisions about priorities that must be made in the countryside, and it will take time to put them right.
What is my countryside agenda, and that of the people in Nottinghamshire to whom I speak? First, let us be straight—farmers face real problems. British farmers are the most efficient in Europe, but they face problems. Farm incomes have fallen, and we must contrast what is happening now and in the past year with previous years. We must be open—there is no point in having discussions with farmers unless we are open and honest. We must say that there is no pot of gold in Brussels. The story spread by Opposition Members about £985 million being made available is nonsense. The British taxpayer would have to contribute to 70 per cent. of the cost. It is all about priorities, and farm interests have had priority with this new Government. Let us not dismiss the fact that £85 million was made available before Christmas for the

941
most disadvantaged farmers. Let us welcome the fact that £70 million will be made available for a cattle traceability scheme and let us remember that the Conservative party presided over the bovine spongiform encephalopathy crisis, but did not produce a computer scheme like that, which will help.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Tipping: No, I will not.
New and extra money has been made available to farmers, on top of existing Tory spending plans. We must also remember that reform of the common agricultural policy is on the agenda. Enlargement will happen, and we shall have to move from a system in which we support production to one that is different. I hope that we shall work with our partners in Europe at the centre of Europe, using our voice wisely to bring in more money and investment, and to create jobs and investment in the rural economy. Also, I hope that we shall move towards a green premium, whereby we can lift the landscape and enhance the environment.
Farm incomes have fallen in recent years, and I am delighted that we have recognised that and are consulting and talking carefully to such bodies as the NFU about an early retirement scheme. Those are not easy issues and they will require a Government who look to the future, not the past, who believe that the countryside is for all our people and not merely for the landowners and who are prepared to take tough and hard decisions to drive reform through.
Progress is being made on lifting the environment. I was delighted that one of the first steps taken by the new Government was to put a moratorium on the sale of Forestry Commission land. Under the previous Government, a piece of land the size of the Isle of Wight was sold off, with no access to the public, whether the environment was rural or urban. I am also delighted that since the Government came to power, the Secretary of State for the Environment, Transport and the Regions has given no new consents for opencasting on green-field sites. That is widely recognised and welcomed throughout the countryside.
We have taken steps to ensure that we protect the green belt. I welcome the statement by the Secretary of State only last week, that 60 per cent. of new housing will be built on recycled sites, and his statement on sequential planning permissions—the end of predict and provide. Those are important steps forward. I look to the Budget for fiscal measures to reinforce that programme.
On a more critical note, there are real problems in the east midlands. Under the previous Government, 32 per cent. of houses were built on recycled sites. If I put that another way, under that Government, two out of every three houses were built in green-field areas. There are problems in my county of Nottinghamshire, where the previous Government endorsed a structure plan that provided 67,000 new houses. I must praise councils such as Gedling borough council, which is struggling to find a way through the Conservative Government's mess. I know that it welcomes the policy changes announced by the Secretary of State.
People in Nottinghamshire welcome the fact that this Government have put extra money into education. Nottinghamshire schools have an extra £12.2 million to
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spend next year as opposed to this. For the first time, there is new and extra money—2 per cent.—to develop new initiatives. The people welcome the new deal.
Mr. Hayes rose—
Mr. Tipping: I can tell the hon. Gentleman that last Friday the Newark Advertiser, a rural newspaper, welcomed the new deal, saying that it was by no means an inner-city policy. It welcomed the initiatives that we have taken.
One thing that filled me with enormous pleasure last week was the publication of our consultation paper, "Access to the open countryside in England and Wales". The principle of greater access is not negotiable. We want to ensure that access by the millennium—what a way to celebrate the millennium, with the right to walk over open countryside. We shall ensure that that promise is delivered. Landowners have been given a chance, and now it is up to them to respond. If they do not, legislation will follow.
I know that the countryside is not a museum—it has always changed, and it will always change. Our policy must be to ensure that that change is properly managed. I believe that we can achieve that. We shall consult and we shall listen. We are not ignorant of and arrogant about the countryside. Unlike the Conservative party, we are not full of pride and prejudice about it—we have sense, and we shall have sensitivity. We shall deliver. I am confident that, under the Labour Government, the countryside will be a place for all our people.
9.10 pm
Mr. Anthony Steen: I agree with much of what the hon. Member for Sherwood (Mr. Tipping) said, but I am not sure that I am a vice-president of the Ramblers Association.
Mr. Tipping: A very good and honoured supporter.
Mr. Steen: I know that I am something important in it. I am also involved with the Open Spaces Society and the Dartmoor Preservation Association. I cannot list as many great deeds as the hon. Gentleman did, but I have some interest in and experience of the countryside, and I want to share with the House what I believe to be some of the threats to the landscape and the continuation of the rural way of life.
All hon. Members will recognise that agriculture plays a central role in the rural economy. The rundown of a farm has a knock-on effect. For example, when I first went to South Hams in 1983, a father, his son and six workers used to repair tractors in the little village of East Allington. Now, only the father and son do that, as the demand is not the same. The rundown of agriculture also affects local builders, who do not have as much work, as well as mechanics, temporary milkers and the village shop. The importance of the crisis in agriculture is that it threatens not only the farmers but the whole rural way of life in Britain.
The decline in agricultural support will result in what has happened in third-world countries—the agricultural worker will move from rural to urban areas. Although the rural way of life currently provides an enormous amount of employment, if it is not supported, rural areas will

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become run down, and the workers will find jobs only in the towns and cities, which is the very thing that we do not want to happen in this country.
Mr. Dawson: I entirely accept the hon. Gentleman's point about the regrettable movement of young people from rural areas to the towns. Was not that exacerbated, however, by the policies of the previous Government, which led to the reduction in the availability of affordable accommodation? Young people who have grown up and now work in rural areas can no longer afford to live there. Should not we address that issue as a matter of some urgency?
Mr. Steen: The problem about making a speech in the House is that one can end up debating each point. I do not want to outstay my welcome, but I will answer that point. One can go on building affordable housing association or council accommodation in the countryside, but one has then to find jobs. Without a buoyant agricultural community to supply the jobs, it is no good building houses.
There is a great movement of people into my area from the north, on retirement, which pushes up the house prices. One cannot build a wall and stop them moving around. That is a problem of market forces.
I want to deal with the more serious problem of urbanisation and suburbanisation of the countryside. The drift from major cities to rural areas is well documented. The number of Members of Parliament representing Liverpool and Birmingham has seriously declined. In 1965, Liverpool had about nine Members, and it now has five, while in Birmingham the figure has decreased from about 11 to eight.
The drift is away from the inner cities and urban areas to the rural areas, because that is where people want to live. Should we deal with that by building new satellite towns around the principal conurbations, or should we infill the villages and hamlets? In my part of south Devon, we have done both, with the result that the countryside between the conurbations is getting narrower and narrower.
The Labour Government, not following the Conservative lead, have increased the number of houses that are to be built in Devon by 2011 from 90,000 to 95,000. The problem is where we are to build all those houses. The Liberal Democrat councils in South Hams and Torbay are simply lying down and accepting the Government's figure, but in my view they should fight the Government and say that they cannot accommodate 95,000 more houses. We shall end up with a continuous run of housing from Plymouth to Exeter. The whole of the A38 will be one urban sprawl, as I forecast in 1983. Unless we stop the growth, we shall get one large urban sprawl throughout the county. How are the Government to stop that happening?
A more significant problem is how the Government are to help to preserve the countryside; that is the subject of this debate. The major factor to be considered about the countryside is the landscape and the view. [Laughter.] One of the first steps that the Government could take is to introduce a new planning policy guidance whereby the view has to be taken into consideration. At present, people
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can build anything where they like, because the view is of no consequence. The Government may say that we could have done that, but I am saying that they can do it now.
Mr. Hayes: Labour Members may laugh, but my hon. Friend makes an important point. He is saying—I hope that he will accept my clarification—that aesthetic concerns are important both in planning terms and in terms of people's perception of the environment around them. That is a matter not only of what they do, but of what they are. The fear of radical change—of the transformation of customs; culture; and the traditions of whole communities—motivated Sunday's march more than any other factor. Of course it was about hunting, but, more than that, it was about the fear of such radical change.
Mr. Steen: I am very grateful to my hon. Friend for that helpful elucidation. In fact, I was saying that in current planning law one cannot consider the damaging effects of development on the view and the landscape. The planners say that the view is not a consideration when an application for development is approved. The Government could look at that.
Mr. Peter Bradley: Will the hon. Gentleman give way?
Mr. Steen: Yes, provided that it is not another clarification of what I am saying.
Mr. Bradley: Does the hon. Gentleman acknowledge that, just as there are additional planning protections for conservation areas in towns, there are numerous designations—not least areas of outstanding natural beauty—that afford such protection in the countryside? Is he really saying that if people in the countryside do not have jobs, they do not need homes, and if they do not have homes, they do not need buses, but a view would be helpful?
Mr. Steen: We need someone to explain the hon. Gentleman's point. The serious question is how we can build 4.5 million houses in Britain without damaging the countryside. One of the factors that should be taken into account when planning applications and structure plans are considered is the effect that those developments will have on the landscape and the view in the area. We do not want to see the British countryside rapidly changed and destroyed.
At present, we have a two-way movement of people. We have the rundown of British agriculture and the movement of rural workers to the towns, and we have a movement from the urban areas to the countryside by, usually, young married couples who want to have their children taught in rural areas and to experience the rural way of life. People are being levered from the towns to the countryside to find a better quality of life for themselves and their children, while country dwellers are forced—by the decline in agriculture—from the villages into towns to find work.
The Government must support the agricultural sector, and so slow down the migration from the country to the towns. They must also make the cities more attractive places in which to live, to stop the reverse process. I draw

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the House's attention to an excellent book that I wrote about 10 years ago, called "Plums", in which I suggested that publicly owned vacant land should be auctioned and that derelict land in the inner city should be used first before the rural landscape is changed.
The Government can take action on some of the issues that I have mentioned. The landscape must be protected by changes in planning law, and farming must be supported, as it is in other European countries, so that the rural economy is anchored and safe. Our principal cities must be given an injection of new life, because we have been talking about the inner cities for the 24 years that I have been in the House and they remain as bad as ever. Housing need on green-field sites must be approached with caution, with new settlements being considered preferable to creeping urbanisation of existing market towns and villages. I hope that I have been helpful to the House, which has listened carefully to what I have said.
9.22 pm
Mr. David Hanson: I am grateful for the opportunity to contribute to the debate, because I represent a large rural area in north Wales and have done so since 1992. It is an area with a large farming community, many small villages and many problems with transport, access to rural services and other matters. We also have a fox hunt—the Flint and Denbigh hunt—as well as a Labour majority of 13,000.
I am pleased to see so many of my hon. Friends who also represent rural areas present for the debate. Labour Members represent many of the rural areas of this country, and I must point out to Conservative Members that not a single tree, bush, fence, hedge or cow in Wales or Scotland is represented by a Conservative Member of Parliament.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Hanson: No, time is pressing. It is a caricature of the debate to claim that there is a difference between town and country. My hon. Friend the Member for West Lancashire (Mr. Pickthall) put his finger on it when he said that we are interdependent. All of us have an interest in rural areas and all of us have an interest in the success and prosperity of those areas. All of us eat the food produced by rural areas and use the leisure facilities available in rural areas. All of us have a stake in the future of rural areas and many of us who live in cities and towns pay through our taxes for the success and development of rural areas. We all need such success. The caricature of town versus country exemplified by Sunday's march is unproductive and unhelpful.
I hope that Sunday's march helps us to focus not only on those who want preserve fox hunting, of whom I am not one, or members of the Conservative party, of whom I am not one, but on the real issues of rural Britain and the positive things that can be done. In the spirit of cross-party co-operation, I welcome some of what the previous Government did. I welcome their White Papers on rural England, the working countryside for Wales and rural Scotland. I just wish that they had done something about those issues, rather than simply producing White Papers.
I welcome the Liberal Democrat amendment, which recognises that things did not get bad in the countryside only after 1 May. I remind the House of bus deregulation
946
in 1985. In Wales, 33 million bus journeys a year have been lost in rural areas since 1985. In one small village in my constituency, Trelawnyd, people cannot get to the dentist, doctor or the shops because bus deregulation has robbed it of its lifeline. We have also seen the sale of housing association homes and the failure of the previous Government to promote low-cost home ownership. The previous Government allowed more green-belt building than this Government intend to. They reduced the number of properties available for rent and the number that councils could build for rent.
Crime is also a factor in rural areas, such as mine in north Wales, with the closure of local police stations. Crime rose by 80 per cent. under the Conservative Government, while police numbers fell in my area. My hon. Friend the Member for Sherwood (Mr. Tipping) mentioned the sell-off of Forestry Commission land. In Wales, under Conservative rule, 229 woodlands were sold—4,500 hectares of land. Only 18 have had access agreements put to them.
Those were the actions of the previous Government. There were proposals that we managed to stop, such as the abolition of the wages board, the sell-off of rural post offices and, through local councils, the closure of local schools. The previous Government's record was not addressed by Conservative Members, but the House should address it—and that is before we touch on BSE or the 17 per cent. drop in farm incomes in Wales between 1981 and 1991, or the loss of local businesses, pubs and shops. It is also before we touch on the fact that, after 18 years of Conservative rule, many rural areas such as mine cannot get NHS dentists. People have a 25-mile drive to the local major district general hospital. The Conservatives would do well to recognise and address that inheritance, as well as the issues that we are discussing today.
Mr. David Taylor: They should apologise.
Mr. Hanson: My hon. Friend mentions apologising. I think that the Conservatives owe my rural constituents an apology for the misery that they put them through. In the short time remaining, I should like some discussion of how to address those issues—not only fox hunting and the others mentioned by Conservative Members.
There are three broad objectives: economic renewal, protection and enhancement of the environment, and social renewal.
Mr. Gray: Will the hon. Gentleman give way?
Mr. Hanson: I have not got time.
I do not mind whether the issues are addressed by a rural Minister directly or by Ministers in each Department with a rural responsibility, but they need to be addressed. On economic renewal, we need to consider an overall economic strategy, both in Wales and in each region, to include rural areas.
I hope that we will examine information technology: bringing the city and information to rural areas through IT. I accept that the new deal will create many jobs for people such as my constituents in rural areas. I hope that we examine—I am sure the Government are doing

947
so—diversification to help with falling farm employment and incomes. I hope that the Government will look at helping small firms to establish themselves in rural areas.
Next year, there will be a minimum wage in rural areas, something which I am very proud of. That will help to support the economic regeneration of areas that are traditionally low paid, especially in parts of Wales. I welcome the rate relief that has been given to local shops and businesses in rural areas. This Government have done it. I hope that we will reform the common agricultural policy to shift the balance of wealth and power from the larger farmer, to ensure that the small farmers, who are in most need, have the income and support that they need. I welcome the Government's announcement of £12 million extra to be given to Wales and farming incomes this year, in connection with the charges for specified risk material and the cattle tracing scheme.
On the protection and enhancement of rural areas, I should like to know how many of the people who went on the march on Sunday have been responsible for removing hedgerows and destroying the rural areas that they purport to represent. Reform of the common agricultural policy is important in that respect. The Government will take steps to protect flora and fauna, strengthen areas of outstanding natural beauty and establish a green belt for the first time in Wales.
A further issue that we need to discuss is a third party right of appeal on planning applications, so that local community councils can tackle developers.
In the context of social renewal, we must examine transport issues. I am pleased to see that the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Hampstead and Highgate (Ms Jackson), is winding up the debate. Transport is crucial to rural areas.
I appreciate the Government's initiative on rural schools, so that such schools cannot be closed without ministerial approval.
Thanks to the Government's capital receipts programme and the input from local authorities into new social building and improvements in local villages, a village in my constituency has for the first time had central heating put into the small council accommodation in the area.
I welcome the extension of the social exclusion unit to include rural areas. I hope also that we can look imaginatively at the use of lottery money to improve village halls and be proactive about the investment in village halls. Perhaps we could examine the issue of matching funds to make it easier for local communities in rural areas to have access to lottery money.
The Opposition motion is too simplistic. It focuses on countryside issues, ignoring the failure of the Conservative Government over the past 18 years to tackle those issues. I know that my Government have a constructive approach to rural areas, and I will be pleased to support them in the Lobby tonight.
9.32 pm
Mr. Christopher Gill: In a wide-ranging debate, we have heard hon. Members on both sides claiming to support the countryside, but, when one listens to the speeches, it is apparent that the perception and understanding on the two sides are quite different.
948
That was demonstrated by the hon. Member for Sherwood (Mr. Tipping), who said that his approach was not the result of ignorance or arrogance. He went on to say that the right to roam on other people's land is not negotiable. That will strike many of those who have listened to the debate not as ignorant or arrogant, but as intolerant, as is the Labour party's commitment to abolish the right of other people to hunt on their own land. We have seen no great enlightenment among Labour Members, but rather a digging in and reinforcement of an intolerant attitude.
I appreciate that the job of agriculture Ministers is always difficult. I thought that the fisheries Minister was to wind up the debate, and I would have said that no job was more difficult than his. I do not want to open up the European debate, but it is clear that not least among the difficulties of agriculture Ministers is the fact that they have responsibility without necessarily having the authority to do what needs to be done. In his opening remarks, the Minister of Agriculture spent much time criticising the record of the previous Administration. Let me say to him and to others on the Front Bench: you will be judged by your record.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman should not be saying anything of the kind.
Mr. Gill: I beg the House's pardon. Right hon. and hon. Members opposite will be judged by their record.
Many of us regret the non-attendance of agriculture Ministers at the countryside march on Sunday. It was a missed opportunity to listen to what the countryside had to say—more to the point, Ministers would have been able to hear what country people had to say because it was a good-natured, peaceable demonstration. It was not a howling mob. Ministers could have conversed with the people on that march, and doubtless they would have learnt something.
Mr. Dawson: On a point of order, Mr. Deputy Speaker. Will the hon. Gentleman note that certain Labour Members attended the march on Sunday?
Mr. Deputy Speaker: That is simply not a point of order for the Chair.
Mr. Gill: It was a peaceable demonstration by responsible people whose livelihoods and way of life is under threat.
Mr. Gray: With reference to the spurious point of order from the hon. Member for Lancaster and Wyre (Mr. Dawson), is it not interesting to note that the only Minister to attend the march on Sunday is notable by his absence from this debate? He has not even turned up.
Mr. Gill: I think that the House will draw its own conclusions.
Ministers cannot dismiss the significance of Sunday's march, and they certainly cannot ignore the fact that 300,000 people sent but one message. That single message was, "Please listen to us".
In this debate, we have heard some predictable responses to the recognisable problems in the countryside. It was suggested that a royal commission should be

949
established, that there should be a Minister for rural affairs and that possibly the Ministry should be reorganised. Is the House really saying that it does not know what the problems are? Surely the problems of the countryside are all too plain. The electorate in this country expects its politicians, particularly the Government and Ministers, to provide answers to those questions.
That job cannot be sub-contracted to a review or a task force. In nine months, the Government have appointed no fewer than 140 such bodies. The urgency of the problems in the countryside does not permit the establishment of bodies to investigate such matters: we do not need a theoretical examination by intellectuals who cannot tell wheat from barley. We need to listen to people in the countryside who do the job—they are the experts.
The problems have been identified already. There is high dependency on agriculture in the countryside. The difficulties currently facing agriculture are exemplified by one of my constituents who produces 1,400 cattle per year at a cost of 112p per kilo and who is currently selling them at 97p per kilo. Another problem is the high dependency on the motor vehicle in the countryside. The House will be watching to see what the Chancellor does in his Budget, because we are aware of the devastating effect that an increase in vehicle excise and fuel duties would have on transport in rural areas.
The threat to community hospitals is implicit in the ending of the general practitioner fundholding system. [HON. MEMBERS: "Rubbish."] Oh yes. I invite Labour Members to come to my constituency where they will see how fundholding doctors, working closely in conjunction with a community hospital, have transformed that hospital, which now provides a much greater range and quality of services than ever before.
In the few seconds that remain, I must mention the totally inadequate SSAs for sparsely populated rural areas, where economies of scale do not apply. Those areas have high transport costs and, as the Minister said, low wages. This year, we shall face record increases in the council tax. Shropshire county council's precept will be 14 per cent. up on last year, before we even consider the district council precept. The Government must take responsibility. Many of the solutions to the problems identified tonight are in their own hands. A measure of the Government will be whether they address those very real and obvious problems.
9.39 pm
Mr. Tim Yeo: We have had an exceptionally interesting debate which has reflected the depth of concern about the countryside—a concern which is particularly shared by hon. Members on the Opposition Benches.
The debate has exposed the Government's continuing lack of understanding of rural issues. The Minister of Agriculture, Fisheries and Food showed no sign at any stage during his 26-minute speech that he had listened to a single concern of the 280,000 people who marched on Sunday. That is not, perhaps, surprising, as he did not have the courtesy to turn up and meet them. Let me point out to him that the mandatory rate relief for small shops, to which he referred, was introduced by the Conservative Government.
The truth is that, on the countryside, the Labour Government have moved from denial, through panic into confusion. A month ago, they denied that there was a
950
problem. A week ago, they panicked about the extent of public hostility. Today, they are in a state of total confusion about what to do and who should do it.
On Saturday, we saw the extraordinary spectacle—it would have been bizarre had it not been disgraceful—of an agriculture Minister publicly smearing the march, just when his colleague, the Minister for the Environment, was announcing that he would take part in it. Open warfare has broken out between the Department of the Environment, Transport and the Regions, and the Ministry of Agriculture, Fisheries and Food about who is in charge of countryside policy. Will it be the Minister of Agriculture, who preferred to remain in the comfort and security of his expensive new office rather than meet the 280,000 representatives of the countryside? Or will it be the Secretary of State for the Environment, Transport and the Regions, who, uncharacteristically, is hiding in the corner—the Minister who picked the pockets of local authorities in rural areas to reward his friends in the towns; who, in 10 short months, has destroyed the principle of the green belt, which has protected the environment around our cities for half a century?
The losers in the battle between the Departments will be those who live and work in the countryside. It is a battle which should never have started. The countryside needs not a new Minister or Department but a new policy.
Having heard the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), who has not had the courtesy to return to the debate, I am of the view that not only the Government but the Liberal Democrats need a new policy. The hon. Gentleman expressed concern about the Rural Development Commission, but, only a week ago, in the Standing Committee, two of his colleagues voted to approve clause 39 of the Regional Development Agencies Bill, which gives the Government the power to abolish the Rural Development Commission. It was a familiar example of the Liberal Democrats pointing in both directions at the same time.
The hon. Member for West Lancashire (Mr. Pickthall) joined Labour's attempts to impugn the motives of Sunday's marchers, but, as my hon. Friend the Member for Meriden (Mrs. Spelman), rightly pointed out, at no time in the 18 years of the previous Government did 280,000 people protesting about Government policy on the countryside descend on the capital city.
The hon. Member for Sherwood (Mr. Tipping) was at least honest enough to admit that farmers face real problems, but he would have done himself more credit had he also recognised that those problems are among the reasons why the marchers came to London last Sunday.
The Government still have an opportunity this evening to regain a shred of credibility and to show that they want to make amends. I welcome the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Hampstead and Highgate (Ms Jackson) to the Front Bench. It is revealing that, for all the Government's claimed expertise in rural matters, and for all the countryside seats which they have now won, the person who is fielded to wind up a debate entitled "Listening to the Countryside" is a London Member and the Minister for Transport in London. I hope that in her winding-up speech, she will announce changes of policy in three key areas. None of those changes would cost a penny of public money, none would need legislation and each would herald the possibility of a more sympathetic attitude towards rural communities.

951
The first change concerns the way in which the cash is distributed to local authorities. This year, the Government carried out a funding fiddle. They took £94 million off the standard spending assessments for rural authorities and switched it into towns. None of the eight changes made by the Government to the standard spending assessment formula has helped shire England. The Government took £8 million from Oxfordshire, £8 million from Norfolk and £10 million from Hampshire.
This week, the Prime Minister wrote in Country Life of his concerns about rural crime. Those were fine words, but, as so often under new Labour, they were just words and they were not matched by deeds. In rural Lincolnshire, the standard spending assessment for the police authority has been cut in cash terms. The same applies to Wiltshire and many other counties. What a contrast with the police authorities in urban areas, which are getting an increase in their standard spending assessment. Yet again, that is the clearest possible proof that when it comes to allocating public money, the Government always favour urban Britain.
The second change of policy that is needed concerns planning. Last Monday, the Secretary of State for the Environment announced a partial climbdown. He appeared to overrule his junior Minister, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), who had described any increase in the target for building more new homes on previously developed sites as a "recipe for disaster". We welcomed those greener noises from the Secretary of State, but we listened in vain for a hint that he would rethink his recent decisions to approve up to 10,000 homes on the green belt in Hertfordshire and 2,500 homes on the green belt in Newcastle, and approve industrial development of 150 acres of farmland in the west midlands. We listened in vain for a hint that he would not insist on inflicting an extra 13,000 new homes in the West Sussex countryside.
The Secretary of State talked of a sequential and phased approach to the development of all sites, but when will that approach be incorporated into planning policy guidance? In a written answer in yesterday's Hansard at column 429, the Minister for London and Construction explained that that idea is merely for consultation at this stage. Until planning policy guidance notes are altered, nothing has changed and the green fields are just as much at risk as they were before. The Minister's fine words are not matched by deeds.
What about the county structure plans? When will the new approach apply to them? Counties such as Hampshire were dragooned into accepting an extra 10,000 houses for their structure plan. Will Hampshire, Devonshire, Cheshire and Gloucestershire have a chance to think again before their structure plans are adopted? That problem was rightly highlighted by my hon. Friend the Member for Totnes (Mr. Steen).
The third policy that should be changed is the right to roam—another example of Government confusion. Months of delay occurred while Ministers argued about whether to implement their promises. Finally last week, a document was published, which was portrayed as evidence of the Government's conversion to the voluntary approach, which the Conservative party has always supported and which has opened up 250,000 acres of land
952
for access since 1990. However, during questions about the documents launched, the Minister for the Environment was reported as saying that he saw legislation as inevitable. As my hon. Friend the Member for Ludlow (Mr. Gill) pointed out, that threat should be withdrawn today.
I hope that all hon. Members will study the wording of the Government's amendment, which claims that the Government want
"prosperity for all in rural areas".
Yet the Government have just taken powers in the Regional Development Agencies Bill to wind up the Rural Development Commission. The amendment claims that the Government are concerned about rural transport, but their planned huge increase in petrol tax will clobber every rural motorist. The amendment also claims that the Government want "comprehensive countryside policies", yet they refuse to continue to publish an annual update of the countryside White Paper, the first ever comprehensive review of countryside policy.
Dr. John Cunningham: The Conservative Government did not do that.
Mr. Yeo: Yes we did, and the Minister should know it. If the right hon. Gentleman aspires to be the countryside Minister, he should do his homework.
The amendment claims that the Government believe in inclusiveness, but lovers of traditional country sports are not just being excluded; Labour Members are supporting a Bill that will criminalise them. The Government's actions contradict the fine words in their amendment. The debate gave the Government the chance to show that they understand why 280,000 people gave up their Sunday to march on London, and that they are willing to listen to the anxieties of the marchers and millions of other country dwellers. That chance was missed by the Minister, but I hope that it will be seized by the Under-Secretary.
If the Government agree to our motion, the marchers really will have something to cheer about. I commend the motion to the House.
9.51 pm
The Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): In his opening remarks, the right hon. Member for Fylde (Mr. Jack) dubbed the debate one in which the true voice of the countryside would be heard. The Country Landowners Association may not agree. In January 1995, it stated:
"For too long there has been a lack of political focus on Britain's rural areas."
In January 1995, the National Farmers Union stated:
"Many parts of the countryside are seriously affected by unemployment, under-employment, a narrow range of job opportunities and low average wage levels."
In July 1994, the Rural Development Commission stated:
"Declining rural services threaten village life."
In November 1994, Countryside 2000, the country life magazine, stated:
"Protecting the countryside is something that we did well traditionally. Sadly the 1980s was a disastrous decade in this respect, thanks to the new spirit of laissez-faire that afflicted planning."

953
Speaking on the Conservative Government's rural record in January 1995, Action for Communities in Rural England stated:
"Our main perception is one of neglect."
On 10 October 1996, the National Farmers Union Council passed a vote of no confidence in the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg), declaring that it had
"no confidence in the Minister's representation of the interests of the UK and its agricultural industry in the EU."
The Opposition are noted for their lack of policies, direction and principles. Tonight's debate showed their sheer opportunism. The Conservative Government would not have wanted to abolish the agriculture wages councils if they had been genuinely concerned for the rural economy and the countryside. The Conservative Government deregulated bus services and privatised the railways, leaving 75 per cent. of parishes with no daily bus service, 79 per cent. with no community minibus or social car scheme, and 93 per cent. with no rail service at any time. They also closed 450 village schools, constantly threatened rural post offices with privatisation, built 60 per cent. of new houses on green-field sites, and closed village shops, hospitals and dental surgeries.
We are dealing with 18 years of Conservative neglect, but, during their lamentable contributions, Conservative Members did not have the courtesy to apologise to the people of this country for the damage that their Government caused. I have not even touched on the relaxation of regulations which led to the introduction of BSE not only into the British beef herd, but into the human food chain. The previous Government were responsible for that disgraceful occurrence, which has had an appalling effect on the countryside and its economy.
My right hon. Friend the Minister of Agriculture, my hon. Friends the Members for West Lancashire (Mr. Pickthall), for Sherwood (Mr. Tipping) and for Delyn (Mr. Hanson), and the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) dealt with the serious issues that face people in rural areas.
Several themes have recurred tonight. My hon. Friends the Members for West Lancashire and for Delyn pointed out that the Conservatives' policy was clearly "town versus country". That is not our policy. We are clear about the fact that town needs country and country needs town. [Interruption.]
Mr. Deputy Speaker: Order. Hon. Members should listen to the Minister, who is winding up an important debate.
Ms Jackson: Thank you, Mr. Deputy Speaker, but it is too late to ask Conservative Members to listen. If their own leader cannot point out to them that their arrogance and unwillingness to listen lost them the last election so resoundingly, there is nothing that anyone can do. Regrettably, their ignorance is bliss for no one in this country.
The peroration of the hon. Member for South Suffolk (Mr. Yeo) matched the opening speech of his right hon. Friend the Member for Fylde (Mr. Jack) in its lack of any understanding of the real difficulties that their Government created for those living in rural areas. The hon. Gentleman castigated the present Government for their local government finance settlement, particularly in
954
a rural context. For the first time in four years, increased funds have been provided for services delivered by a shire district. This Government have done that. We have treated all local authorities, whether rural or urban, fairly and consistently.
The pattern of gainers and losers in rural and urban areas is mixed. There are gainers and losers in both types of area. That confirms yet again that the present Government govern for all the people. We are not interested in creating artificial divisions between town and country.
Many grievous allegations were made about the Government's policy. I shall touch on only a few that we have heard, perhaps on both sides of the House but certainly from Opposition Members. A recurring Opposition allegation—
Mr. Owen Paterson: Will the Minister give way?
Ms Jackson: No.
A recurring Opposition allegation related to building on green-belt land.
Mr. Paterson rose—
Ms Jackson: I said no. That is another example of Opposition Members' inability to listen.
As my right hon. Friend the Secretary of State made clear in a statement to the House only a few days ago, we have abandoned the old predict and provide policy with regard to house building. We will work from the bottom up. We have asked for 60 per cent. of building to take place on brown-field sites. It was the Conservative party that built 60 per cent. of houses on green fields. In our 10 short months of government, we have added five times as much land to the green belt as has been lost.
Certain allegations were made about our ban on beef on the bone. Opposition Members described it as a panic measure. Let the record show, however, that independent scientists said that the material could be infected with BSE. The Conservative party banned all sales of infected material; we have done the same. It is vital to rebuild confidence in British beef at home and abroad.
More than once we were asked where was our right hon. Friend the Minister for the Environment. Let me allay the fears that may be pounding in the breasts of Opposition Members: my right hon. Friend is abroad on Government business.
Our manifesto pledged to recognise the special needs in rural areas, and our policies are being designed to take account of rural interests—it is quite wrong to suggest that we do not care or understand. The Government believe in opportunity, fairness and prosperity for all—applied equally to urban and to rural areas. We realise also that people who live and work in the countryside have distinctive needs. The rural dimension is an important consideration in many of the Government's policies.
Most important, we wish to foster a strong and vibrant rural economy. New jobs are being created in the countryside.
Mr. James Arbuthnot rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 131, Noes 321.

Division No. 188]

[9.59 pm

AYES

Ainsworth, Peter (E Survey)

Horam, John

Amess, David

Howard, Rt Hon Michael

Ancram, Rt Hon Michael

Howarth, Gerald (Aldershot)

Arbuthnot, James

Hunter, Andrew

Atkinson, David (Bour'mth E)

Jack, Rt Hon Michael

Atkinson, Peter (Hexham)

Jenkin, Bernard

Baldry, Tony

Johnson Smith, Rt Hon Sir Geoffrey

Bercow, John

Beresford, Sir Paul

Key, Robert

Blunt, Crispin

King, Rt Hon Tom (Bridgwater)

Boswell, Tim

Kirkbride, Miss Julie

Bottomley, Peter (Worthing W)

Laing, Mrs Eleanor

Bottomley, Rt Hon Mrs Virginia

Lait, Mrs Jacqui

Brady, Graham

Lansley, Andrew

Brazier, Julian

Leigh, Edward

Browning, Mrs Angela

Letwin, Oliver

Bruce, Ian (S Dorset)

Lewis, Dr Julian (New Forest E)

Burns, Simon

Lidington, David

Cash, William

Lilley, Rt Hon Peter

Chapman, Sir Sydney (Chipping Barnet)

Lloyd, Rt Hon Sir Peter (Fareham)

Luff, Peter

Chope, Christopher

Lyell, Rt Hon Sir Nicholas

Clappison, James

MacKay, Andrew

Clark, Rt Hon Alan (Kensington)

Maclean, Rt Hon David

Clarke, Rt Hon Kenneth (Rushcliffe)

McLoughlin, Patrick

Madel, Sir David

Clifton-Brown, Geoffrey

Major, Rt Hon John

Collins, Tim

Malins, Humfrey

Colvin, Michael

Maples, John

Cormack, Sir Patrick

Mates, Michael

Cran, James

Mawhinney, Rt Hon Sir Brian

Curry, Rt Hon David

May, Mrs Theresa

Davies, Quentin (Grantham)

Moss, Malcolm

Davis, Rt Hon David (Haltemprice)

Nicholls, Patrick

Day, Stephen

Norman, Archie

Duncan, Alan

Ottaway, Richard

Duncan Smith, Iain

Page, Richard

Emery, Rt Hon Sir Peter

Paice, James

Evans, Nigel

Paterson, Owen

Faber, David

Pickles, Eric

Fallon, Michael

Randall, John

Forth, Rt Hon Eric

Robertson, Laurence (Tewk'b'ry)

Fowler, Rt Hon Sir Norman

Ruffley, David

Fox, Dr Liam

St Aubyn, Nick

Fraser, Christopher

Sayeed, Jonathan

Gale, Roger

Shephard, Rt Hon Mrs Gillian

Garnier, Edward

Simpson, Keith (Mid-Norfolk)

Gibb, Nick

Soames, Nicholas

Gill, Christopher

Spelman, Mrs Caroline

Gillan, Mrs Cheryl

Spicer, Sir Michael

Gorman, Mrs Teresa

Spring, Richard

Gray, James

Stanley, Rt Hon Sir John

Green, Damian

Steen, Anthony

Greenway, John

Swayne, Desmond

Grieve, Dominic

Syms, Robert

Hague, Rt Hon William

Tapsell, Sir Peter

Hamilton, Rt Hon Sir Archie

Taylor, Ian (Esher & Walton)

Hammond, Philip

Townend, John

Hawkins, Nick

Tredinnick, David

Hayes, John

Trend, Michael

Heald, Oliver

Tyrie, Andrew

Heathcoat-Amory, Rt Hon David

Wardle, Charles

Heseltine, Rt Hon Michael

Waterson, Nigel

956

Whitney, Sir Raymond

Yeo, Tim

Widdecombe, Rt Hon Miss Ann

Young, Rt Hon Sir George

Wilkinson, John

Wilshire, David

Tellers for the Ayes:

Winterton, Mrs Ann (Congleton)

Mr. John M. Taylor and

Winterton, Nicholas (Macclesfield)

Mr. John Whittingdale.

NOES

Abbott, Ms Diane

Cryer, John (Hornchurch)

Ainger, Nick

Cunliffe, Lawrence

Ainsworth, Robert (Cov'try NE)

Cunningham, Rt Hon Dr John (Copeland)

Allan, Richard

Anderson, Donald (Swansea E)

Cunningham, Jim (Cov'try S)

Anderson, Janet (Rossendale)

Dafis, Cynog

Ashton, Joe

Dalyell, Tam

Atkins, Charlotte

Darting, Rt Hon Alistair

Austin, John

Darvill, Keith

Baker, Norman

Davey, Valerie (Bristol W)

Ballard, Mrs Jackie

Davidson, Ian

Banks, Tony

Davies, Rt Hon Denzil (Llanelli)

Barron, Kevin

Davies, Geraint (Croydon C)

Bayley, Hugh

Davies, Rt Hon Ron (Caerphilly)

Beard, Nigel

Davis, Terry (B'ham Hodge H)

Beckett, Rt Hon Mrs Margaret

Dawson, Hilton

Begg, Miss Anne

Dean, Mrs Janet

Benn, Rt Hon Tony

Denham, John

Bennett, Andrew F

Dismore, Andrew

Benton, Joe

Dobbin, Jim

Bermingham, Gerald

Donohoe, Brian H

Blackman, Liz

Doran, Frank

Blears, Ms Hazel

Dowd, Jim

Blizzard, Bob

Drew, David

Boateng, Paul

Drown, Ms Julia

Bradley, Keith (Withington)

Dunwoody, Mrs Gwyneth

Bradley, Peter (The Wrekin)

Edwards, Huw

Brake, Tom

Ellman, Mrs Louise

Brand, Dr Peter

Ennis, Jeff

Breed, Colin

Etherington, Bill

Brown, Rt Hon Nick (Newcastle E)

Fearn, Ronnie

Buck, Ms Karen

Field, Rt Hon Frank

Burden, Richard

Fisher, Mark

Burgon, Colin

Fitzpatrick, Jim

Burnett, John

Fitzsimons, Lorna

Burstow, Paul

Flint, Caroline

Cable, Dr Vincent

Follett, Barbara

Caborn, Richard

Foster, Don (Bath)

Campbell, Alan (Tynemouth)

Foster, Michael Jabez (Hastings)

Campbell, Mrs Anne (C'bridge)

Foster, Michael J (Worcester)

Campbell, Menzies (NE Fife)

Foulkes, George

Campbell—Savours, Dale

Fyfe, Maria

Cann, Jamie

Galloway, George

Caplin, Ivor

Gapes, Mike

Chapman, Ben (Wirral S)

Gardiner, Barry

Chidgey, David

George, Andrew (St Ives)

Chisholm, Malcolm

George, Bruce (Walsall S)

Clapham, Michael

Gerrard, Neil

Clark, Rt Hon Dr David (S Shields)

Gibson, Dr Ian

Clark, Dr Lynda (Edinburgh Pentlands)

Gilroy, Mrs Linda

Godman, Norman A

Clark, Paul (Gillingham)

Goggins, Paul

Clarke, Eric (Midlothian)

Golding, Mrs Llin

Clarke, Rt Hon Tom (Coatbridge)

Gordon, Mrs Eileen

Clarke, Tony (Northampton S)

Gorrie, Donald

Clelland, David

Griffiths, Jane (Reading E)

Coaker, Vernon

Griffiths, Nigel (Edinburgh S)

Coffey, Ms Ann

Griffiths, Win (Bridgend)

Cohen, Harry

Grogan, John

Colman, Tony

Gunnell, John

Cook, Frank (Stockton N)

Hain, Peter

Cooper, Yvette

Hall, Mike (Weaver Vale)

Corbett, Robin

Hall, Patrick (Bedford)

Cotter, Brian

Hamilton, Fabian (Leeds NE)

Cousins, Jim

Hanson, David

Cranston, Ross

Harris, Dr Evan

Crausby, David

Heal, Mrs Sylvia

Cryer, Mrs Ann (Keighley)

Healey, John

957

Heath, David (Somerton & Frome)

Maxton, John

Henderson, Doug (Newcastle N)

Meale, Alan

Henderson, Ivan (Harwich)

Michael, Alun

Heppell, John

Michie, Bill (Shefld Heeley)

Hesford, Stephen

Michie, Mrs Ray (Argyll & Bute)

Hinchliffe, David

Milburn, Alan

Hodge, Ms Margaret

Miller, Andrew

Hoey, Kate

Moffatt, Laura

Home Robertson, John

Moore, Michael

Hoon, Geoffrey

Moran, Ms Margaret

Hope, Phil

Morgan, Ms Julie (Cardiff N)

Hopkins, Kelvin

Morley, Elliot

Howarth, George (Knowsley N)

Mudie, George

Hughes, Ms Beverley (Stretford)

Mullin, Chris

Hughes, Kevin (Doncaster N)

Murphy, Denis (Wansbeck)

Hurst, Alan

Murphy, Jim (Eastwood)

Hutton, John

Oaten, Mark

Iddon, Dr Brian

O'Brien, Bill (Normanton)

Illsley, Eric

O'Hara, Eddie

Ingram, Adam

Olner, Bill

Jackson, Ms Glenda (Hampstead)

Öpik, Lembit

Jackson, Helen (Hillsborough)

Organ, Mrs Diana

Jenkins, Brian

Palmer, Dr Nick

Johnson, Alan (Hull W & Hessle)

Pearson, Ian

Johnson, Miss Melanie (Welwyn Hatfield)

Pendry, Tom

Perham, Ms Linda

Jones, Helen (Warrington N)

Pickthall, Colin

Jones, leuan Wyn (Ynys Môn)

Pike, Peter L

Jones, Ms Jenny (Wolverh'ton SW)

Plaskitt, James

Pope, Greg

Jones, Jon Owen (Cardiff C)

Pound, Stephen

Jones, Dr Lynne (Selly Oak)

Powell, Sir Raymond

Jones, Nigel (Cheltenham)

Prentice, Ms Bridget (Lewisham E)

Jowell, Ms Tessa

Prentice, Gordon (Pendle)

Keeble, Ms Sally

Prescott, Rt Hon John

Keen, Alan (Feltham & Heston)

Primarolo, Dawn

Keen, Ann (Brentford & Isleworth)

Prosser, Gwyn

Keetch, Paul

Purchase, Ken

Kelly, Ms Ruth

Quin, Ms Joyce

Kemp, Fraser

Quinn, Lawrie

Kennedy, Charles (Ross Skye)

Rammell, Bill

Kidney, David

Raynsford, Nick

Kilfoyle, Peter

Reid, Dr John (Hamilton N)

Lawrence, Ms Jackie

Rendel, David

Lepper, David

Robertson, Rt Hon George (Hamilton S)

Levitt, Tom

Lewis, Ivan (Bury S)

Roche, Mrs Barbara

Lewis, Terry (Worsley)

Rogers, Allan

Liddell, Mrs Helen

Rooker, Jeff

Linton, Martin

Rooney, Terry

Livingstone, Ken

Ross, Ernie (Dundee W)

Livsey, Richard

Roy, Frank

Lloyd, Tony (Manchester C)

Ruane, Chris

Llwyd, Elfyn

Russell, Bob (Colchester)

Lock, David

Salter, Martin

Love, Andrew

Sanders, Adrian

McAllion, John

Sawford, Phil

McAvoy, Thomas

Sedgemore, Brian

McCabe, Steve

Sheerman, Barry

McDonagh, Siobhain

Sheldon, Rt Hon Robert

McDonnell, John

Shipley, Ms Debra

McFall, John

Short, Rt Hon Clare

McGuire, Mrs Anne

Simpson, Alan (Nottingham S)

McIsaac, Shona

Singh, Marsha

McKenna, Mrs Rosemary

Skinner, Dennis

Mackinlay, Andrew

Smith, Angela (Basildon)

McLeish, Henry

Smith, John (Glamorgan)

McNamara, Kevin

Smith, Llew (Blaenau Gwent)

Mactaggart, Fiona

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

McWilliam, John

Snape, Peter

Mahon, Mrs Alice

Soley, Clive

Marek, Dr John

Spellar, John

Marsden, Gordon (Blackpool S)

Stevenson, George

Marshall, David (Shettleston)

Stewart, Ian (Eccles)

Marshall, Jim (Leicester S)

Stinchcombe, Paul

Martlew, Eric

Stott, Roger

958

Straw, Rt Hon Jack

Webb, Steve

Stringer, Graham

Whitehead, Dr Alan

Sutcliffe, Gerry

Wicks, Malcolm

Taylor, Rt Hon Mrs Ann (Dewsbury)

Wigley, Rt Hon Dafydd

Williams, Fit Hon Alan (Swansea W)

Taylor, David (NW Leics)

Thomas, Gareth (Clwyd W)

Williams, Alan W (E Carmarthen)

Thomas, Gareth R (Harrow W)

Williams, Mrs Betty (Conwy)

Tipping, Paddy

Willis, Phil

Touhig, Don

Winnick, David

Trickett, Jon

Winterton, Ms Rosie (Doncaster C)

Truswell, Paul

Wise, Audrey

Turner, Dennis (Wolverh'ton SE)

Wood, Mike

Turner, Dr George (NW Norfolk)

Worthington, Tony

Twigg, Derek (Halton)

Wray, James

Tyler, Paul

Wright, Anthony D (Gt Yarmouth)

Vis, Dr Rudi

Wright, Dr Tony (Cannock)

Wallace, James

Wyatt, Derek

Walley, Ms Joan

Ward, Ms Claire

Tellers for the Noes:

Wareing, Robert N

Mr. Clive Betts and

Watts, David

Mr. Graham Allen.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
The House divided: Ayes 265, Noes 163.

Division No. 189]

[10.13 pm

AYES

Ainger, Nick

Clelland, David

Ainsworth, Robert (Cov'try NE)

Coaker, Vernon

Anderson, Donald (Swansea E)

Coffey, Ms Ann

Anderson, Janet (Rossendale)

Cohen, Harry

Atkins, Charlotte

Colman, Tony

Austin, John

Cooper, Yvette

Banks, Tony

Corbett, Robin

Barron, Kevin

Cousins, Jim

Bayley, Hugh

Cranston, Ross

Beard, Nigel

Crausby, David

Beckett, Rt Hon Mrs Margaret

Cryer, Mrs Ann (Keighley)

Begg, Miss Anne

Cryer, John (Hornchurch)

Benn, Rt Hon Tony

Cunliffe, Lawrence

Bennett, Andrew F

Cunningham, Rt Hon Dr John (Copeland)

Benton, Joe

Bermingham, Gerald

Cunningham, Jim (Cov'try S)

Blackman, Liz

Dalyell, Tam

Blears, Ms Hazel

Darting, Rt Hon Alistair

Blizzard, Bob

Darvill, Keith

Boateng, Paul

Davey, Valerie (Bristol W)

Bradley, Keith (Withington)

Davidson, Ian

Bradley, Peter (The Wrekin)

Davies, Geraint (Croydon C)

Brown, Rt Hon Nick (Newcastle E)

Davis, Terry (B'ham Hodge H)

Buck, Ms Karen

Dawson, Hilton

Burden, Richard

Dean, Mrs Janet

Burgon, Colin

Denham, John

Caborn, Richard

Dismore, Andrew

Campbell, Alan (Tynemouth)

Dobbin, Jim

Campbell, Mrs Anne (C'bridge)

Donohoe, Brian H

Campbell—Savours, Dale

Doran, Frank

Cann, Jamie

Dowd, Jim

Caplin, Ivor

Drew, David

Chapman, Ben (Wirral S)

Drown, Ms Julia

Chisholm, Malcolm

Ellman, Mrs Louise

Clapham, Michael

Ennis, Jeff

Clark, Rt Hon Dr David (S Shields)

Fitzpatrick, Jim

Clark, Dr Lynda (Edinburgh Pentlands)

Fitzsimons, Lorna

Flint, Caroline

Clark, Paul (Gillingham)

Follett, Barbara

Clarke, Eric (Midlothian)

Foster, Michael Jabez (Hastings)

Clarke, Rt Hon Tom (Coatbridge)

Foster, Michael J (Worcester)

Clarke, Tony (Northampton S)

Foulkes, George

959

Fyfe, Maria

McGuire, Mrs Anne

Galloway, George

McIsaac, Shona

Gapes, Mike

McKenna, Mrs Rosemary

Gardiner, Barry

Mackinlay, Andrew

George, Bruce (Walsall S)

McNamara, Kevin

Gerrard, Neil

Mactaggart, Fiona

Gibson, Dr Ian

McWilliam, John

Gilroy, Mrs Linda

Mahon, Mrs Alice

Godman, Norman A

Marek, Dr John

Goggins, Paul

Marsden, Gordon (Blackpool S)

Golding, Mrs Llin

Marshall, David (Shettleston)

Gordon, Mrs Eileen

Marshall, Jim (Leicester S)

Griffiths, Jane (Reading E)

Martlew, Eric

Griffiths, Nigel (Edinburgh S)

Maxton, John

Griffiths, Win (Bridgend)

Meale, Alan

Grogan, John

Michael, Alun

Gunnell, John

Michie, Bill (Shefld Heeley)

Hain, Peter

Milburn, Alan

Hall, Mike (Weaver Vale)

Miller, Andrew

Hall, Patrick (Bedford)

Moffatt, Laura

Hamilton, Fabian (Leeds NE)

Moran, Ms Margaret

Hanson, David

Morgan, Ms Julie (Cardiff N)

Heal, Mrs Sylvia

Morley, Elliot

Healey, John

Mudie, George

Henderson, Ivan (Harwich)

Mullin, Chris

Heppell, John

Murphy, Denis (Wansbeck)

Hesford, Stephen

Murphy, Jim (Eastwood)

Hodge, Ms Margaret

O'Brien, Bill (Normanton)

Home Robertson, John

O'Hara, Eddie

Hoon, Geoffrey

Olner, Bill

Hope, Phil

Organ, Mrs Diana

Hopkins, Kelvin

Palmer, Dr Nick

Howarth, George (Knowsley N)

Pearson, Ian

Hughes, Ms Beverley (Stretfond)

Pendry, Tom

Hughes, Kevin (Doncaster N)

Perham, Ms Linda

Hurst, Alan

Pickthall, Colin

Hutton, John

Pike, Peter L

Iddon, Dr Brian

Plaskitt, James

Illsley, Eric

Pope, Greg

Ingram, Adam

Powell, Sir Raymond

Jackson, Ms Glenda (Hampstead)

Prentice, Ms Bridget (Lewisham E)

Jackson, Helen (Hillsborough)

Prentice, Gordon (Pendle)

Jenkins, Brian

Prescott, Rt Hon John

Johnson, Alan (Hull W & Hessle)

Primarolo, Dawn

Johnson, Miss Melanie (Welwyn Hatfield)

Prosser, Gwyn

Purchase, Ken

Jones, Helen (Warrington N)

Quin, Ms Joyce

Jones, Ms Jenny (Wolverh'ton SW)

Quinn, Lawrie

Rammell, Bill

Jones, Jon Owen (Cardiff C)

Raynsford, Nick

Jones, Dr Lynne (Selly Oak)

Reid, Dr John (Hamilton N)

Jowell, Ms Tessa

Robertson, Rt Hon George (Hamilton S)

Keeble, Ms Sally

Keen, Alan (Feltham & Heston)

Roche, Mrs Barbara

Keen, Ann (Brentford & Isleworth)

Rogers, Allan

Kelly, Ms Ruth

Rooker, Jeff

Kemp, Fraser

Rooney, Terry

Kidney, David

Ross, Ernie (Dundee W)

Kilfoyle, Peter

Roy, Frank

Lawrence, Ms Jackie

Ruane, Chris

Lepper, David

Salter, Martin

Levitt, Tom

Sawford, Phil

Lewis, Ivan (Bury S)

Sedgemore, Brian

Lewis, Terry (Worsley)

Sheerman, Barry

Liddell, Mrs Helen

Sheldon, Rt Hon Robert

Linton, Martin

Shipley, Ms Debra

Livingstone, Ken

Simpson, Alan (Nottingham S)

Lloyd, Tony (Manchester C)

Singh, Marsha

Lock, David

Skinner, Dennis

Love, Andrew

Smith, Angela (Basildon)

McAllion, John

Smith, John (Glamorgan)

McAvoy, Thomas

Smith, Llew (Blaenau Gwent)

McCabe, Steve

Snape, Peter

McDonagh, Siobhain

Soley, Clive

McDonnell, John

Spellar, John

McFall, John

Stevenson, George

960

Stewart, Ian (Eccles)

Ward, Ms Claire

Stinchcombe, Paul

Wareing, Robert N

Stott, Roger

Watts, David

Straw, Rt Hon Jack

Whitehead, Dr Alan

Stringer, Graham

Williams, Rt Hon Alan (Swansea W)

Sutcliffe, Gerry

Taylor, Rt Hon Mrs Ann (Dewsbury)

Williams, Alan W (E Carmarthen)

Williams, Mrs Betty (Conwy)

Taylor, David (NW Leics)

Winnick, David

Thomas, Gareth (Clwyd W)

Winterton, Ms Rosie (Doncaster C)

Thomas, Gareth R (Harrow W)

Wise, Audrey

Tipping, Paddy

Wood, Mike

Touhig, Don

Worthington, Tony

Trickett, Jon

Wray, James

Truswell, Paul

Wright, Anthony D (Gt Yarmouth)

Turner, Dennis (Wolverh'ton SE)

Wyatt, Derek

Turner, Dr George (NW Norfolk)

Twigg, Derek (Halton)

Tellers for the Ayes:

Vis, Dr Rudi

Mr. Clive Betts and

Walley, Ms Joan

Mr. Graham Allen.

NOES

Ainsworth, Peter (E Surrey)

George, Andrew (St Ives)

Allan, Richard

Gibb, Nick

Amess, David

Gill, Christopher

Ancram, Rt Hon Michael

Gillan, Mrs Cheryl

Arbuthnot, James

Gorman, Mrs Teresa

Atkinson, David (Bour'mth E)

Gorrie, Donald

Atkinson, Peter (Hexham)

Gray, James

Baker, Norman

Green, Damian

Ballard, Mrs Jackie

Greenway, John

Bercow, John

Grieve, Dominic

Beresford, Sir Paul

Hague, Rt Hon William

Blunt, Crispin

Hamilton, Rt Hon Sir Archie

Boswell, Tim

Hammond, Philip

Bottomley, Peter (Worthing W)

Harris, Dr Evan

Bottomley, Rt Hon Mrs Virginia

Hawkins, Nick

Brady, Graham

Hayes, John

Brake, Tom

Heald, Oliver

Brand, Dr Peter

Heath, David (Somerton & Frome)

Brazier, Julian

Heathcoat—Amory, Rt Hon David

Breed, Colin

Horam, John

Browning, Mrs Angela

Howard, Rt Hon Michael

Bruce, Ian (S Dorset)

Howarth, Gerald (Aldershot)

Burnett, John

Hughes, Simon (Southwark N)

Burns, Simon

Hunter, Andrew

Burstow, Paul

Jack, Rt Hon Michael

Cable, Dr Vincent

Jenkin, Bernard

Campbell, Menzies (NE Fife)

Johnson Smith, Rt Hon Sir Geoffrey

Cash, William

Chapman, Sir Sydney (Chipping Barnet)

Jones, leuan Wyn (Ynys Môn)

Jones, Nigel (Cheltenham)

Chope, Christopher

Keetch, Paul

Clappison, James

Kennedy, Charles (Ross Skye)

Clark, Rt Hon Alan (Kensington)

Key, Robert

Clifton—Brown, Geoffrey

King, Rt Hon Tom (Bridgwater)

Collins, Tim

Kirkbride, Miss Julie

Colvin, Michael

Laing, Mrs Eleanor

Cormack, Sir Patrick

Lait, Mrs Jacqui

Cotter, Brian

Lansley, Andrew

Cran, James

Leigh, Edward

Curry, Rt Hon David

Letwin, Oliver

Dafis, Cynog

Lewis, Dr Julian (New Forest E)

Davies, Quentin (Grantham)

Lidington, David

Davis, Rt Hon David (Haltemprice)

Lilley, Rt Hon Peter

Day, Stephen

Livsey, Richard

Duncan Smith, Iain

Lloyd, Rt Hon Sir Peter (Fareham)

Evans, Nigel

Llwyd, Elfyn

Faber, David

Luff, Peter

Fallon, Michael

Lyell, Rt Hon Sir Nicholas

Fearn, Ronnie

MacKay, Andrew

Foster, Don (Bath)

Maclean, Rt Hon David

Fowler, Rt Hon Sir Norman

McLoughlin, Patrick

Fox, Dr Liam

Madel, Sir David

Fraser, Christopher

Maginnis, Ken

Garnier, Edward

Major, Rt Hon John

961

Malins, Humfrey

Spicer, Sir Michael

Maples, John

Spring, Richard

Mates, Michael

Stanley, Rt Hon Sir John

Mawhinney, Rt Hon Sir Brian

Steen, Anthony

May, Mrs Theresa

Swayne, Desmond

Michie, Mrs Ray (Argyll & Bute)

Syms, Robert

Moore, Michael

Tapsell, Sir Peter

Moss, Malcolm

Taylor, Ian (Esher & Walton)

Nicholls, Patrick

Townend, John

Norman, Archie

Tredinnick, David

Oaten, Mark

Trend, Michael

Öpik, Lembit

Tyler, Paul

Ottaway, Richard

Tyrie, Andrew

Page, Richard

Viggers, Peter

Paice, James

Wallace, James

Paterson, Owen

Wardle, Charles

Pickles, Eric

Waterson, Nigel

Randall, John

Webb, Steve

Rendel, David

Whitney, Sir Raymond

Robertson, Laurence (Tewk'b'ry)

Widdecombe, Rt Hon Miss Ann

Ruffley, David

Wigley, Rt Hon Dafydd

Russell, Bob (Colchester)

Wilkinson, John

St Aubyn, Nick

Wilshire, David

Sanders, Adrian

Winterton, Mrs Ann (Congleton)

Sayeed, Jonathan

Winterton, Nicholas (Macclesfield)

Shephard, Rt Hon Mrs Gillian

Yeo, Tim

Simpson, Keith (Mid-Norfolk)

Young, Rt Hon Sir George

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

Tellers for the Noes:

Soames, Nicholas

Mr. John M. Taylor and

Spelman, Mrs Caroline

Mr. John Whittingdale.

Question accordingly agreed to.
MR. DEPUTY SPEAKER forthwith declared the main question, as amended, to be agreed to.
Resolved,
That this House condemns the previous administration for its persistent neglect of the countryside over the past eighteen years which resulted in rural unemployment and deprivation and the collapse of the rural transport system; and congratulates the Government on its emphatic commitment to comprehensive countryside policies, to reform of the Common Agricultural Policy, to successful, sustainable United Kingdom agriculture, and on its vision for a countryside that is strong, fair and modern, with a programme for social justice, inclusiveness, welfare reform, improving services, the national minimum wage, education and skills which will ensure prosperity for all in rural areas as well as in the towns.
MR. GRAHAM ALLEN (Lord Commissioner to the Treasury) and MR. JOHN M. TAYLOR, who acted as Tellers in Division No. 187, came to the Table.
Mr. Allen: I have to report an error in the number reported as having voted in the No Lobby in the Division at 7 o'clock on the first Opposition motion. The number voting no was 320, not 329 as reported.
Mr. Deputy Speaker: The Clerk will arrange that the record is corrected.

DELEGATED LEGISLATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

NORTHERN IRELAND
That the draft Appropriation (Northern Ireland) Order 1998, which was laid before this House on 12th February, be approved.—[Mr. Kevin Hughes.]
Question agreed to.

Heavily Indebted Countries
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kevin Hughes.]
Mr. Deputy Speaker (Sir Alan Haselhurst): Perhaps the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) should wait a moment while hon. Members leave the Chamber as quickly and as quietly as possible.
10.25 pm
Mr. Paul Goggins: Thank you for protecting my first paragraph, Mr. Deputy Speaker. I am grateful for the opportunity to initiate this Adjournment debate on the problems and opportunities associated with third-world debt. For me the timing is particularly appropriate, since today I accompanied my right hon. Friend the Secretary of State for International Development to meet Church groups in my constituency that have campaigned for many years on behalf of the one in four people in the world who live in abject poverty. My right hon. Friend was extremely well received. It is appropriate, too, because we are merely weeks away from important meetings of the International Monetary Fund and the World bank, as well as the Group of Seven meeting in Birmingham and we have reached a crucial point in the international strategy for reducing the debt of the world's poorest countries—the heavily indebted poor countries initiative, or HIPCI.
I see nothing wrong in any country, rich or poor, borrowing to invest to deliver a developing and sustainable economy. Indeed, one of the problems facing the poorest countries of the world is finding people who want to invest in their countries. In the 1970s and 1980s, many of the poorest countries were given loans that they could never hope to repay. Sometimes the creditors behaved irresponsibly, sometimes the Governments of the debtor countries were corrupt. Also, there were fluctuating interest rates, currency depreciations, falls in export prices, wars and drought, and all impacted on the world's poorest countries.
As an example of how the debt burden grew, in 1962 the countries of sub-Saharan Africa had a total debt of $3 billion, but today that total stands at $235 billion. In 1996, the World bank and the IMF, with considerable support it must be said from the right hon. and learned Member for Rushcliffe (Mr. Clarke), then the Chancellor of the Exchequer, established HIPCI, to provide the most heavily indebted and poverty-stricken countries with a robust exit from the burden of unsustainable debt. They identified 41 countries with a total population of 700 million people, which all had external debts valued at more than double their export earnings. Of course, many countries were in a much worse position. For example, Mozambique has debts of 10 times the value of its export earnings.
The advantages of HIPCI are that it provided a comprehensive assessment of each country's level of debt. It put in place a one-off system of debt reduction via the Paris club of Government creditors. For the first time ever, the IMF and the World bank agreed to provide debt relief themselves and they went beyond the existing Naples terms, which limited debt reduction to 67 per cent., moving instead to a new level of 80 per cent.
964
Moreover—many would argue that this was not an advantage—it was agreed that debt reduction would take place only after a six-year period of compliance, in which debtor countries had to achieve structural adjustment targets. It was recognised that, although the debts of the world's poorest countries were not a threat to the international finance system, they were a tax on economic progress and prevented sustainable growth and development.
That was why HIPCI was started. It was greeted with great acclaim—it was as if James Wolfensohn, the president of the World bank, had come as a modern messiah to bring good news to the poor. The truth is that, 18 months on, HIPCI is in some difficulty, partly because of the framework and the criteria that were laid down, and partly because of a lack of political will from a number of creditor Governments, not—I hasten to add—including the United Kingdom Government. As things stand, of the 41 heavily indebted poor countries, only Uganda and Bolivia will receive help in 1998—the majority will receive no help until into the next century.
The case of Mozambique, the poorest country in the world, has brought into focus the problems of HIPCI. Mozambique built up most of its debt during a 16-year civil war, which ended in total economic collapse. Despite its problems, however, it has started to turn round the situation. In 1996, its economy grew by 6 per cent. and its exports had risen by 30 per cent. Nevertheless, its exports are worth only $225 million—roughly what the country needs to service its debt repayments.
The price of Mozambique's indebtedness is paid by her people: 10 million people have no access to safe drinking water; 1 million children are not able to attend primary school; and 200,000 children will die this year before they reach their fifth birthday. One of Mozambique's major difficulties has been the HIPCI rules, which allow only 80 per cent. debt relief, despite the fact that most experts agree that 90 per cent. is required.
I know that, at the recent Paris club meeting, representatives managed to break through the 80 per cent. ceiling, but there is still a deficit of $100 million. Again, I praise the UK Government, who have contributed a further $10 million to try to fill that gap, in the hope that others will be moved to match that figure. It is clear that, unless creditors are prepared to change the rules and adopt a more urgent and generous approach, HIPCI for Mozambique and for many others is in grave danger.
One of the countries that may suffer is Tanzania, which has been implementing structural adjustment programmes since the mid-1980s, and which has received full marks from the IMF for its economic performance over the past two years. However, it spends a third of its export earnings on servicing its debts; it spends on debt four times what it spends on primary education or on health provision. Under HIPCI's current terms, the best that Tanzania can hope for is that next year its creditors may agree how to share out the debt reduction burden—by 2002, it may receive some actual relief.
Even the two countries that will receive help this year—Uganda and Bolivia—have not gained as much from HIPCI as they expected. Delays have cost Uganda an estimated $193 million, and overestimation of sustainable debt levels has cost Bolivia an estimated $241 million. HIPCI is in danger of delivering too little,

965
too late. Unless something is done, we are in grave danger that it will not deliver what was originally intended.
I offer some proposals, which are supported by a number of development experts and which, I believe, should be considered. We should review the definition of debt sustainability, which currently includes a ratio of debt repayment to export income of 20:25 per cent., and a ratio of total debt to export income of 200:250 per cent. I simply ask why. No one has yet been able to give a convincing justification of those levels—perhaps my hon. Friend the Economic Secretary can. At best, they seem arbitrary, and, at worst, they seem to have been set to suit the creditor, not the debtor.
We should set a limit on the proportion of Government revenue that can be spent on servicing debt—say, 15 per cent. Countries should clearly pay something to wipe out their debts, but every dollar spent servicing debt is another dollar less for education, health and sanitation.
We should review the time scales governing HIPCI. I recognise that it is extremely important for poor indebted countries to have sustainable and sound economies, but to tell a country in which one fifth of children die before their fifth birthday that it will have to wait until 2002 is simply not acceptable. It may be acceptable in the world of economic theory, but in the real world of suffering, six years is too long to wait.
We need more flexibility about the 80 per cent. debt relief ceiling. We should not expect the needs of the world's poorest people to be limited by a technical formula. If Mozambique needs 90 per cent. debt relief, it should get it. I acknowledge the United Kingdom's recent initiative, but that 90 per cent. should be given as a right, not as a fudge, which smacks more of charity than of justice and, more importantly, allows the unenthusiastic to drag their feet.
Rules and regulations count for nothing unless the IMF, the World bank and creditor Governments show more compassion and a greater sense of urgency: the kind of urgency, I might argue, that helped to put together the $100 billion package for south-east Asia in a matter of three months.
I want to emphasise the positive role played by our Government, particularly through the Mauritius mandate. No doubt my hon. Friend the Minister will outline some of the details of that mandate, which was a genuine attempt to speed up the process and deliver some practical help. That spirit is not shared by all creditors. In particular, I cite Italy, Japan and Germany.
Germany's attitude is perhaps the hardest to understand. Last Friday was the 45th anniversary of the London agreement, which arose from Germany's inability to service its debts after the second world war, and under which 50 per cent. of those debts were cancelled; yet now, Germany drags its feet over an initiative that would cost in total 5 per cent. of the cost of reunification.
New priorities and a change of heart are needed. Organisations such as Oxfam, Christian Aid, the Catholic Fund for Overseas Development and, more recently, Jubilee 2000, are playing a vital part. Jubilee 2000 is especially to be praised. The idea of jubilee is rooted in Leviticus. It was an opportunity, every 50 years, to restore balance to economic life; to forgive debts; and to let the slaves go free. As is often pointed out, that did not always
966
happen—people were as human then as they are now—but it was an aspiration and an inspiration, as it can be for us today.
The millennium can be a special time, a one-off moment for doing something extraordinary: cancelling the debts of the poorest countries and releasing the cash to reduce poverty. As a millennium project, that has the capacity to fire our nation's imagination. A nation that overturned the political status quo on 1 May and that mourned so deeply for Princess Diana is ready for a humane project that can bring progress and justice to 700 million of the world's poorest people.
Evidence of the potential popularity of such a scheme was contained in a MORI poll commissioned recently by CAFOD. Given a choice between writing off third-world debt and funding the millennium dome, people opted by four to one for the former. One in five ranked cancelling the unpayable debts of the world's poorest countries as the best way in which to celebrate the millennium.
In total, this country will spend £2.7 billion of public money on millennium projects. That is enough to cancel the debts of the 11 poorest African countries. How do we make the breakthrough? We have to start by talking in a more practical way: perhaps a little less about the telephone number debt figures owed by poor countries, and rather more about the millions of mothers in those countries who die in childbirth. The way we talk—the words and the pictures we use—can add urgency to our initiative and can help us to see that it is achievable. We could deliver the whole HIPC initiative for what Americans spend in one year on training shoes.
We must also think of debt reduction as poverty reduction. Let us forgive the debts, but let us also insist that the money is spent on health, education and clean water. In the first 10 months of our Government, we have seen priority given to health and education, which are popular causes. Let us ensure that we insist on the same standards for the world's poorest people. That is the approach that we are already taking when we link export guarantees to productive investment.
The Jubilee 2000 campaign has a prayer that will have meaning for believers and non-believers alike. It says:
"O God, to whom we owe more than we can count, in our desire to control all that will come to be, we hold your other children in the grip of debt which they cannot repay; and make them suffer now the poverty we dread. Do not hold us to our debts but unchain our fear, that we may release others into an open future of unbounded hope."
Let us take that golden opportunity to remove the burden of debt from the world's poorest countries and give their people real hope for the new millennium.
10.40 pm
The Economic Secretary to the Treasury (Mrs. Helen Liddell): I congratulate my hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins) on securing this Adjournment debate, which is most timely because of the significance of the issues and the international conferences that are looming on the subject. It is also timely because, as my hon. Friend reminded us in his closing remarks, we are in the Lenten season, which is a time of reflection. Many of us are impressed by the commitment and compassion that my hon. Friend has shown in raising these important issues.
It is important for all of us who live in the advanced world to recognise that the world's poorest and most heavily indebted countries need urgent help with their

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debt problems. The debate is also timely because, as my hon. Friend said, we must consider the current state of the heavily indebted poor countries' initiative. Given the level of public feeling and the great resolve that has been shown recently by the international community in dealing with financial instability in Asia, it has become doubly important to ensure that the debt problems of the desperately poor countries are dealt with effectively and permanently, and that they are not squeezed out of our international economic debate by the scale of the problems experienced in wealthier economies.
Since the initiative was launched by the World bank and the International Monetary Fund in September 1996, we have seen some progress. Four countries—Uganda, Bolivia, Burkina Faso and Guyana—have had decisions on the level of relief that they will receive under the HIPC initiative. In a few weeks' time in April, Uganda will be the first country to receive relief. My right hon. Friend the Secretary of State for International Development has already announced a contribution by the Government of £6.5 million to help the African Development bank meet the costs of debt relief. Uganda will be followed by Bolivia in September, and Guyana in December. Burkina Faso will receive its relief under the initiative in April 2000. I recognise the problems that those countries will face, but the scale is enormous indeed.
A start has been made, but it does not yet make the HIPC initiative an undeniable success. In the speech by my right hon. Friend the Chancellor of the Exchequer—the Mauritius mandate speech, as it is now known—he set out targets that he felt that the international community should adopt to ensure the rapid and flexible implementation of the HIPC initiative.
One goal is for three quarters of the 20 countries initially identified by the International Monetary Fund and World bank as possibly needing HIPC relief to receive decisions on the timing and level of debt relief by the new millennium. I accept my hon. Friend's point about the significance of marking the millennium not only by celebration, but by recognising that many people in many parts of the world do not have the wherewithal or the will to celebrate if they live in poverty. I believe that the target set in the Mauritius mandate is attainable, but it will not and cannot be reached without very substantial efforts by the international community, as well as by the debtor countries, which must acknowledge their responsibility for putting to rights their economic problems.
My hon. Friend was right to draw our attention to the need for the international community urgently to demonstrate its commitment in the case of Mozambique, which spends twice as much on servicing its debts as on the basic services of health care and education. Even then, it manages to meet only about a third of its debt obligations. It is a severely indebted country which has, as he said, demonstrated its commitment to reform, but it awaits a decision from creditors to provide the necessary debt relief to reduce its debt burden to a sustainable level.
My hon. Friend movingly described the human cost of Mozambique's economic crisis. IMF figures show that to reach debt sustainability, Mozambique will require a debt write-off of about 88 per cent. I shall come to debt sustainability in a minute. The UK has consistently argued that the Paris club of Government creditors should provide debt relief of up to 90 per cent. in the special case
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of Mozambique. Despite that, the Paris club agreed in January to provide debt relief equivalent only to an 85 per cent. write-off. The outstanding amount is some $100 million dollars. Without that money, the IMF and World bank boards have been unable to proceed with HIPC relief for the most deserving candidates. Mozambique is a crucial test case for the seriousness of the international community's commitment to debt relief and the HIPC initiative.
My hon. Friend asked about the debt sustainability criteria. Debt sustainability is defined in terms of an agreed ratio based on empirical studies by the World bank and the IMF on debtors' debt service performance over time. It is only an indicative analysis, but I hope that at least by reducing debts to such a level, we shall come nearer to the point of preventing the build-up of arrears, while allowing debtor countries the necessary development costs of health and education. I understand my hon. Friend's frustration about the time that that is taking, but we must concentrate countries' minds on debt relief.
Tracking the record of reform is a key indicator that sensible policies will be sustained. There is a need to ensure that structural problems are put right to make sure that the situation never again occurs. Countries get help from international financial institutions, donors and bilateral creditors while they are establishing a track record. For countries that have already established long track records, the UK will continue to argue that it is absurd to ask for further lengthy periods of such policies before debt relief is available. We have been successful in doing that for both Uganda and Guyana.
The UK, with some other creditors, has suggested that individual donors contribute bilaterally to raise the necessary $100 million. My right hon. Friend the Chancellor has written to his counterparts in the G10, urging them to help to resolve the problem, and he and my right hon. Friend the Secretary of State for International Development met the president of the World bank last week to discuss possible solutions.
After that meeting, we announced that we—the United Kingdom Government—would commit up to $10 million of aid funds to filling the financing gap. That contribution is on top of the £10 million that my right hon. Friend the Secretary of State for International Development has already committed, through her Department's bilateral aid programme, to help Mozambique to meet the costs of servicing its loans from the multilateral development banks.
I am hopeful that those efforts, along with the considerable work being done at the World bank and the IMF, will bring a rapid solution to the problem. Last month, I was in Washington, where I raised the matter again with the World bank and the US Treasury.
Decisions are expected in the coming months on Cote d'Ivoire, Mali and Mauritania. If those go smoothly and a solution is found for Mozambique, we shall be able to say that the HIPC initiative is well on track. To meet the Chancellor's Mauritius mandate targets, however, greater efforts will be required to ensure that all the countries identified under the initiative receive relief as quickly as possible.
As my hon. Friend pointed out, the United Kingdom is leading the way in making that effort, not least in our capacity as president of the G7. The HIPC initiative will

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be on the agenda in the context of development issues at the summit in Birmingham on 15 to 17 May. I hope, as do the Government, that that discussion can pave the way for more flexible and rapid implementation of the HIPC initiative, in line with the goals set out in the Mauritius mandate.
After the recent meeting of G7 finance Ministers and central bank governors, a communique was published which expressed the hope that all the 41 countries identified under the HIPC initiative would have begun the process of securing the debt relief that they needed by the year 2000.
My hon. Friend referred to the work done by the Churches, and I pay tribute to that. The Government have engaged in regular dialogue with Church leaders and NGO directors on the HIPC initiative. In December last year, my right hon. Friend the Chancellor held a seminar on the issues at No. 11 Downing street. The discussion was constructive, and showed that, although our final objectives may differ in some respects, there is much common ground between the Government and those other groups. On 17 February, my right hon. Friends the Chancellor and the Secretary of State for International Development met the president of the World bank, as well as a smaller group of Church representatives. It is important that that dialogue continues.
My hon. Friend may be interested to know that my fellow Ministers on ECOFIN are already finding that NGOs and Church communities in their countries are putting pressure on them in relation to HIPC. That is a useful development.
In the HIPC initiative, the IMF and World bank have provided the international community with a tool for dealing with the unsustainable debt burdens of the world's
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most indebted countries. We support that initiative and we support a serious commitment by the international community to implementing it flexibly. There must be an equal commitment by the debtor countries to reform. Once that happens, those countries can look toward implementing policies that can lead to sustainable economic growth, which is necessary for long-term development and poverty alleviation.
My hon. Friend mentioned Tanzania, which is one of the countries initially identified as possibly needing extra debt relief under the HIPC initiative. We fully support such relief for Tanzania, providing that it adopts and adheres to economic and structural reforms. My right hon. Friend the Secretary of State for International Development has committed between £5 million and £10 million to help the Tanzanians to meet the costs of servicing some of their loans.
Debt sustainability is, in the case of every poor country, our first goal. It is not, however, the full solution to the problems faced by HIPC. In short, there is a need to act quickly and effectively. It is important to the House, the Government and the British people. In the past six months, I have received 3,000 letters and postcards, many of which were accompanied by donations from 2p to several pounds from ordinary men and women in this country seeking to ease the debt burdens of those who are much poorer than we are.
We as a Government are determined to fulfil the hopes of our own people and of those in the most indebted countries of the world. I am grateful to my hon. Friend for giving us an opportunity this evening to discuss this important and timely subject.
Question put and agreed to.
Adjourned accordingly at six minutes to Eleven o'clock.

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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield.
Lord Dunleath—Sat first in Parliament after the death of his father.
Lord Hives—Sat first in Parliament after the death of his uncle.
Lord Bolton—Took the Oath.

European Union: Accession Process
The Earl of Carlisleasked Her Majesty's Government:
What measures are being undertaken to help the applicant nations of central and eastern Europe, in particular Latvia and Lithuania, which are not in the first wave of accession negotiations, to prepare for entry to the European Union at the earliest opportunity.
Lord Whitty: My Lords, the Luxembourg European Council took the necessary decisions to ensure that the enlargement process was all-inclusive. As part of that, the accession process will begin on 30th March with all 10 central European applicants.
The Luxembourg European Council also decided on measures to reinforce the applicants' preparations for accession. An enhanced pre-accession strategy, centring on accession partnerships and increased pre-accession aid, accompanied by an analytical study of the EU acquis, will help Latvia and Lithuania fulfil the Copenhagen criteria and come into line with EU legislation. The London European Conference on 12th March is another important element on inter-governmental co-operation within that process.
The Earl of Carlisle: My Lords, I thank the Minister for that helpful Answer. Is he aware that the right honourable Member for Livingston in another place presided over the European Union Association in Brussels on 23rd February? What, if anything, was achieved at that meeting? Will Her Majesty's Government utilise the association to ensure that the nations not in the first wave have a good opportunity of joining the EU before the end of this decade?
Lord Whitty: My Lords, I am aware of the meeting. It is part of the ongoing process of engaging the civic society in the applicant countries. The Luxembourg summit also ensured that aid would be geared to those countries in the greatest need. In most cases, those not in the first wave entering formal negotiations will receive benefit from that decision.
Lord Stoddart of Swindon: My Lords, does my noble friend agree that one of the great bars to entry to
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the EU of Latvia and Lithuania and many other countries is the continued operation of the absurd common agricultural policy? If we want those countries to join the European Union, would it not be as well to get rid of that ridiculous policy as soon as possible?
Lord Whitty: My Lords, it is part of the Government's intent drastically to reform the CAP. That requires detailed negotiations with existing members and further discussion of how the policy would apply to potential new candidates joining the European Union. In that context, it is a problem if it remains unreformed.
Baroness Rawlings: My Lords, despite the Luxembourg European Council, mentioned by the Minister, and in the light of the recent failure of the Amsterdam conference to prepare satisfactorily for enlargement of the EU, do the Government agree with Commission proposals under Agenda 2000 to hold another IGC? What effect would that have on the likely timetable of future EU enlargement to enable the smooth admission of eastern European countries, in particular Lithuania and Bulgaria?
Lord Whitty: My Lords, the Amsterdam Treaty achieved a fair amount in preparation for enlargement. However, a number of institutional issues were left over which must be addressed. The Government believe that that will not involve a major inter-governmental conference the size of Amsterdam. We believe that those institutional issues can be resolved in time and in parallel with the probably long and difficult negotiations for accession, even of the first countries to join.
Lord Mackie of Benshie: My Lords, will the Minister confirm that the Government intend to reform the CAP and not abolish it?
Lord Whitty: My Lords, the noble Lord will find that I did not repeat precisely the words of my noble friend Lord Stoddart. We intend to reform the CAP, but we require agreement to do so. The imperative for reform is clear in the enlargement context and in other areas.
Lord Bruce of Donington: My Lords, will the Minister seek to dispel the note of optimism in the Question, which presupposes that the European Union in its present form will be in existence when the countries concerned will be joining? Will the Minister induce his noble friends to take a closer look at the implications of the Amsterdam and Maastricht treaties, which by this time they might have had the opportunity to examine?
Lord Whitty: My Lords, I never wish to discourage optimism; indeed, I have for some time been attempting to dispel the pessimism of my noble friend Lord Bruce about such matters, but without any success whatever. I suspect that these issues will be returned to in our debates in Committee on Amsterdam, which will take place in a few days' time.
Lord Renton: My Lords, is the Minister aware that the larger the Community becomes the less possible it

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is to harmonise the laws of all the countries involved? Therefore, has not the time come for a complete revision of the Rome Treaty, the original proposals of which may have suited the first six countries but are now utterly impossible to implement?
Lord Whitty: No, my Lords; I do not accept that view. Indeed, one of the great economic and social benefits of enlargement will be the creation of a single market spanning the whole of Europe. Those regulations have already been adopted to a large extent in those countries which are seeking membership. The fulfilment of the single market across eastern and western Europe will be the greatest achievement of the European Union, and the greatest guarantee of prosperity both east and west.
Lord Pearson of Rannoch: My Lords, in that case, can the Minister expand on the answer that he gave to his noble friend Lord Stoddart of Swindon in which he referred to detailed discussions with existing members? Can the noble Lord tell the House exactly how many votes are required to carry reform of the common agricultural policy, and how many votes the Government are, at present, confident of securing towards that noble aim?
Lord Whitty: My Lords, there is already a proposition on the table from the Commission for partial reform of the CAP, which we strongly support. That is the first step. There appears to be majority support for that position. However, the more radical reform that we would like to see will require some persuasion. We do not require unanimity but we do require a qualified majority in most aspects of the agricultural policy.
Lord Monson: My Lords, given that the lavish transfer payments enjoyed by the Republic of Ireland, Greece, Spain and Portugal will not be available to the Baltic States, or other applicant countries, because the money simply is not there, is the Minister certain that it is in the genuine interests of Latvia, Lithuania, and so on, to join an organisation so bureaucratic, over-regulated and interfering as the EU? Would they not be much better off with a genuine advantageous free trade agreement instead?
Lord Whitty: My Lords, without accepting for one moment the description of the EU advanced by the noble Lord, I can tell the House that I believe this to be a matter for the peoples of those countries to assess. As I understand it, the overwhelming view in those countries is that they wish to join the European Union. Therefore, we should help to develop their prosperity and their civic institutions to that end.

Far Eastern Economic Problems: Student Support
2.48 p.m.
Lord Dean of Beswickasked Her Majesty's Government:
Whether recent financial difficulties in certain Far Eastern countries may reduce the number of students from those countries who undertake further education in the UK, and whether this may in turn cause financial difficulties for some UK universities and other higher education establishments.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, it is difficult to predict exactly what the impact of the various currency collapses in South-East Asia will be on the numbers of students coming to the UK, though there is clearly cause for concern. The Government applaud the substantial efforts made by higher education institutions to alleviate the hardship of many of the students affected, enabling them to continue to study here. The Higher Education Funding Council for England is looking at the potential effects on individual universities and higher education colleges and will offer advice to any who might need it.
Lord Dean of Beswick: My Lords, I am grateful to my noble friend the Minister for that reply. However, is she aware that I have received some information from the Council of Vice-Chancellors and Principals which indicates that, if there were a total withdrawal of those students, the amount of money lost would be as high as £300 million? Further, another £300 million could be lost that these students normally spend while they are over here. These are serious figures. Will the Minister do her best to make sure that the Government keep this situation under review and take any action that may be required?
Baroness Blackstone: My Lords, I can confirm that my noble friend's figures are quite correct. It is estimated that about £300 million comes to universities direct from the fees paid by students from these countries. They probably inject approximately another £300 million indirectly into the UK economy. They constitute about 11 per cent. of the total number of overseas students. The Government are closely monitoring this matter and are working with the British Council to establish exactly what the extent of the problem may be next year and what can be done about it. Meanwhile the Government very much applaud the efforts of higher education institutions in helping existing overseas students from this region to deal with any hardship.
Lord Quirk: My Lords, does not the Minister agree that the 50,000 students from the region, the greatest number of whom are from Malaysia and Hong Kong, who come to this country annually are an important resource not only to higher education which benefits, as the Minister said, by £300 million a year—Imperial College receives £9 million a year out of that—but also

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to British industry as a whole, largely because of the networking that students get involved in during their years here'? Would it not be a good idea and in their interests for British firms which have major involvement in the region to set up bursaries for as long as the emergency continues so that we can maintain this flow of students to this country?
Baroness Blackstone: My Lords, the Government regard overseas students in our universities as an important asset and one that we want to maintain. It is, of course, up to companies of the kind that the noble Lord, Lord Quirk, describes to decide whether they want to develop sponsorships or scholarships of this kind. I believe that some already do. The Government would very much welcome more of them establishing programmes of this kind. Meanwhile the Government, through the Chevening scholarship scheme, the Commonwealth scholarship scheme, and scholarships run by the British Council, offer awards to a substantial number of overseas students, including large numbers from this region.
Lord Beloff: My Lords, does the Minister agree that there is a particular problem, not so much with the Far East as a whole, but with regard to Malaysia? I have information that the number of Malaysian students coming to this country is falling rapidly. Does not this suggest that we made a mistake when we classed Commonwealth students as general overseas students while European students pay lesser fees? Would not the simplest thing be to treat Malaysians as honorary Europeans from the point of view of fees?
Baroness Blackstone: My Lords, the decision to change the fees paid by overseas students was made by the previous government some years ago. The noble Lord, Lord Beloff, is absolutely right that the fall in the number of students from this region is especially pronounced in Malaysia where there has been a drop in applications this year of about 25 per cent. I am, however, glad to say that for most of the other countries the number of applications is holding up, although, of course, applications may not necessarily result in entrants to our universities later this year. As regards treating Malaysian students as Europeans, I am not sure that Malaysian students would welcome that.
Lord Monkswell: My Lords, a figure of £300 million of revenue that universities may lose has been mentioned. Can my noble friend advise the House what proportion that is of total university revenue income?
Baroness Blackstone: My Lords, there is no suggestion that all of the £300 million that students from this region are paying in fees will be lost. That is the total sum they are currently paying. The Government and the universities hope that applications will continue to be submitted and that the eventual fall will be relatively small. As I just said, I am glad to say that the
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number of applications from most of the countries in the region is holding up. The £300 million is a tiny percentage of the total income of our universities.
Baroness Blatch: My Lords, does not the noble Baroness agree that the problem of losing students from the South-East Asian countries is compounded by the overall decline in applications of home students? Therefore the problems for universities are much greater. Will the noble Baroness confirm, or deny, that the £165 million extra that will be allocated to higher education in 1998–99 is permanent year on year funding that is additional to the base funding for higher education?
Baroness Blackstone: My Lords, the second part of the noble Baroness's question does not seem to bear much relation to what is on the Order Paper. The £165 million extra funding that has been found by the Government for next year arises directly from the changes in the funding of students that the Government are introducing. I cannot say what will happen in years after that because of the comprehensive spending review.
Lord Thomson of Monifieth: My Lords, will the Minister take some comfort from the fact that I seem to recall that over 30 years there have been recurrent occasions when everyone has prophesied woe as regards students coming from the Far East to this country—sometimes that was the result of the policies of the government of the day and now the fall in numbers is the result of financial circumstances in the Far East—but in each case there has been an extraordinary resilience on the part of the students, the political fears have proved unfounded and the attractions of British higher education have remained supreme?
Baroness Blackstone: My Lords, I entirely agree with everything that the noble Lord. Lord Thomson of Monifieth, has just said.

Asylum Seekers: Welfare
2.56 p.m.
Lord Evans of Parksideasked Her Majesty's Government:
Whether the proposal of Westminster City Council to move asylum seekers from London to Merseyside accords with their policy.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, social services authorities in London, as indeed elsewhere, are seeking to discharge their duties towards asylum seekers as they are currently defined in the most cost-effective and appropriate way. How this is done is, of course, a matter for individual authorities. We would, however, expect those seeking to move asylum seekers to consider very carefully the consequences of doing this, including the impact on the asylum seekers themselves and on the existing communities in the receiving area, and to seek

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the views of the local authority concerned. As I said in answer to another Starred Question on asylum seekers in your Lordships' House last week, we do not believe that the present system is working well. That is why the Government are reassessing the whole process, including the way that welfare support is delivered to asylum seekers.
Lord Evans of Parkside: My Lords, I thank my noble friend for that reply. Does she accept that a number of issues are raised by the proposal of Westminster City Council to relocate asylum seekers on Merseyside, as reported in the Evening Standard? Is my noble friend aware that Merseyside has probably the highest male unemployment in Great Britain and that if there is imported competition for the limited number of jobs available it may cause some friction with local jobseekers? Will the refugees' applications for asylum be speeded up or retarded by living in Merseyside rather than in London? More importantly, will my noble friend give a categorical assurance that no Merseyside local authority will be called upon to make any contribution towards the cost of the imported asylum seekers, no matter how long those asylum seekers remain on Merseyside?
Baroness Jay of Paddington: My Lords, all of the points that my noble friend has raised reflect precisely the considerable concern that is felt about this problem by the asylum seekers themselves and by the relevant local authorities. I assure my noble friend that we are aware of the potential for difficulties on Merseyside in terms of employment. That is why Westminster Council consulted carefully with the local authorities on Merseyside before deciding to take this step. As I am sure my noble friend is aware, the step was taken because of the large numbers involved. Suitable accommodation in London is now scarce. I assure my noble friend that the costs will continue to be borne by the London local authority. He will be as aware as I that a large number of asylum requests are pending. The Government are seeking to speed up that process.
The Lord Bishop of Lichfield: My Lords, is the Minister aware that local authorities near Gatwick airport estimate that expenditure on unaccompanied children seeking asylum is approximately £1.2 million a year? If so, is it not time for the Government to decide that the National Assistance Act will not be used in the long term for providing support to asylum seekers but that a return to a realistic benefit system is both cheaper and easier to administer?
Baroness Jay of Paddington: My Lords, we are very much aware of the problem of unaccompanied children. As the right reverend Prelate says, it is a problem in areas around airports and seaports in this country, and is growing. It is very much a focus of the review being undertaken. The review is comprehensive and will deal with the subject of unaccompanied children among the other relevant issues.
Baroness Ludford: My Lords, the Question refers to government policy. The Minister replied that it was up
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to local authorities. It is precisely the absence of a national policy after 10 months in office which so concerns many of us. We are anxious to hear the results of the review. We believe that it should be a national responsibility to welcome and support asylum seekers. Is the noble Baroness aware that the Refugee Council is worried that one result of the current situation is an adverse impact on race relations? That is of great concern to many inner London authorities where the excess costs to local authorities are between £0.5 million and £1 million a year. When budgets are being cut across the board the situation is not helpful to race relations. The Government are undermining the position.
Baroness Jay of Paddington: My Lords, as I said in answer to previous questions, the Government are at least as concerned as any Member of your Lordships' House about difficulties which many local authorities face on this issue. That is why at central government level, led by my noble and right honourable friends from the Home Office, the Government are addressing the matter as a central policy issue. With her roots and background in local government, I am sure that the noble Baroness would not wish central government to override the autonomous decisions of local authorities on this matter.
Lord Campbell of Alloway: My Lords, is the Minister aware that she gave no effective reply to the question of the right reverend Prelate? It is a most interesting and constructive suggestion that I have not heard before. Would the noble Baroness care to reply to it?
Baroness Jay of Paddington: My Lords, I apologise to the noble Lord if he feels that I did not reply specifically. The reason that I did not do so was precisely because the issue of the children's grant, the levels of which have not been fixed for next year, is subject to the general consideration on the national strategy which the noble Baroness and other noble Lords have rightly demanded should be forthcoming.
Lord Avebury: My Lords, is the Minister aware that Westminster is not the only London borough which has had to decant asylum seekers to other parts of the country? Lambeth has had to do the same for reasons of cost effectiveness. Even so, in 1997–98 the council taxpayers of Lambeth are having to foot a bill of no less than £1 million for looking after asylum seekers. Does the noble Baroness not consider that it is grossly unfair that the residents in a borough which is home to many deprived people should have to bear those additional costs?
Baroness Jay of Paddington: My Lords, yes, and that is precisely why we have said that the National Assistance Act, induced by court action in previous years, is not a suitable way of dealing with the problem. That is precisely why we are addressing the issue. One interesting result of moving asylum seekers from the London boroughs is that I understand they tend to

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disappear. That may be a way—I do not mean this frivolously—by which local authorities seek to avoid some of their responsibilities. For example, I understand that when Westminster tried to move a large number of asylum seekers to Great Yarmouth where there was a certain amount of reasonable accommodation, it being a seaside resort with only seasonal pressures, 74 per cent. of the asylum seekers simply disappeared. I am sure that the noble Lord would not wish that to be adopted as a policy.

Scottish Agricultural Industry
3.4 p.m.
Lord Selkirk of Douglasasked Her Majesty's Government:
What steps they are taking to reverse the decline in farm income in Scotland.
The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel): My Lords, the Government have made it clear that they are committed to supporting a viable agricultural industry and have taken a number of important steps to help alleviate the current problems.
The Government paid £480 million in direct subsidies to Scottish farmers in 1997, an all-time record. We recently announced a further package of aid for the beef and sheep sectors which are the hardest hit. They are set to receive in Scotland a further £24 million.
In addition, the Government recently announced that charges for implementing specified risk material controls from 1st April 1998 will not be recovered from the industry. Also start-up costs for the new computerised cattle traceability system and running costs during its first full year of operation will be paid for by the Government. These two measures will save the UK livestock industry some £70 million in total.
The ban on British beef exports represents a serious handicap to our producers and we are taking all possible steps to have this ban lifted as early as possible.
Looking to the longer term, the Government's objective is for farmers to gain a larger proportion of their income from the marketplace, with a consequential reduction in centrally-funded support.
Lord Selkirk of Douglas: My Lords, I thank the Minister for his reply. I wish to declare a family interest in farming. Is the noble Lord aware that there is on average a 34 per cent. drop in farm incomes in Scotland? Will the noble Lord do his best to ensure that systems of regulation and support are as supportive to farmers in Britain as comparable systems elsewhere in Europe?
Lord Sewel: My Lords, the answer to the second part of the noble Lord's question is, yes. The noble Lord mentions the figure of 34 per cent. I do not dispute that figure but perhaps I may put it in context. Incomes today are higher than they were in the late 1980s and early
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1990s. Perhaps I may give the noble Lord one specific figure. Between 1990 and 1995 aggregate farm incomes in Scotland increased in real terms by 308 per cent.
Lord Mackie of Benshie: My Lords, is the Minister aware that the paradise he describes does not exist and that the figures for Scotland will be worse than the 34 per cent. drop this year? If the noble Lord wishes to help the industry, surely the Government should have taken up the £940 million in January, as they could have done. The figure from the European Union has now dropped to £642 million. Why has that money not been taken up as it has been by other countries in Europe?
Lord Sewel: My Lords, in addressing the problem of the beef and sheep sectors, we put forward support for £85 million on a UK level which virtually reaches the ceiling available under the agri-monetary compensation system. So we have compensated the most hard hit sector for the adverse effects of currency appreciation.
I should point out to the noble Lord that the £940 million that is often referred to is not free money in any sense of the word. Fifty per cent. of that would have to be funded entirely from the UK taxpayer and, as a result of the Fontainebleau Agreement, of the remaining 50 per cent. 71 per cent. would have to be funded by the UK taxpayer.
The Countess of Mar: My Lords, as with all statistics, does it not depend how far back one goes? Does the Minister agree that between the 1970s and 1980s farm incomes fell by half, and by half again during the 1980s? They were restored to some extent after the reform of the CAP in 1992 and have now begun to fall again because of the problems with the exchange rate and the green pound.
A noble Lord: The question is too long.
The Countess of Mar: My Lords, does the Minister agree that it is only by increasing their efficiency and output, and by reducing labour, that farmers have survived this far? They are now down to the bone. Does the noble Lord appreciate how important it is that some help is given?
Lord Sewel: My Lords, perhaps I may point out that, taking a longer term perspective, aggregate income last year was still higher than aggregate income in 14 out of the past 25 years. I would also point out that the support given to agriculture in Scotland, at £480 million, is equivalent to the total budget of Scottish Enterprise and Highlands and Islands Enterprise, and represents support running at £14 per week for the average family in Scotland.
The Lord Privy Seal (Lord Richard): My Lords, perhaps the House will allow me a few words. It seems to me—and I grant that it is only an impression—that the length of supplementary questions is somewhat on the increase. If it is indeed on the increase, I am sure your Lordships realise that it tempts Ministers into

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giving somewhat lengthy replies. I wonder whether I might draw the position to the attention of the House and hope that, next week, I will be able to rise and say how short the replies are.

National Lottery Bill [H.L.]
Lord McIntosh of Haringey: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clause 1,

Schedule 1,

Clauses 2 to 7,

Schedule 2,

Clauses 8 to 10,

Schedule 3,

Clauses 11 to 23,

Schedule 4,

Clause 24,

Schedule 5,

Clause 25.—(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

Crime and Disorder Bill [H.L.]
3.10 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Williams of Mostyn.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 60 [Detention and training orders]:
Baroness David Baroness David moved Amendment No. 237C:
Page 48, line 6, leave out ("child or").
The noble Baroness said: In speaking to this amendment I shall also speak to Amendments Nos. 238, 239, 240 and 242. Amendments Nos. 237C, 239 and 240 would restrict the making of detention and training orders to offenders aged 15 and over. Amendments Nos. 238 and 242 would restrict detention and training orders to those aged 12 and over.
Clauses 60 to 65 introduce a new detention and training order for 10 to 17 year-olds. Initially it will be introduced for 12 to 17 year-olds, but there will be a power for the Home Secretary to extend it to 10 or 11 year-olds by laying an order before Parliament at a later date. After sentence, the offender could be accommodated in Prison Service custody, local authority secure accommodation, a secure training centre or a youth treatment centre.
We agree that there is a strong case for rationalising the courts' present complicated powers to detain juveniles. However, we are concerned that, in the case of offenders aged under 15, giving the courts strengthened powers to order detention could produce a sharp and undesirable increase in the detention of children, most of whom would be better dealt with by supervision in the community.
At present, courts can pass sentences of detention in a young offenders institution on offenders aged 15 and over. For that age group the new sentence would simply replace the existing power. However, it would significantly increase the court's powers to detain young people under 15. Offenders aged 10 to 14 can currently be sentenced to long-term detention under Section 53 of the Children and Young Persons Act 1933 if they commit an offence carrying a maximum penalty of 14 years (or more when committed by an adult); be sentenced to a supervision order with a "residence requirement" which requires the local authority to place the young person in local authority accommodation (where necessary, secure accommodation can be used) for a specified period of up to six months; or be taken into care through civil care proceedings if they are out of control and, if necessary, held in local authority secure units. We consider that this range of powers is adequate to ensure that juveniles can be detained wherever that is genuinely necessary, and we are very concerned about widening courts' powers to detain this age group.
The courts' powers are to be extended in two phases. First, in April this year, the Government will introduce the Secure Training Order, a new custodial sentence for 12 to 14 year-olds which was part of the last Government's Criminal Justice and Public Order Act 1994; and the Detention and Training Order contained in this Bill will then supersede it.
Past experience shows that removing young people from family and community life is likely to magnify their difficulties. Not only is the normal maturing process interrupted, but reintegration back into normal life presents great difficulties and can lead to long-term problems. All forms of institutional care or custody for young offenders have high reconviction rates; 89 per cent. of juveniles leaving Prison Service custody are reconvicted within two years.
However, high reconviction rates are not restricted to Prison Service establishments: they are also common to other forms of institution. Research into the effectiveness of approved schools (and community homes with education, as they subsequently became) indicates that they increased rather than reduced the likelihood of re-offending. The 1975 edition of the Home Office Handbook, The Sentence of the Court, showed that 65 per cent. of first offenders and 78 per cent. of offenders with previous convictions who were given approved school orders were reconvicted within five years. When the characteristics of offenders were taken into account, those leaving approved schools had a reconviction rate 49 per cent. higher than would otherwise have been expected from their characteristics and records.
Even institutions which adopt constructive regimes invariably produce high reconviction rates for young people. Research studies from the late 1970s into secure units for juveniles—such as the Dartington Social Research Institute's study, Locking Up Children, published in 1978, by Spencer Millham, Roger Bullock and Kenneth Hosie (well-known names)—showed that reconviction rates were very high, even though secure units were taking younger and less delinquent children than had been the case several years previously. The Dartington unit found that boys in secure units were younger and less delinquent than in earlier years: 62 per cent. were under 14½ years of age. Yet of 587 boys released from secure units and followed up for two years, 76 per cent. of those released to the community re-offended. The majority then underwent a further spell in an institution, usually a borstal.
More recently, the Dartington Social Research Unit's study, The Experiences and Careers of Young People Leaving the Youth Treatment Centres (1989), followed up 102 young people leaving youth treatment centres between 1982 and 1985. After two years, 72 per cent. of boys released from youth treatment centres into the community have been reconvicted. The overall figure for boys and girls was 59 per cent., and after three years the proportion had risen to 73 per cent. The study found that,
"some groups are more likely to be convicted than others, for instance, persistent delinquents who had three or more convictions prior to entry".
There is no reason to believe that detention and training orders will succeed in producing low reconviction rates when similar measures in the past have markedly failed to do so.
It is particularly disturbing that the Bill gives the Home Secretary a power to extend the Detention and Training Order to children aged 10 and 11. I find that really quite horrifying. Even if their sentences are served in local authority secure accommodation, it should be remembered that such establishments hold an increasing number of young offenders aged up to 16 serving sentences of long-term detention imposed for grave crimes such as murder, manslaughter, rape and robbery. Some of these things are really horrifying, and I hope that the Minister will respond with sympathy and perhaps think of changing some of these policies. I beg to move.
The Chairman of Committees (Lord Boston of Faversham): I should point out to the Committee that as Amendments Nos. 240 and 242 are also being spoken to, if Amendment No. 240 is agreed to, I cannot call Amendments Nos. 241 to 243 inclusive.
Lord Windlesham: I wish to raise the question of the provenance of the new detention and training orders for young offenders. As far as I can see, they were not mentioned in any of the three youth justice consultation papers nor, as a result, in the tabulated responses to those consultation papers which were helpfully placed in the Library. Unless I have overlooked something—and the Minister will tell me if I have—these highly significant new orders seem to have been a late addition.
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The first public reference to a "new custodial sentence" appears in Chapter 6 of the White Paper (Cmnd. 3809), published in November 1997. That document outlines the Government's intention to introduce a novel disposal for young offenders from the very early age of 10 to the age of 17: half the sentence would be spent in custody and half under supervision in the community, with a provision for shortening or lengthening the custodial element depending on the progress made. There is a considerable element of new administrative discretion, and that alone should command attention. The orders will run from a minimum duration of four months to a maximum of two years. We are told that it is the Government's initial intention to implement these new orders only for those aged 12 to 17, but with a power to extend by order to children as young as 10 and 11.
Although the proposed new orders for detention and training have some good features—for example, I think we should welcome the focus on preventing offending—there must nevertheless be reservations about the significant extension of powers of the courts to detain and even imprison children between the ages of 12 and 15, especially if there is a possibility of a later reduction of the age to 10. I shall have more to say later about custodial confinement of young and very young offenders, but I believe it is more appropriate to do so when we reach Amendment No. 245.
Will the Minister say whether the provision was a late addition? Secondly, will he say whether there has been any consultation with the agencies that will implement the new orders, apart from raising the matter for discussion by the Youth Justice Task Force? Thirdly, will he say whether the Government will accept that great care will need to be exercised in making young people under the age of 15 subject to these orders, even if they have a record of failing to respond to previous non-custodial penalties?
The Lord Bishop of Lichfield: In rising strongly to support these amendments, particularly Amendments Nos. 239 and 240, I assure the Minister that I share the very proper concern of the Government. and of other speakers, that people of whatever age, however young, should take appropriate responsibility for their actions and that the victims and potential victims of their criminal behaviour should be protected from further harm. That is what we mean by justice, and that is clear.
However, we must be sure that the degree of responsibility that we ask children and young offenders to take is commensurate with their capacity to understand it, to bear it and then to turn it to good use. Children of that age have all their lives before them. Surely we ought not to give up on them until everything constructive has been tried.
That is necessary not only for the sake of the children. In order to protect others from the future harm which may be wreaked on them by these children, we must be sure that the punishment meted out is a punishment which will be most likely to prevent these children and young people offending again. It must be a punishment, I suggest, which seeks to discover the reasons for the offending behaviour and how they might be remedied.

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It must seek to educate, to support and even to constrain; but its purpose must also be to divert the young people from offending again.
It is interesting to note that during the 1980s there was a substantial reduction in the number of young people receiving custodial sentences but that that trend has been sharply reversed since the early 1990s. I am told by the Children's Society that, in 1996, 5,300 young offenders aged 17 or under were received into prison custody—the highest number since 1986. Yet, as I understand it, there is no evidence that the behaviour of such children and young people was significantly better in the 1980s. The difference was the way in which we punished them. We punished them with a view to their futures by what has been called "tough love", by challenging them to face up to what they had done, educating them and standing no nonsense, but making clear that we had faith in them.
Since that time there have been many projects, some provided by the Children's Society, which have worked successfully with offending children and young people to turn them away from crime. Regrettably, many of those projects, and certainly those run by the Children's Society, have had to close because funds allocated by the previous government have not been renewed. If we have not provided such opportunities for every young offender to change, we have no right to lock up him or her.
We can be sure of one thing: from the evidence, custodial sentences do not divert young people from crime. Properly constructed, rigorous diversion programmes afford a better chance of doing so, at less cost and in a way which will fully express society's responsibility towards young people.
From the conditions contained in Clause 60, it is clear that the Government recognise that particular attention needs to be paid to offending under-12s and under-15s in respect of sentencing. As the law now stands, provision exists for locking up those few for whom, by any reasonable standard, no alternative exists.
It is worth noting that the inclusion of a power to sentence young people, particularly those under the age of 12, to a custodial sentence is completely out of step with the prevalent approach in Europe, where young people under that age are not usually viewed as criminally responsible.
There are no grounds for extending the current provision in the way laid out in Clause 60. I hope that the Minister is willing to think again.
Earl of Mar and Kellie: I have put my name down to Amendment No. 242 which seeks to eliminate the use of detention and training orders for children under the age of 12. I wish to ask the Minister about the expected scale of the use of subsection (2)(b) of Clause 60.
My maiden speech during the Criminal Justice and Public Order Bill focused—non-controversially, of course—on the creation of youth training centres on a regional basis. The centres were described as prisons for 12 year-olds. We now have a measure before us which appears to create the possibility of prison for under-12s.
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I acknowledge that some children need secure accommodation. The environment of such accommodation must be of a very high standard, for these children have to be enabled to grow up in spite of being in secure accommodation. Security must be an important component in their care programme, but it must never become the dominant component. We want them to grow away from their offending behaviour rather than be confirmed in it.
3.30 p.m.
Baroness Hilton of Eggardon: My name too is attached to these amendments. I am astonished that the Government are seeking the power to gaol 10 to 12 year-olds, the sort of draconian measures we argued against so ferociously when we were discussing the Criminal Justice Bill in 1994. It saddens me to see the present Government going down the same draconian route that was pursued by the previous administration.
We tend to turn to America for examples of how to deal with offenders rather than to other parts of Europe which often have far more enlightened regimes. To add to the evidence of research provided by my noble friend Lady David, experience nearer home, in Northern Ireland, was that gaoling 12 to 15 year-olds led to a 90 per cent. reconviction rate. I really do not believe that this is an effective use of resources or a humane way of trying to secure reduced offending by young people.
There is also the danger, of course, that it is cheaper to put people into youth custody centres. The cost may be as little as £20,000 per offender per year whereas with other forms of detention—and certainly some young people do need to be kept in secure accommodation—it can rise to as much as £150,000 per place. There will therefore be pressure on courts and on local authorities to use youth custody rather than local authority places.
These financial pressures on the criminal justice system are to be deplored, particularly in relation to young people. I urge the Government to think again, particularly about seeking the power to gaol 10 to 12 year-olds which seems totally inhumane and counter-productive.
Lord Williams of Mostyn: I do not think that I disagree with any of the fundamental purposes identified by noble Lords who have spoken to these amendments. In respect of specific questions put by the noble Lord, Lord Windlesham, I entirely agree that great care will have to be exercised in deploying this power. I should like to set that in a context which will be profoundly different to what has gone before by virtue of other remedies—I use the word carefully—which we are offering in this Bill, which I think have been the general subject of approval. The noble Lord referred to consultation and asked when the DTO first appeared. It is true that the DTO was not in the first three consultation papers. It was, as he says, in the November White Paper.
On the review that the Government conducted, we came to the conclusion that previous custodial arrangements were really rather chaotic. They had

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grown up piecemeal, perhaps without a coherent strategy. On assessing that situation we came to the conclusion that the DTO was the appropriate remedy to be available to the courts in some circumstances. We consulted the Home Secretary's task force. The noble Lord is quite right. But we went wider. We asked lay practitioners, the Association of Chief Police Officers, the Association of Directors of Social Services, the Criminal Justice Consultative Council and the Magistrates' Association. So even if the conclusion is not to universal satisfaction, our consultation was a decent and considered one.
The context I propose to spend a moment on, because I recognise the strength of feeling and indeed sympathise with it, is that we are not simply choosing piecemeal remedies and thinking that any of them is a perfect answer to these undoubted problems. We have to think of what we are offering as alternatives in this spectrum. No More Excuses, the White Paper of November, said that we wanted the courts to have a fully effective range of sentencing options, community based, I stress, as well as custodial, for all juvenile offenders. We must not overlook the action plan order; we must not overlook the reparation order. I take entirely to heart the observation of the right reverend Prelate. We do have what I think he would describe as moral duties to young people before incarcerating them. One way to discharge that moral duty, I agree, is to make the young offender realise what he or she has done. The action plan will deal with that; the reparation order will deal with that. It will be demonstrated to a child, however young, that he does have moral responsibilities though it is a child's responsibilities, not an adult's responsibilities.
I agree that we need to steer young people away from crime if we can. The melancholy truth is that for some children, a relatively small number, a degree of positive constructive custody has to be provided but only if we have discharged our community obligations to nip offending in the bud early and not simply allowed the system to be abused by delay, compounded by inappropriate penalties, so that although the child is not actually encouraged to continue to be a criminal he is not assisted to stop and sees no constructive purpose in stopping.
We believe that custodial sentences should not be regarded simply as an end in themselves but that they are sometimes needed to protect the public by removing the young offender. That, of course, is only a temporary relief. We are looking to positive, constructive regimes to prevent further offending but only at a stage when alternatives have been considered. That is why I accept the melancholy story that previous statistics point to. We have to bear in mind, however, that quite often reoffending rates often derive from a number of circumstances including the fact that no action plan order is at present available, nor any reparation order. And, of course, quite often in the past young offenders have been sentenced to custody—I say this with no harshness—at too late a point for it to be of assistance to them. If one leaves custody too late it does no service to the offender but simply increases the likelihood of further offending.
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Where custodial sentences are clearly required for 12 to 17 year-olds, we need the detention training order to put in place a framework. That framework has stringent requirements, which appear on the face of the Bill, before custody can be imposed. The tests set out in the Criminal Justice Act 1991 must be satisfied. Either the offence must be so serious that no other sentence can be justified or, in the case of a violent or sexual offence, only custody is adequate to protect the public from serious harm from the offender.
It is a sad proposition but there are circumstances when custody is the only adequate remedy to protect the public from serious harm. That being so, I would suggest, with great respect, that there is another moral and social obligation that any government have; namely, to protect the public so far as is consistent with decent progressive regimes for those who have to be incarcerated.
No one wants to see what is, after all, a child under 17 incarcerated. If all were well, all came from good families, and all had the opportunities that we in this House have had, there would be no need for custody. But that is not the world in which we presently live.
I turn to the different question of the under 12 year-olds. It is not yet apparent that there is a need to introduce this order for 10 and 11 year-olds, and therefore that is my answer to the question put by the noble Earl, Lord Mar and Kellie, as to the likely take-up. The Bill, as it stands, as a number of noble Lords indicated, contains simply a power for the Secretary of State to extend the order to include this age group. If experience demonstrates that that is required to assist with a positive, constructive regime for offenders, even of that young age, or for public protection, we would have to give it very careful consideration before the Secretary of State were minded to introduce the power by order.
We propose to monitor the courts' use of detention and training orders for over-12s. We want to monitor carefully the underlying rate of offending by 10 and 11 year-olds. If the order were extended to 10 and 11 year-olds—no one would want to do that other than with a heavy heart—before imposing such an order the court would have to satisfy itself of three things: that the offending is serious enough to justify the use of custody under the tests of the Criminal Justice Act 1991; that the offender is persistent; and, additionally, that only a custodial sentence is adequate to protect the public from further offending by him.
These are not welcome responses to concerns which I recognise as sincerely held and legitimate. However, that is the Government's policy. I believe that it is a soundly based policy which should prove useful in assisting very young people and protecting the public.
Baroness David: I should like to thank very much the noble Lords and the right reverend Prelate who have supported me on these amendments. I was very interested to hear about the work of the Children's Society which is not being funded as it should have

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been. I do not think the Minister responded to that or indeed to the right reverend Prelate's point about Europe. For us to be the worst country in Europe for detaining young people is something which we must all find quite abominable.
I thank the Minister for his long and careful reply, which will need to be read extremely carefully. All the evidence proves that detention, prison and custody do not work and I do not believe they will work any more now. I realise how much care will be taken before someone is put into custody but I firmly believe that it is wrong to put young children into custody. I know that it is only a power for 10 and 11 year-olds, but even so there is something really abhorrent in it.
I shall read carefully what the Minister has said, but I think that we shall almost certainly be coming back at the Report stage with further amendments on this subject. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 238 to 240 not moved.]
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 241:
Page 48, line 15, leave out ("is a persistent offender") and insert ("has a history of failure to respond to non-custodial penalties and is unable or unwilling to respond to them").
The noble Earl said: With the leave of the Committee, perhaps I may speak to this amendment on behalf of my noble friend Lord Dholakia. Amendment No. 241 does not alter the Bill; it merely alters the wording. It sets out to provide a definition for the emotive term "persistent offender". Such an offender is rightly defined in the amendment as a teenager who,
"has a history of failure to respond to non-custodial penalties and is unable or unwilling to respond to them".
It is always helpful to have this clearly in the Bill so that everyone knows what is meant. There is a difference between a persistent offender and an offender with some previous convictions. The former has a different attitude to his offending behaviour, identifying a lack of motivation to curb that offending behaviour. The latter can be thought of as a teenager trying frustratingly to find the limits imposed by society, and learning, albeit slowly, from the experience.
My initial reaction to seeing the words "persistent offender" in the Bill was that this was an unhelpful outbreak of labelling. Telling anyone whose behaviour must change that he is a persistent offender runs the risk of confirming the situation and, what is worse, creating a justification for continuing offending behaviour. I believe that the amendment avoids this unhelpful and counterproductive labelling process. I also note that the wording of the amendment has been lifted from the Criminal Justice Act 1982. I beg to move.
3.45 p.m.
Lord Henley: My amendment, Amendment No. 243, has been grouped with Amendment No. 241. Although it is not really on the same subject, it will do no harm
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if I say a word or two about it while also offering a degree of support for the amendment moved by the noble Earl, Lord Mar and Kellie.
Again, our amendment is merely one that changes the wording of this clause and suggests that the words "further offending by him" in subsection (2)(b)(i) be replaced with the words "serious harm". Those words are more inclusive words in terms of the kind of problems the persistent offender, or whatever he might be called following the amendment moved by the noble Earl, might cause. They are designed to offer better protection and better guidance to the courts as to when they should make use of the power. I shall be interested to know what the Government think in relation to that amendment and I shall listen carefully to what the Minister has to say.
The Chairman of Committees: As Amendment No. 243 is being spoken to, I should point out to the Committee that if Amendment No. 242 is agreed to, I cannot call Amendment No. 243.
Lord Northbourne: I should like to speak briefly in support of Amendment No. 241. It is a well known principle of education that you do not tell a child that he is a bad boy; you tell him that he is a boy who has behaved badly. The use of the words "persistent offender" will tend to encourage a child to role play the part of a persistent offender and it may well give him street cred among his peer group. I support Amendment No. 241.
Lord Monson: As a layman, it seems to me that both the Liberal Democrat amendment, Amendment No. 241, and the Conservative amendment, Amendment No. 243, are well thought out and would improve the Bill. I hope that the Government will give them both serious consideration.
Lord Renton: I wish I could think that they are well thought out. Those of your Lordships who have had the responsibility of sitting in court in a judicial capacity—we have with us a former Lord Chief Justice—will realise that when fixing a sentence the court needs to have very specific evidence. There is no more specific evidence than the evidence of previous convictions. The expression "persistent offender" makes it quite clear that the obligation of the court is to consider previous offences.
If, as an alternative and instead of using that expression, the court has to go into a history of failure to respond to non-custodial penalties and the question of whether the child was unable or unwilling to respond, a great deal of evidence will have to be taken and conclusions from that evidence could very well vary. In order that justice may not only be done but appear to be done with a degree of certainty, it is far better to stick to the phrase "persistent offender".
Baroness David: I have to disagree with the noble Lord, Lord Renton. I have sat in a judicial capacity as a magistrate; admittedly it was rather a long time ago. I do not think it will be too difficult to find out whether

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someone has been unable or unwilling to respond. A probation officer or a social worker could perfectly well explain what had happened. I very much dislike the phrase "persistent offender" and I am totally in sympathy with the mover of the amendment and the other noble Lords who have spoken in favour of it. I hope that this time the Minister may have a better response.
Lord Williams of Mostyn: I am sorry to say that the noble Baroness is likely to find me a persistent offender until later in the evening. I spoke at a little length on the first group of amendments. I said then that we found the present provisions for custody not focused or coherent. Therefore, we are looking to something which is new and capable of being flexible, positive and constructive. I have already set out the conditions and I do not repeat myself.
Amendment No. 241 would change the additional test which must be met before an under-15 year old can be made the subject of a detention and training order. Instead of the court simply having to satisfy itself that the offender is persistent, it would have to go through the further test of a history of failing to respond to non-custodial penalties and also that the offender was unwilling or unable to respond to them.
I take the point made by the noble Lord, Lord Northbourne, that telling someone he is a persistent offender is not going to be a badge of merit; but, equally, telling him that he has a history of failing to respond to non-custodial penalties and he is unable or unwilling to respond to them, is not likely to improve the shining hour. So with great respect to the noble Lord, I do not believe that his point is well made. We believe that to limit the court's discretion to impose a detention and training order where it would be appropriate, is not the way forward.
Amendment No. 243 is a still further narrowing of the criteria on which a detention and training order could be imposed on 10 and 11 year-olds, should the provision subsequently be introduced for that age group.
We believe that Amendment No. 243 is narrowing too far. It is deeply distressing, but there are offenders of that age who cause a good deal of harm to other vulnerable sections of the community. Children are particularly vulnerable, but not uniquely vulnerable. Quite a lot of people have their lives made a misery by very young offenders. The Government have a duty to attend to their interests as well—not to put their interests above all else but to give them a decent regard.
If the order is made by the Secretary of State in due time, and if one has someone who is already a persistent offender at that age and the court is convinced that custody is the only way to protect the public from further offending, we believe that court intervention, as an opportunity, should be there. We do not believe that raising the threshold any further does anyone any favours, neither the victims nor the defendants. We have Struck a balance in the legislation between restricting the use of custody and giving the courts sufficient discretion.
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I stress again that before one comes to the conclusion in many cases that a child needs to be in custody, or should be in custody, there are alternatives which we are providing. We believe that they are capable, if worked properly, of transforming the way in which we deal with young children. I refer to the action plan, the reparation order and other remedial measures which do not involve custody. We specified them on earlier occasions. Sometimes small children can do infinite harm whether or not they recognise it. Sometimes they will need to be dealt with constructively, carefully, but nevertheless firmly.
The Earl of Mar and Kellie: I am grateful to the noble Lord for his answers. While it may be for the convenience of the more judicially-minded Members of the Committee that a persistent offender is just someone who has committed many offences, as someone coming more from the social work end of the process, there is a difference between an offender who commits the same offence several times and someone who commits a different offence each time. Persistence means continuing to commit the original offence. From the social worker's point of view, trying to promote change is never helped by labelling because, as I have said, it allows the offender to say, "I am fated and predestined to do it". That is not a useful thing.
The Minister has declined to accept my definition. I was hoping that he would very willingly insert it in Clause 92, which gives the opportunity for a definition. Perhaps it may appear as a government amendment later. The Minister has kindly smiled at me. Therefore, without more ado, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 242 and 243 not moved.]
Lord Henley Lord Henley moved Amendment No. 244:
Page 48, line 30, leave out from ("be") to ("24") and insert ("not less than 4 months or more than").
The noble Lord said: I hope that the Minister will smile on me. This is a very simple and straightforward drafting amendment. Clause 60(5) currently states that detention and training orders,
"shall be 4, 6, 8, 10, 12, 18 or 24 months".
No further discretion is allowed other than that the order should be for one of those seven specified times. My amendment suggests that it should be not less than 4 months and not more than 24 months, allowing the court to choose its own time within that band. That seems a much simpler way and leaves greater discretion to the court. I do not know why the Government drafted the matter in the way they did. I shall be very interested in the noble Lord's explanation and to know whether he could allow the court that little bit of extra discretion. I beg to move.
Lord Williams of Mostyn: I am sorry that I smiled at the noble Earl, Lord Mar and Kellie. I shall try to improve my behaviour in future. The noble Lord has indicated the consequence of his amendment if it were accepted. We have gone to discrete periods of four, six,

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eight, 12, 18 or 24 months because we want to make the orders readily understandable to the offenders; to try to prevent inconsistencies in sentencing; to help in designing constructive regimes and sentence plans; and to have equitable early and late release arrangements. I quite understand that a view, which could reasonably be come to, is that proposed by the noble Lord. We thought about it with some care because this is an unusual sentencing régime. But for the reasons that I have briefly mentioned we came to the conclusion that this was the better way forward.
Lord Henley: I find that a fairly extraordinary response. The Government wish to make the matter understandable to the offender. I do not see why they cannot understand the court giving a sentence of 22 months, 20 months or whatever, and some figure other than four, six, eight, 10, 12, 18 or 24 months. I take it that our education system has not come to such a pass that the only numbers that offenders can understand are the seven numbers put in front of them. I would have thought that other numbers would be within the grasp of most offenders. However, I take the noble Lord's point.
The second argument he put forward was that he desires consistent sentencing and I support him in that. But I fail to see how setting out seven discrete periods increases the possibility of consistent sentencing. That is a matter we shall come to later on. We all like to see a degree of consistency, but I fail to see why one cannot have consistency when the court has the discretion to choose any time between four months and 24 months. Having said that, I do not believe that this is an amendment of fundamental importance. I shall look again very carefully—
Lord Renton: Before my noble friend sits down, perhaps I may with humility intervene, to say that it is an extraordinary situation to find such a provision in the Bill. Normally, we try to give the court discretion to impose a sentence to fit the crime and the offender's previous record. Under Clause 60(5), although a court could impose an order for four, six, eight, 10, 12, 18 or 24 months, it would be excluded from imposing a period of detention of, say, 14, 15, 16, 20 or 22 months, which is quite absurd. I implore the noble Lord the Minister, who is generally so open-minded, to think again before my noble friend withdraws his amendment.
4 p.m.
Lord Williams of Mostyn: The provision does not take away discretion from the courts but places the discretion in discrete bands. The court will have to put its mind to whether a term of four, six, eight, 10 or 12 months is appropriate or, in more serious cases, 18 months or, in the most serious cases, 24 months. We believe that useful device will have two consequences—consistency of sentencing and maintaining the principle
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that one ought, where possible, to give the courts sufficient discretion in sentencing. Our present scheme encompasses both objectives.
Lord Henley: I noted carefully what the noble Lord the Minister said, which is that the provision is not taking away the discretion of the court but placing it in discrete bands. That seems to me to be taking away a degree of discretion but, at this stage, it would probably be best if I were to take away my amendment. In doing so, may I say how grateful I am to my noble friend Lord Renton for his support. I will read carefully what the Minister had to say and I may possibly return to this matter at a later stage, when we can look in more detail at the noble Lord's argument—which I am afraid I do not accept. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 60 agreed to.
Clause 61 [Duties and powers of court]:
Baroness David Baroness David moved Amendment No. 244A:
Page 49, line 24, leave out ("take account") and insert ("reduce that term by the length").
The noble Baroness said: This amendment provides that time on remand should automatically reduce the term of a detention and training order. Clause 61(6) as it stands requires the court to take account of time spent on remand in custody when sentencing a young offender to a detention and training order. The amendment provides that time spent on remand will automatically reduce the sentence. Prisoners on remand are not only deprived of their liberty but are usually held in the most restricted conditions in the prison system. It would be unjust to make them serve this time twice over.
It may be argued that courts should be permitted to disallow remand time from counting when the defence has wasted time before a trial. There is, however, a risk that defendants will thereby be penalised for the behaviour of dilatory or less than competent defence lawyers and that, in cases involving co-defendants, one defendant could be penalised for delays caused by another. We prefer to see the problem of time-wasting before trial dealt with by the rigorous application of time limits applicable to both prosecution and defence at each stage of the pre-trial process. I beg to move.
The Earl of Mar and Kellie: The noble Lord, Lord Williams of Mostyn, will have plenty of other occasions to make what I shall describe as a benevolent smile of sorrow in my direction. I am not convinced that I can support this amendment because I am a little worried about automatic backdating. I know that is part of the English system but I want to speak briefly about the Scottish system, which can be characterised by the fact that the defence solicitor or agent makes a plea to the sheriff for the backdating of the sentence in the event of the defendant having been in custody before sentencing. That provision allows the sheriff to grant backdating provided that the individual who has been in custody did not deliberately waste time or was in some

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way positively unhelpful. I am a little worried about automatically granting a backdated sentence when a person may have been positively unhelpful.
Lord Acton: My noble friend Lady David has made an overwhelming case. Although she has not had much luck with the Minister so far this afternoon, I very much hope that a great beam is crossing my noble friend's face even now and that he will grant this amendment.
Lord Williams of Mostyn: The purpose of these new orders is to run for a set period that will be clearly understood by all concerned—the defendant, his or her family, the supervisor and victim. The period must be long enough but no longer than is required to allow effective intervention and rehabilitation insofar as that may be brought about. We want to protect that clarity and to allow for effective intervention. We have therefore taken a different approach to the crediting of remand time.
Currently, remand time is deducted after the sentence has been passed and the residue is served in custody. We want the courts to be in a position to be as flexible as possible. If the amendment were carried, the courts would be obliged to reduce the term of each detention and training order by the period spent on remand. That would take away the court's flexibility to take account when sentencing of the time spent on remand. I put in parenthesis our determination to rid the system as far as humanly possible of dreadful cumulative delays.
If a court decides, having considered things carefully and taken into account the time spent on remand—and it may be, the reasons for that time—that four months is the right period for the individual to have, I repeat without apology, a positive and constructive regime intended to prevent reoffending, we believe that the court ought to be able to say, "Four months is the appropriate length. We have taken into account the time spent on remand. There will he no automatic deduction".
Baroness David: We are getting used to stonewalling by the Minister and to lack of a generous response. I thought that everybody was very worried about the length of time that young and older people are kept on remand, thereby filling prisons and other places of custody, such as secure accommodation—which seems altogether bad. Many times, people who are kept on remand are not given a custodial sentence. The whole question of remand ought to be looked at seriously. I thank my noble friend Lord Acton for his support. Again, of course, I am disappointed at such an ungenerous response. I shall read what the Minister said but I give no guarantee that I shall not return to this matter at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 61 agreed to.
Clause 62 [The period of detention and training]:
Lord Henley Lord Henley moved Amendment No. 245:
Page 50, line 1, at beginning insert ("Subject to subsections (1A) and (1B) below").
The noble Lord said: I will speak also to Amendment No. 247 and to Amendment No. 246, in the name of the
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noble Baroness, Lady David. Both my amendments and the amendment of the noble Baroness are designed to prohibit the placing of children under the age of 15 in Prison Service custody under a detention and training order. It first appears as though the noble Baroness's amendment is a more elegant way of achieving that objective, as it is easily comprehensible. It states exactly that,
"where the offender is under the age of 15, such accommodation shall not include a young offender institution".
I have approached the matter differently, by excluding Clause 62(7)(b), to keep young offenders out of Prison Service custody, while, for the over 15s, I have excluded subsection (7)(a), respecting a secure training centre. My reasoning is that I think it appropriate that there should be some way of ensuring that over-15s do not overlap with under-15s, allowing the risk of cross-fertilisation, if I may put it in those terms, with the over-15s corrupting the under-15s. However, I shall no doubt be informed that that is not the right way to set about it.
I do not want to rehearse some of the arguments that were put forward earlier when we discussed the question raised on Clause 60 by the noble Baroness, Lady David, on when custody is appropriate for under-15s. Although custody might be appropriate, there are occasions when Prison Service custody would not be appropriate. That is why we have tabled these amendments in their current form. I beg to move.
Baroness David: The noble Lord, Lord Henley, has described the purpose of my Amendment No. 246 as being to prohibit the placing of children under 15 in Prison Service custody. The current minimum age for being sent into Prison Service custody is 15. However, as it stands, Clause 62(7) apparently enables a child of any age who has been given a detention and training order to be placed in a Prison Service young offender institution. That could mean a child as young as 12 or even, if the lower age range of the order is reduced from 12 to 10, a child as young as 10. Presumably, it cannot be the intention of the legislation that young children should be placed in Prison Service accommodation. I believe that that should be made absolutely clear on the face of the Bill.
Lord Windlesham: The abolition of child imprisonment is one of the great causes of penal reform in the 19th century although the main changes did not come until the Children Act 1908. It would be a sad day if, nearly a century later, we were to see the clock being set back.
The principal objection towards which Amendment No. 246 is directed is not really to the notion of confinement where that is unavoidable above the age of 15, but is essentially to the place of confinement. We can all agree with the Home Secretary's opening words in the preface to the White Paper:
"Today's young offenders can too easily become tomorrow's criminals".
We can all agree with the noble Lord, Lord Williams of Mostyn, that destructive behaviour by some teenagers regrettably can, and at times does, cross the line between

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what is anti-social and what is criminal. In those circumstances, the young person concerned needs to be confronted with the consequences of his or her behaviour. If a custodial sentence is justified, it is the "how" and the "where" that is crucial.
Several Members of this Committee will remember the highly charged debates during the passage of the Criminal Justice and Public Order Act 1994 on the secure training orders and, in particular, the part played in those debates by the late Lady Faithfull. At that time I recall Labour Front Bench spokesmen arguing vigorously for persistent young offenders to be detained in local authority secure accommodation rather than in one of the proposed new training centres. There were supposed to be five national training centres, containing no more than 200 young people—that is, 40 in each—which would be managed by the Prison Service or by private contractors. That was three-and-a-half years ago. Where are we now? Not one of them is in operation. One has been constructed and is, I believe, due to be opened this April. So, here we have the next major criminal justice Bill and the innovation of one government being superseded by the innovation of another before it has come into effect.
But the lesson is the same: prison department establishments (whether young offender institutions or secure training centres) are the least effective of all the available disposals if measured in terms of preventing reoffending. We entirely accept what the noble Lord, Lord Williams, said—indeed, it is implicit in the Government's approach as set out in the White Paper—that much of this legislation is aimed at the need to prevent reoffending.
All forms of institutional care and institutional custody for young offenders unhappily have high reconviction rates; but 89 per cent. of juveniles leaving Prison Service custody are convicted again within two years, and that is a staggering percentage. I strongly support the amendments.
4.15 p.m.
Baroness David: Perhaps I may follow what the noble Lord, Lord Windlesham, said about the philosophy of this Bill. I am afraid that my government seem to go against so much that went on in the last century and much more recently. I remember—I am sure that older Members will remember—Lady Wootton, who was very much in the vanguard of thinking on all these matters. I well remember in 1994 how the late Lady Faithful] fought for children not to be sent to prison but to have secure accommodation available. It saddens me that we are now going into reverse on all this.
Lord Williams of Mostyn: In this order we want to offer flexibility in the arrangements for dealing with young offenders. We want to be able to place individual young offenders in accommodation according to their individual needs and maturity. That is why the order at present provides for the placement of young offenders in a young offender institution, a secure training centre,
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local authority secure accommodation, a youth treatment centre or other accommodation which may be directed by the Secretary of State. The result of these amendments would be to restrict the options.
No one wants to see a child deprived of liberty. I would suggest that very often different children mature at different rates and that chronological age is not always a good indicator of either maturity or, just as importantly, vulnerability. The consequence of these amendments would be that one could not put a vulnerable offender who had just turned 15 and was subject to, for instance, a four-month detention and training order, in a secure training centre, whereas a less vulnerable 14 year-old, just a few weeks younger but subject to a full two-year detention and training order, could be placed in a secure training centre until release, possibly after his 16th birthday, but not in a young offender institution.
I concede that those are extreme examples, but they indicate that one does not want to look to limiting discretion to place young offenders in the secure accommodation which is most suitable to their needs. We do not believe that restricting flexibility is the way we should be going.
I take up a point which my noble friend Lady David made earlier about secure accommodation for holding young people on remand. We are reviewing the range of secure accommodation to hold young people on remand or when they have been sentenced and how we can make best use of it. That review should be completed quite soon and will inform consideration of how to deal with the very difficult question of juveniles in secure accommodation.
Lord Henley: I am grateful to the noble Lord for giving way. He said that the review would be completed quite soon. Can the noble Lord say whether "quite soon" means that the review will be completed before the Bill leaves this House or while the Bill is in another place having completed its passage through this House?
Lord Williams of Mostyn: I doubt that the review would be completed before the Bill left this House, bearing in mind the nature of the review. If I am given any specific details I shall in the usual way write to the noble Lord.
One does not want legislative inflexibility built into the regime. If a child has to go into custody of whatever kind that should be related sensibly and flexibly to the needs of that individual child. Children can vary quite significantly. There are some bold, sophisticated, subtle young people who are well versed in crime at the age of 13 or 14. Equally, there are lost souls who are rather vulnerable and easily led and need to be dealt with differently and not on the basis of chronological age.
I hope that I have set out clearly the Government's position and that the review of the secure accommodation is of some comfort to my noble friend. On that basis I ask the noble Lord not to press his amendment.
Lord Henley: I apologise for intervening to ask the noble Lord what he meant by "quite soon". Many noble

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Lords on various occasions speaking from the Dispatch Box for the Government have used the words "soon" and "quite soon". According to my understanding, those words can have a variety of different meanings. I have the impression that on this occasion the "quite soon" is not as soon as all that and it is quite likely that we shall not have the benefit of this report before the Bill leaves this House and goes to another place.
I shall read very carefully what the noble Lord said. I am sure that the noble Baroness, Lady David, will do likewise. I have a sneaking suspicion that both I and the noble Baroness will wish to return to these issues at Report stage and possibly Third Reading so that they can be explored further. With that warning, perhaps the noble Lord will do his utmost to ensure that the "quite soon" in relation to the review is genuinely "quite soon" and that the review will, with a little luck, arrive in time to assist noble Lords at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 246 and 247 not moved.]
Baroness Masham of Ilton Baroness Masham of Ilton moved Amendment No. 248:
Page 50, line 36, at end insert—
("() An offender who is a girl under the age of 18 shall be kept separate from adults and shall be detained in a separate institution such as local authority secure accommodation, or in a separate part of an institution also holding adults, unless, after assessment and in exceptional circumstances, it is held to be in the best interests of the offender to be held with adults for a temporary period.").
The noble Baroness said: Amendment No. 248 would make it unlawful for girls aged under 18 to be held with adults in prison. This would bring the UK into line with the United Nations Convention on the Rights of the Child. Article 37, to which the Government have entered a reservation, requires that juveniles and adults should be held separately. The information supporting this amendment was obtained by the Howard League's inquiry in 1997, which I had the privilege to chair, into the use of prison custody for girls aged 15 to 17. The inquiry visited all prisons that held teenage girls under the age of 18. It was able to talk to governors and staff and consult the probation, education, medical and psychology departments of each prison. The inquiry also interviewed over 80 per cent. of the girls under 18 who were being held to find out their offences and backgrounds.
The inquiry's report Lost Inside! The Imprisonment of Teenage Girls was published on 27th October 1997. All the girls who were interviewed were between 15 and 17. All were vulnerable and damaged youngsters in trouble. Forty per cent. had been in care; 65 per cent. had experienced broken families; 57 per cent. were excluded from school or were long-term non-attendees; 41 per cent. admitted to drug or alcohol abuse; and many had been abused.
During 1997 over 300 girls aged under 18 were held in adult prisons. At any one time there are between 60 and 80 girls held in the system. In 1992, however, there were only about 25. We believe that
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the main reason for the three-fold increase is that courts send girls to prison more readily than previously. Girls who are given a custodial sentence under Section 8 of the Criminal Justice Act 1982, which deals with detention in a young offender institution, are always held in women's gaols alongside adults. This occurs because there are no specifically designated young offender institutions for girls as there are for boys, who are always held separately from adults. In order to abide by the letter of the law these prisons are designated as young offender institutions, although in reality they are adult prisons with few facilities for young people and with regimes designed for adults.
Should not young girls of 15 and 16 have full-time education? The Prison Service is unable to provide special units to accommodate small groups of girls around the country because the number is too small, and one large young offender institution would result in children being hundreds of miles from home. The best option is to hold the girls in local authority secure accommodation units where, apart from providing rehabilitative regimes designed for adolescents, there is a better chance of those girls being nearer their families because the units are regional.
Under the clause girls as young as 12, and possibly 10, who are sentenced to detention and training orders can be held in adult gaols which are also designated as young offender institutions. This arises because the definition of "secure accommodation" in Clause 62(7) of the Bill includes young offender institutions.
In August last year the High Court ruled that the Home Office policy of holding young offenders in adult gaols at the start of their sentence was unlawful. Four of the five holding prisons which took prisoners direct from the courts after sentence were adult prisons with no designation as young offender institutions. Since then a number of these prisons have been redesignated as both adult prisons and young offender institutions. Since the Flood case the Prison Service has begun to reorganise the prisons to provide separate sleeping accommodation for juveniles. However, the practice remains that during the day teenagers share regimes with adults and mix with them, still in breach of the United Nations Convention on the Rights of the Child.
The Prison Service argues mixing adults and children provides the children with mothering figures and that as a result young girls are less volatile; but there is a danger that young girls will become bonded to prison. Further, those who mother the girls are themselves often damaged women who are unlikely to be able to provide good role models for the children to follow. The danger is that relationships that appear to be mothering can hide subtle bullying which prison staff may find hard to detect. The risk of contamination from adults is no less with girls than with boys. Girls are just as

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impressionable and will want to emulate women who have committed more sophisticated offences such as credit card fraud. They particularly look up to women in their 20s.
The Howard League found that despite being minors the girls were not often given protection under the Children Act. The Howard League inquiry found cases where girls were mixing with adults who had committed serious violent and sexual offences against children. For example, a 15-year-old was placed in a cell next to a woman who had been convicted of procuring 15-year-olds into prostitution. The Howard League is concerned that questions about sex and other issues around growing up are becoming distorted for children at the crucial ages of 15, 16 and 17 at a time when they are sorting out their difficult problems.
While the presence of the older women may help in keeping young girls less volatile, we believe that this can be achieved by holding the girls in small groups in local authority secure units.
Many prison staff are not suited to working with demanding youngsters, nor do they particularly want to do so, having been recruited to work with adults. They are also largely untrained in dealing with a vulnerable and difficult group. The only training available is a three-day training pack, designed by the trust for the study of adolescence. Since the prisons are essentially designed for adults, the girls represent a very small percentage and are included in the adult regime. There is little provided which is designed for their rehabilitation.
The culture and environment in prison is damaging for adolescent girls. They are engulfed in a world of dysfunction where emotionally damaged women regularly self harm, where any number of drugs are widely available and where bullying may be endemic. The girls are the odd ones in the prison and they are expected to behave like the adults that they are not. Typically, teenage behaviour is not tolerated by staff and older prisoners.
The amendment is flexible enough to allow girls in exceptional circumstances, for example if they wish to have a baby with them, which may be in their best interest, to be held with adults for a temporary period.
I hope that the Minister, who has so much knowledge of this subject, will accept the amendment. I beg to move.
Lord Acton: I would like to pick up the final point that the noble Baroness, Lady Masham, raised on this amendment, to which I have put my name. That is the question of young girls who are mothers or mothers-to-be. Can the Minister say whether there is any mother and baby accommodation at all outside prison?
Baroness Mallalieu: I support the amendment brought by the noble Baroness, Lady Masham, and in doing so pay tribute to her and her panel who last year produced a report that was both powerful and damning on a relatively small number of teenage girls for whom our present system, frankly, makes no appropriate provision.
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As a barrister visiting prisons, one is normally confined to the areas set aside for legal visits or, on occasions, to the hospital wing, if one's client is being held there. The impression one gets of the atmosphere and regime is usually quite superficial and restrictive. However, women's prisons are those which over the years have left the deepest impression on me: an undercurrent of bullying, intimidation, favouritism and ganging up, all set against a background of a closed community of mainly emotionally damaged women, is sometimes palpable even from where I have been sitting during brief visits.
The report produced by the Howard League from a panel chaired by the noble Baroness opened my eyes and confirmed that impression as reality. Older women who find themselves in prison are very often, perhaps more often than not, serious social misfits, and yet into that unhealthy and corrupting environment we are currently sending juvenile girls for whom, because of their small number and no doubt the expense that would be involved, we have made no proper provision.
As the report showed, a high proportion of them sadly come from care, which is an indictment in itself. Others come from broken homes and a widespread background of abuse. The report refers to the high incidence of self-mutilation among those young girls whilst in prison, which says more than any words about the state of mind of so many of these youngsters who we are treating in this way; yet we are currently putting them into regimes which are designed for adults, and under the care of staff who have had only the most rudimentary training in how to deal with this age group.
As the noble Baroness stated, unlike boys who are kept separate from adults, we usually place these very disturbed girls in close proximity to older women who are themselves often damaged, and we expose them to a culture of corruption.
As the noble Baroness indicated, what we are doing appears to be contrary to Article 37 of the United Nations Convention. There is an alternative, and that is local authority secure accommodation with proper rehabilitative regimes which are designed for this age group. They would surely provide a better chance for the future for these young offenders than exposing them to older women who the system has already plainly failed. The amendment to this part of the Bill gives an ideal opportunity to our Government to stop this happening. I beg to support the amendment.
Viscount Tenby: I rise to support the amendment in the name of my noble friend Lady Masham. My noble friend has already done a great deal of valuable work in chairing the group which produced this extremely useful report at the end of last year on the use of prison custody for girls between 15 and 17 years of age, of whom there are probably no more than 60 at any one time within the system.
In a way, the amendment and others which follow all hinge on the undesirability in a civilised society of committing various groups of offenders to senior prison establishments. In this case it is girls who, bizarrely, are not given their own separate young offender establishment.

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I fully realise the administrative implications which will follow should the amendment be adopted. No doubt the Minister will enumerate those implications in his reply. Let me try to make an educated guess as to some of the reasons he may advance. The numbers are small: we know that already. To have a custom-built section in a designated prison will inevitably mean concentration of all such prisoners there, almost certainly far from family and support probation services. It will place too high a financial burden on the prison estate. That is a situation that over the years the Government have inherited from past administrations.
All these arguments have merit: it would be foolish and unfair to say otherwise. No-one is blaming the Government for this state of affairs. This thoroughly unsatisfactory situation stems from years of neglect and the absence of imagination on the part of previous administrations.
What we do have a right to say, surely, is this: let us do something about it now. A complete reorganisation and refunding of the programme for local secure accommodation could remove these girls from the prison system now and for ever, especially if we take the bold step of parting local secure accommodation, at least for the purposes of funding, from the Health and Social Security Department, and passing it to where it belongs, the Home Office and Prison Service. If that revolutionary suggestion does not take the smile off the noble Lord the Minister, I do not know what will.
Lord Hurd of Westwell: I support the noble Baroness, Lady Masham. I do not believe that she needs a great deal of support because the work she has done in this field gives her a unique authority to speak. She has mobilised the argument very well.
I pray in aid Her Majesty's Chief Inspector of Prisons, who, in his thematic review of women offenders published last year, stated:
"There are serious child protection issues in mixing young prisoners with others… We noted, for example, women convicted of procuring being held alongside 15 and 16 year olds".
That deals with the mothering argument which the noble Baroness expected to meet from the Minister.
The Minister may argue—and we can understand why he should do so—that the Prison Service is now committed to providing wholly separate units designated to the needs of teenagers. But, as has been pointed out, the numbers are small; we are talking about 80 15 to 17 year-old girls in the system at any one time. Separate prison units for that purpose would be expensive and, as the noble Baroness pointed out, they would inevitably mean that such girls would be held hundreds of miles away from their own homes.
The Chief Inspector of Prisons went further. In the same review he stated:
"I am convinced that the Prison Service is better suited to, and more appropriate for, dealing with adults and that children",
that is, children of both sexes,
"should no longer he its responsibility. I am also convinced that, whilst some of the particular needs of children in custody are shared with young adults, they have other distinct needs in the areas of
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protection, maturation and education. I therefore conclude that the Prison Service should relinquish responsibility for all children under the age of 18".
As has been pointed out, the number of girls sent to Prison Service custody trebled between 1992 and 1996. Many of us would believe that most could and should be punished in the community. However, for those who genuinely deserve and require a secure environment, detention should be in local authority secure accommodation which, for all its faults—such accommodation can never be perfect—is likely to be closer to home and more responsive to the needs of children than a prison can ever be.
Lord Judd: I support the noble Baroness. In doing so, I join those who have paid tribute to her consistent commitment to this issue. If we take penal policy seriously, as regards serious offences, we can never underestimate the importance of punishment and the protection of society. However, in a civilised society, the greatest challenge of all in penal policy is the rehabilitation of the offender. In the treatment of young girls, I find it difficult to imagine anything which could engender a greater likelihood of delinquent behaviour in later life than the issue raised by this amendment.
There is plenty of evidence to indicate that even when dealing with the most serious offences, if the right kind of individual and personal attention can be provided for the young girl found guilty of the crime there is a real chance of building a better life for the future. It is easy in such debates to ignore or to make only a passing reference to the fact that in almost every case there are horrific stories of conditioning in younger life, in family circumstances and so forth which those of us who come from what can be described as more normal family circumstances find difficult to believe.
For all those reasons, I hope that my noble friend will take the amendment seriously and will accept it. I have heard him argue that we must be realistic, that not everything can be done at once and that only small numbers are involved. However, perhaps I may say without being accused of being over emotional, each individual case represents a 100 per cent. problem in terms of the individual. To say that only a small number of girls is involved and then to ignore the future cost to society in failing immediately to find appropriate treatment is extraordinary. Therefore, I cannot believe that it is possible to underestimate the need for urgency in action.
I know that the Minister is sympathetic. I hope that today he will say that his department is determined to move faster in this matter and that he will indicate that by accepting the amendment tabled by a noble Baroness who is second to none in her understanding of and commitment to the issue.
4.45 p.m.
Lord Campbell of Alloway: I support the amendment for the cogent reasons given by all Members of the Committee who have spoken. It requires no elaboration, no further emphasis and, assuredly, no repetition.

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I am on my feet because I wish it to be on record that some of us on this side of the Committee, quite apart from the noble Lord who has just spoken with far greater experience than I, support the amendment. It is, so to speak, an all-party amendment. I wish to ask the Minister seriously to consider not only the relatively small number of people involved, 60 or 80—a handful compared with the mass of prisoners—but also the cost involved compared with the cost to society if action is not taken. A balance must be struck. I hope that the Minister will give us a firm assurance so that we do not have to divide on the issue. However, if there is a Division, I shall support the amendment.
Lord Thomas of Gresford: I assure the Minister that we, too, support this important amendment. Everything that could be said was said, first by the noble Baroness, Lady Masham, and then by other Members of the Committee. I believe that no rational distinction can be drawn between the position of adolescent boys, who are kept separately from adults, and adolescent girls. I believe that the case for adolescent girls is even stronger; they should not be contaminated by too intimate a contact with older women.
I hope that on this occasion the Minister, who has not been particularly giving in connection with the Bill, will assure the Committee that it is not a matter of cost and that he will accede to the requests which have been made.
The Lord Bishop of Lichfield: I am sorry to say that in my diocese there are more prisons than in any other diocese in the country. All the chaplains and voluntary workers in prisons would wish to support the noble Lord, Lord Judd, in pointing out that small numbers represent a great opportunity. Small numbers enable relationships to be struck which lead to the prime aim of rehabilitation sought by every Member of the Committee. The amendment represents the most effective way of achieving that result.
The Earl of Mar and Kellie: I support the amendment. The penultimate line mentions the "best interests" of the young girl. The noble Baroness gave as an example the possibility of a girl staying with her young baby, but I have two further ideas of what it might be. The first would be the application of crisis theory; the idea that one might promote change by shocking the individual with the reality of imprisonment. The second one is the rather mistaken view that the young woman might learn a coping strategy for imprisonment just by being in prison. I should particularly like to reject that, because I believe that it is much more important that young offenders learn coping strategies for living in the community.
Lord Williams of Mostyn: Members of the Committee will remember that the noble Baroness raised this matter by way of a tabled Question a short while ago. I do not believe that anyone who has heard what she said today, or read the reports to which she
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and the noble Lord, Lord Hurd, referred, could approach the topic other than with a sense of deep unease and unhappiness.
It seems to me that the amendment really deals, first, with the question of accommodation; and, secondly, with mixing during activities. The Flood judgment in 1997 required the Prison Service to put right what was wrong in the present arrangements. It means that all female offenders under the age of 21 years are now held in designated parts of female prisons. In some cases there are separate houses or separate wings. Whether it is a separate house or a separate wing, those designated areas operate under young offender institution rules.
It is possible that for specific reasons some young women should be in a prison rather than in a young offenders' institution. That is what is allowed under the Criminal Justice Act 1982, but it only applies on a case-by-case basis and not a category basis. Reference has already been made to some examples in that respect; for example, placement in a mother-and-baby unit or the need for specialist medical or psychiatric care, which will not always be available in the sort of local authority accommodation that has been suggested as the answer to these problems.
The noble Lord, Lord Acton, asked me a specific question, the answer to which is, no. There is no local authority home with a mother-and-baby unit. The Prison Service has four: one at Holloway, one at New Hall in Wakefield; one at Styal in Cheshire and one at Askham Grange, the open prison, in York. I readily accept that it is no answer to say that the number involved is fewer than 80, indeed, that is something that we must consider.
If we had the number of distinct local authority units which has been mentioned we might well end up with a number of local authority secure accommodation units containing as few as five persons. It is very difficult to get a decent, meaningful and constructive regime for education, training and appropriate programmes to help address problems so as to do away with the possibility of reoffending in units which are that small.
I know that this point has already been made, but we should not overlook the fact that the possibility of contact with family and with the home community can be maintained. This is no excuse; nor is it a reproach. We inherited a situation which is difficult. I do not pretend that we have even begun to achieve a perfect solution.
So, what have we done? We have reorganised the Prison Service so that there is now a framework for delivery of a regime specifically directed to women and female young offenders. A good deal of the impetus for that came from the report of the chief inspector and from the report to which the noble Baroness, Lady Masham, made such a notable contribution. Moreover, some of that impetus has come from within the service and a part of it is predicated on our belief that custodial sentences are not an end in themselves.
I mentioned earlier the review of the range of secure accommodation for holding young persons who are remanded in, or sentenced to, custody. I can assure the Committee that that review also includes now—in the sense that the review is still continuing—consideration of

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the most appropriate arrangements for the small number of girls held in custody. I agree with what my noble friend Lord Judd said; namely, that whether the number is 60 or 80 is not really material. Each one of those girls is an individual. I emphasise the sense of deep unease that one feels when one looks at what the chief inspector said in his report and, indeed, at the findings of the Howard League report.
All I can say to Members of the Committee is that, for my part, I take such concerns most seriously. I am not seeking to avoid Home Office responsibility for this problem which is both long-standing and serious. I cannot accept the amendment. However, I undertake to transmit what I take to be the unanimous, strongly expressed and held views of this Chamber to my right honourable friend the Secretary of State.
Baroness Masham of Ilton: I should like to thank all supporters of the amendment for their very strong support. I also thank the Minister for his response. However, I must point out to the noble Lord that, when we were looking at secure accommodation, we found that some very serious offenders are now housed in secure accommodation provided by local authorities, while less serious offenders—for example, young girls—are in prison. The situation really does seem upside down and extraordinary. Before we reach the Report stage, I hope that the Minister will review the situation because it seems to be entirely wrong.
When we visited New Hall prison, which is near Wakefield, we found that the girls were being locked up at 5 o'clock in the afternoon. That is really very damaging for young teenagers who, as we all know, can be very difficult. Indeed, the complete lock-up takes place at 5 p.m. That is not a healthy situation. Bearing in mind what the Minister said and, indeed, the strong support expressed by Members of the Committee, I shall carefully consider what is going to happen. It is possible that we may have to divide on the matter on Report if we do not receive a satisfactory solution. Indeed, that will put emphasis on the whole matter when it goes to the other place. Having said that, I beg leave to withdraw the amendment.
Lord Hylton: Before we leave this part of the Bill, I should like to ask the Minister whether he can say how the Government envisage the training component of detention and training orders will actually be organised in practice. Can the Minister say how it will be done, given the fact that there are likely only to be small numbers of people undergoing these orders in individual places? Who will provide the training; in other words, what type of personnel will be involved?
One should also bear in mind at this stage that those young people becoming the subject of such orders are likely, as the noble Baroness, Lady Masham, said when speaking to the last amendment, to be highly vulnerable, whether they are girls or boys. Indeed, many of them will have come out of care, will have been excluded from their previous schools and may have a history and a record of suffering sexual abuse. So they will be difficult people to teach and train. I wonder who will be found to undertake this particularly demanding job.
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Further, can the Minister tell the Committee where the training will be delivered? Will it be in the place of custody? If not, I can foresee there will be problems escorting people to and from the training. These are all questions to which, as far as I know, we have not yet had an explanation from the Government in the course of the Bill. I apologise that on this occasion I have not given the Minister prior notice of this point.
5 p.m.
Lord Williams of Mostyn: The noble Baroness has dealt most graciously with this important matter. The noble Lord, Lord Hylton, is quite right. Normally, we try to arrange these matters in correspondence. I am perfectly happy to do that. Part of the answer to his question is that it is intended that a sentence plan will be drawn up at sentence with a member of the YOT scheme. Progress in custody and afterwards will be monitored. On release there will be supervision. It seems to me that that is not as full an answer as I ought to be able to give the noble Lord. Will he allow me to write to him with fuller responses to his detailed questions, as we have done in the past?
Lord Hylton: If the noble Lord is kind enough to write to me, will he also place a copy of his letter in the Library?
Lord Williams of Mostyn: I shall certainly do that as soon as I can.
Amendment, by leave, withdrawn.
Clause 62 agreed to.
Clause 63 agreed to.
Clause 64 [Breaches of supervision requirements]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 249:
Page 52, line 2, at end insert
("() An offender detained in pursuance of an order under subsection (3) above shall be deemed to be in legal custody; and a fine imposed under that subsection shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.").
The noble Lord said: In moving Amendment No. 249 I wish to speak also to the amendments grouped with it, Amendments Nos. 250, 251, 252, 253, 254 and 255.
Amendments Nos. 249 to 255 are technical amendments to ensure the smooth functioning of the detention and training order and the transitional arrangements for the secure training order. They clarify that those detained under provisions relating to either order are deemed to be in legal custody. The amendments also provide that a fine imposed for breach of supervision requirements of either order will be treated as a fine imposed on conviction. Normal court powers to deal with fine defaults will apply to those fines. The Bill as it stands includes no power to enforce the fine should the offender or the parent default. The amendments are intended to rectify this omission.
Amendment No. 250 extends the powers currently available to the courts to deal with defaults of other fines to fines imposed for a breach of supervision requirements imposed under a detention and training order. There is no power at present.
Amendments Nos. 251 to 254 amend Clause 91(2) which sets out the modifications which may be made by an order under Section 2 of the Criminal Justice and Public Order Act 1994 and in Section 4 of the 1994 Act. Subsection (7) of Section 2 provides that a person detained elsewhere than in a secure training centre because accommodation there is not immediately available, under subsection (2), or because he has been transferred elsewhere because of special circumstances, under subsection (4), is also deemed to be in legal custody. Amendments Nos. 251 to 254 ensure that subsection (7) applies to both those situations while an order under Clause 91 is in force and that subsection (5), which defines those who may provide accommodation, continues to apply to transfer under subsection (4).
Amendment No. 255—the final amendment in this group—provides an additional transitory provision governing the period before Clause 60 of this Bill relating to detention and training orders is enacted. This new subsection (4A), inserted in Section 4 of the 1994 Act, which deals with breach of supervision requirements for secure training orders, provides that a fine imposed under subsection (3)(b) of Section 4, for breach of requirements, shall be deemed to be a sum adjudged to be paid by conviction. With that explanation of these technical amendments, I beg to move.
Lord Henley: The noble Lord helpfully wrote to me about a number of government amendments that he was proposing to table. Unfortunately my filing system—if I can call it that—broke down this morning and I am not clear that he wrote to me about these amendments.
I suspect that he did not. I have, though, listened carefully to what he has had to say about them. As far as I can make out, I have no objections. Can he confirm that they formed part of the group of amendments about which he wrote to me, a copy of the letter, I imagine, having also been sent to the noble Lord, Lord Thomas?
Lord Williams of Mostyn: My best recollection is that they were contained in what was, I think, a rather lengthy letter. I shall check that and if they were not, I shall write again. If they were, I shall resend the letter.
On Question, amendment agreed to.
Clause 64, as amended, agreed to.
Clause 65 [Offences during currency of order]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 250:
Page 52, line 29, at end insert—
("() A person detained in pursuance of an order under subsection (2) above shall be deemed to be in legal custody.").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 65, as amended, agreed to.
Clause 91 [Transitory provisions]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendments Nos. 251 to 255:
Page 74, line 28, leave out second ("that") and insert ("the 1994").
Page 74, line 31, leave out ("subsections") and insert ("subsection").
Page 75, leave out lines 1 to 3 and insert—
("(b) in subsection (5) of that section, for the words "subsections (2)(a)(ii) and (4)(b) apply" there were substituted the words "subsection (4)(b) applies";").
Page 75, line 11, leave out ("subsection (8)") and insert ("subsections (7) and (8)").
Page 75, line 11, at end insert—
("() In relation to any time before the commencement of section 60 above, section 4 of the 1994 Act shall have effect as if after subsection (4) there were inserted the following subsection—
"(4A) A fine imposed under subsection (3)(b) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction."").
The noble Lord said: I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Clause 91, as amended, agreed to.
Lord Ackner Lord Ackner moved Amendment No. 256:
Before Clause 66, insert the following new clause—
STANDING ADVISORY COUNCIL ON CRIMINAL JUSTICE AND THE PENAL SYSTEM
(" .—(1) There shall be constituted a body to be known as the Standing Advisory Council on Criminal Justice and the Penal System ("the Advisory Council") for the purpose of—

(a) advising the Secretary of State on the adequacy and effectiveness of the criminal law and procedure of the criminal courts;

(b) advising the Secretary of State on such aspects of the penal system as he may from time to time refer to it; and

(c) at the request of the sentencing Advisory Panel referred to in section 67 below, providing such advice and assistance as may enable the panel the better to discharge its functions.

(2) The Advisory Council shall consist of—

(a) a chairman appointed by the Secretary of State, after consultation with the Lord Chancellor and the Lord Chief Justice, from among the members of the Advisory Council; and

(b) such other members, not exceeding eighteen in number, as the Secretary of State may appoint having regard to qualifications referred to in subsection (3).

(3) At least two-thirds of the members of the Advisory Council shall be persons who appear to the Secretary of State to possess knowledge or experience of any aspect of the criminal justice system or the penal system including, in particular, the prosecution of offenders and their care and treatment in prison and the community.
(4) The members of the Advisory Council shall hold and vacate office in accordance with the terms of their respective appointments and shall, on ceasing to hold office, be eligible for re-appointment, but any such member may at any time, by notice addressed to the Secretary of State, resign his office.
(5) The Secretary of State may, out of moneys provided by Parliament, pay the members of the Advisory Council such remuneration and such allowances as may be determined by the Secretary of State with the consent of the Treasury.
(6) The Secretary of State shall provide the Advisory Council with such officers and such accommodation as may be appropriate.
(7) The Advisory Council shall make annual reports to the Secretary of State with respect to its functions, and the Secretary of State shall lay any such report before each House of Parliament.
(8) The Advisory Council shall separately report to the Secretary of State on any matter referred to it, or sanctioned by the Secretary of State for advice; and the Secretary of State shall publish any such report.").
The noble and learned Lord said: Since I do not claim pride of parentage in this amendment, which provides for the setting up of a standing advisory council on criminal justice and the penal system, I think I can say without immodesty that it is a very important amendment, as indeed is demonstrated by those who have added their names in its support.
The aetiology of the amendment is of some significance. The 10th April 1995 was the centenary of the report of the Gladstone Committee on Prisons. The crucial contribution which that committee made to penal thinking was its insistence that the reformation of prisoners should become one of the primary aims of the prison system. It argued that,
"the present system. while admirable for cohersion or oppression, is excessively deficient in the reformatory side".
The committee proposed that prisoners' treatment,
"should be more effectively designed to maintain, stimulate or awaken the higher susceptibilities of prisoners, to develop their moral instincts, to train them in orderly and industrial habits, and whenever possible to turn them out of prison, better men and women, both physically and morally, than when they came in".
To mark this centenary there was sent to The Times a letter under the joint signatures of Professor Sean McConville, Sir Louis Blom-Cooper, the noble Lord, Lord Allen of Abbeydale, Professor Anthony Bottoms, the noble Lord, Lord Callaghan, Sir Ralph Gibson, John Harding, the noble Lord, Lord Hunt of Llanfairwaterdine, Professor Terence Morris, Brendan O'Connor Friel, and the noble Lord, Lord Runcie. It stated among other things:
"We think the time is right for an overview, on the scale of the Gladstone enquiry, to propound a sound authoritative penal philosophy for the 20th Century".
The letter went on to say:
"Over the last two decades the United States has shown the tragic and counter-productive results of mixing competitive party politics in such policy debates and thereby inflaming public opinion. This is a field where the national interest demands that bipartisanship should be striven for, even while legitimate party differences are debated".
The letter stressed that it was essential to provide a mechanism to address these important issues—criminal and penal policy—dispassionately, authoritatively and constructively.
In the debate on the Address on 19th May 1997 I invited the Government to make provision for a comprehensive reassessment of a rational penal policy and thereby to restore much-needed public confidence in the system. In a subsequent debate I repeated the invitation. I was accordingly delighted to learn that my
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noble and learned friend the Lord Chief Justice, on two occasions in two lectures, subsequently endorsed my suggestion. His last comment was made at the conclusion of the annual lecture of the Prison Reform Trust given by him last June. He said:
"If a revived Advisory Council were able, with the benefit of intensive world-wide research and consultation, to reach authoritative conclusions which commanded the respect of public and the professional opinion, and if those conclusions were given legislative effect, this Parliament would earn an assured place in the history of this country".
Of course I accept that crime is a complex phenomenon and that there is no "quick fix". The various parts of the criminal justice system—the police, prosecution, the court, the Probation Service and Prison Service—often address quite different agendas, and this was acknowledged by the establishment of the Criminal Justice Consultative Council in order to reconcile the potentially conflicting aims of these disparate agencies. I accept, of course, that the public are impatient, indeed angry and frightened, at rising crime and want results from the police and the criminal justice system. But the public require to be far better informed than they are at present. They need to know that there is no realistic prospect with the present degree of overcrowding in prisons and the continuing cutback in prison budgets, of prisoners at the end of their sentence being either better equipped or better motivated to lead an honest life than when they began their sentence. On the contrary, the reverse is often the case. The public ought to know that if the present harsh sentencing regime continues it is expected by the Home Office to give a prison population of nearly 83,000 for the year 2005. That is virtually double what it was some five years ago. It will involve crippling expenditure for new prisons, additional staff and associated expenses.
On 18th February, last month, during a debate on life prisoners and release procedures, I learned from an admirable speech by the noble Baroness, Lady Linklater of Butterstone, that not only have we more than 3,500 lifers in our system at the moment but they represent more than the entire lifer population of Europe put together. Why is that, and why do we have a higher proportion of our population behind bars than any other nation in Western Europe? We have 120 prisoners for every 100,000 people in the general population compared with 89 in France, 84 in Germany and 65 in Sweden. Have other European countries more effective community-based alternatives to incarceration? How have other countries gained public acceptance of alternative strategies to traditional imprisonment? Is there in Europe a more balanced approach to sentencing; and, if so, how has that been achieved? These and other questions need careful research, and I submit that this can only be successful by an authoritative and dispassionate body of the kind we recommend.
In conclusion, in case it should be suggested that criminal policy has been now removed from competitive party politics, let me remind your Lordships of Amendment No. 218A, which was

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moved by the noble Lord, Lord Windlesham, only a week ago. It related to Section 2(5) of the Crime (Sentences) Act 1997, which provides for mandatory life sentences on second conviction of certain violent and sexual offences. What was sought by the amendment was very modest. It was to remove paragraph (d), which provided that Section 18 offences of wounding or causing grievous bodily harm with intent should not trigger the mandatory life sentence. The noble Lord explained that while some Section 18 offences were very serious indeed, and rightly carried up to a maximum of a life sentence on first conviction, at the other end of the scale is a large cluster of relatively minor incidents. He explained that the most cursory scrutiny of some recent Section 18 appeal cases revealed sentences as low as six months upheld on appeal. He emphasised the absurdity of a judge being obliged to impose a sentence of life imprisonment and then explaining, as he is bound to do, that the tariff—the period to be served for retribution and deterrence—was only a few months.
The noble Lord was in good company in saying that it was absurd. At Second Reading the noble Lord, Lord Williams of Mostyn, put it in this way:
"it is nonsensical to invite a High Court judge to say, 'I am sentencing you to life imprisonment. By the way, you can expect to serve 18 months'. That is a perversion of the system. It will bring the whole system into disrepute".—[Official Report, 27/1/97; col. 1063.]
The fact that the noble Lord's case was unanswerable was made doubly clear by the fact that the self-same amendment had been moved by the Government when in Opposition, and indeed by the noble Lord, Lord Williams of Mostyn. Quite unabashed, he resisted the amendment of the noble Lord, Lord Windlesham, saying in terms, that he did not resile from anything he had said in the past. The very idea of mandatory life sentences had been condemned when in opposition by the present noble and learned Lord the Lord Chancellor and by the noble Lord who is currently the Leader of the House. Crime is one of the most difficult and complex problems confronting the Government. The advisory council proposed could give valuable assistance in solving it. I beg to move.
Lord Thomas of Gresford: In the dying days of the previous government, the protests of the Liberal Democrats over the Police Bill, the Crime (Sentences) Bill and the Scottish crimes Bill were regarded by some of your Lordships as little more than Liberal hand-wringing while the Front Benches on both the Conservative and Labour sides got on with the serious stuff—the dutch auction on toughness: who was going to be "more righteous than thou"; who was going to be tougher. But what lay behind our protests was concern at the wild swing in penal policy over a period of a mere six years.
In March 1991, the noble Earl, Lord Ferrers, introduced the Criminal Justice Bill into this House with these words:
"The main purposes of the Bill are to reform sentencing practice—the way in which a sentence is determined—and the way in which sentences are actually carried out. The sentence in an
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individual case is, of course … not a matter for Parliament. It is, after all, only the sentencer who will know all the facts of the case".—[Official Report, 12/3/91; col. 73.]
The noble Earl noted that for some offences only imprisonment was a fitting punishment. But he continued,
"for many other offences, particularly for property offences, it has long been recognised that imprisonment frequently does more harm than good. It can turn inexperienced offenders, who may be verging on the edge of a criminal career, into hardened criminals".—[col. 74.]
Those of us who sat as recorders in 1990 and 1991 will recall that we were urged by the Government not to take into account previous convictions. That caused conflict with the judges themselves, who thought the Government and the Home Office were going soft on crime. I recall a sentencing seminar in which a very senior judge advised us to ignore the Home Office—if we thought the defendant was to go to prison, he was to go there. "Let them find the places", is what he said.
At that time, again, in accordance with that philosophy, the attitude to penal reform was characterised by the noble and learned Lord, Lord Woolf, in his 1990–91 inquiry, in which he called for a civilised regime for prisons and justice for prisoners.
Then everything changed. The noble Baroness, Lady Hilton, has already referred to the 1994 Act. But it was in 1995 at the Conservative Party conference that the Home Secretary announced a change of policy—the minimum mandatory sentences and life sentences for second offences. The noble Lord, Lord Windlesham, referred to that as, "policy making by proclamation". I hope the noble Lord will forgive me if I adopt those words. Judges were thereafter characterised as soft on crime; and in response to that they filled the gaols to the point that, as the noble and learned Lord, Lord Ackner, just mentioned, the prison population has doubled and is likely soon to reach 83,000 inmates.
The White Paper, Protecting the Public, which followed the Conservative Party conference speech was discussed in this House on 23rd May, 1996. The late Lord Chief Justice, Lord Taylor of Gosforth, said, as many noble Lords will recall,
"I venture to suggest that never in the history of our criminal law have such far-reaching proposals been put forward on the strength of such flimsy and dubious evidence. The shallow and untested figures in the White Paper do not describe fairly the problems the Government seek to address. Still less do they justify the radical solutions it proposes".—[Official Report, 23/5/96; col. 1025.]
Indeed, one noble Lord was quite rightly moved to say of minimum mandatory sentences for burglary:
"That is not just; it is a perversion of justice and one which, I am sorry to say, is brought about on the basis of low motive".—[Official Report, 23/5/96; col. 1031.]
That same noble Lord later commented on automatic life sentences for pub punching or glassing 10 years after the event of an offence of unlawful sexual intercourse, and used these terms:
"I believe it to be a pity—and worse, an infinite shame—that matters of this sort are dealt with on the basis of mottos at party conferences. That demeans our society".—[col. 1032.]
It was, of course, the noble Lord, Lord Williams of Mostyn.

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Last week, I was decidedly hurt during the debate on Amendment No. 218A of this Bill to which the noble and learned Lord, Lord Ackner, referred, when the noble Lord, Lord Williams, questioned the motives of those of us who had proposed that Section 18 offences be removed from the list of mandatory life sentences. He asked:
"Is this a principled attack, or is it—dare I question?—simply an opportunist attempt to focus on one part of the provisions? Those with more metropolitan minds than my own might think that opportunism rather than principle was driving some of these observations—not all of them".—[Official Report, 24/2/98; col. 611.]
I was so deeply hurt that I was, very unusually, moved to interrupt and to inquire whether the noble Lord's views had changed since the views that I have recounted to your Lordships expressed only a year or so earlier. The noble Lord replied:
"My view has not changed".—[col. 611.]
As the noble Lord, Lord Renton, has said, referring to the "open mind" of the noble Lord, Lord Williams of Mostyn, it is open to the point where he can hold two conflicting opinions at the same time.
This amendment seeks to set up a permanent advisory council which will take criminal penal policy away from the fighting cocks in the cock pit and set up an authoritative body which can provide a continuing view of the criminal justice system and give to both government and the public a dispassionate and factual assessment of priorities, benefits and costs upon which policy can be based.
The sort of issues that such a council should address are matters such as these. What are the causes of criminal behaviour? How can crime be prevented or reduced? How successful is our present criminal justice system in convicting offenders, and what improvements are desirable? What types of sentencing should be introduced? We have heard today that the DTOs have been introduced without any prior consultation; we debated that provision earlier.
What are appropriate sentencing levels, having regard both to other jurisdictions and to public opinion? The noble Baroness, Lady David, said that it was abominable that this country should be the worst in Europe for imprisoning young people. The noble and learned Lord, Lord Ackner, made the same point. We need to compare our penal system with those of the European Union countries with which we work so closely.
Where should resources be spent in dealing with offenders? Should they be spent on building more prisons, or on courses of rehabilitation and support in the community? How can public confidence be improved in the system of criminal justice; and in particular how should the victims of crime be treated, both as witnesses and complainants, and how should they be compensated for the hurt that they have suffered?
I hope that an advisory council of this sort would provide no more the flimsy and dubious evidence referred to by the late Lord Chief Justice in his speech as the basis of policy. I support the amendment.
Lord Bingham of Cornhill: It is surely true that in the fields of criminal justice and penal policy we all,
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wherever we sit, share the same objectives. Wherever possible, we all want delinquency to be nipped in the bud. We all want extra-judicial remedies to be applied wherever they are appropriate and likely to be effective. We all want the law to be modern, intelligible and, again, effective. We all want trials to be conducted so that the prosecutor has a proper and adequate opportunity to prove guilt and the defendant has a proper and adequate opportunity to contest it. We all want sentencing to be carried out with due regard to the traditional objectives of retribution, deterrence, rehabilitation and, perhaps now, incapacitation, having regard to the circumstances of the individual offender and the individual offence. We all want penal methods to be effective and humane.
There is very little disagreement about ends, but finding the most effective way of achieving those ends is a much more difficult task. It is a task to which we have over the years devoted immense legislative effort. In the past decade there have been seven major criminal justice statutes and over 20 more limited measures.
It is, of course, necessary that the law, practice and penal policy should be kept under review and overhauled where necessary, and it is right that governments should be free to act quickly when the need arises. But surely it cannot be wise—and it is certainly not efficient—to enact a series of measures hard on the heels of each other, often modifying or repealing the previous measure. Noble Lords will be able to think of examples of legislative measures which have been brought into force, only for their deficiencies to be quickly demonstrated, and other measures which have never been brought into force at all.
The purpose of the amendment, which I support in no adversarial or carping spirit, is to provide the Home Secretary and the Government with a reservoir of wise, informed, objective and non-partisan advice on the important and intractable problems which confront him, them and us. It need not be a recipe for delay, although a measure of deliberation is not out of place in this field. There will be a financial cost, but that must be weighed against the cost of trial and error.
The recommendations of this body will in no way fetter the judgment of the Secretary of State, but I hope and expect that they will inform and strengthen that judgment. I hope that the amendment may be recognised as a constructive and helpful proposal, intended to promote the achievement of shared objectives.
5.30 p.m.
Lord Carlisle of Bucklow: I rise to support the amendment moved by the noble and learned Lord, Lord Ackner, and his call for the setting up of an advisory council. I remind Members of the Committee that there is nothing new in this proposal. An advisory council on the penal system was set up by the noble Lord, Lord Jenkins, in, I think, 1966 and existed until 1980. I had the honour to be a member of it in its early days. Other than myself, it had a highly distinguished membership. The noble Baroness, Lady David, was a member. I thought she was, but I see she shakes her head. The late Lady Wootton was its first chairman; the

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then Bishop of Exeter, Dr. Mortimer, was the vice-chairman. Professor Radzinowich, Dr. Walker, Sir Louis Blom-Cooper and various other people involved in the penal field were members.
The purpose of that council was to attempt to take matters of penal policy out of the ambit of party political debate. I believe that its reports were of value. Reports introduced the proposals for suspended sentences. The council looked at the whole question of non-custodial sentences. There was a report on prison policy, dealing with the question of a policy of dispersement as against a policy of concentration for serious offenders. There was a report on the regime of detention centres. I notice that in a recent article Sir Louis Blom-Cooper described some of the reports as being indifferent and some outstanding. In hindsight, one only remembers the ones that were outstanding. But I do know that we were greatly fortified by the existence of that advisory council when, in 1970, under the late Mr. Reginald Maudling, I became a junior Minister in the Home Office and we were faced with a paper from the noble Lord, Lord Allen of Abbeydale, pointing out the vast likely increase in the prison population unless action was taken, which led to the introduction of community service and suspended sentences and the extension of parole. I believe that the establishment of an advisory council would assist in taking these matters out of the political arena.
The noble Lord, Lord Judd, said in an earlier intervention that we must remember that the purpose of sentencing is not only punishment and deterrence but also the rehabilitation of the individual. There is a need to remember always the importance of punishment and deterrence, but I believe that a degree of humanity is also needed. I believe that had that council, which regrettably was done away with in 1980, existed during the past decade, we should have avoided the wide fluctuations in penal policies which we have seen and which the noble Lord, Lord Thomas, mentioned. I believe we should have avoided the absurdity of mandatory minimum sentences and the extension of the mandatory life sentence.
Over that period we have seen policies recommended at one stage being stood on their head by the same government a few years later. We have seen parties change completely their approach to individual proposals, largely affected by what they believed was the public opinion of the moment. I believe that a standing advisory council would assist in avoiding those pressures and would allow issues of penal policy to become matters of common consent and agreement in this House. I strongly support the amendment.
The Earl of Longford: I rise to support strongly the amendment. The main points have already been made but, following a few remarks, I shall make a point which comes best from someone on these Benches.
We surely all recognise the extraordinary difficulty of the position in which the Home Secretary, that high-minded Christian socialist, finds himself today, when all enlightened opinion is on one side in these discussions and the passions of the so-called multitude
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are on the other. He, of course, is employed to solve the problem; he has chosen that destiny, and we wish him well.
I wrote an article for The Tablet newspaper headed, "If I were Jack Straw". It was rather impertinent to make such a suggestion and to conceive of such a fantasy. When I became Leader of this House in 1964, I had been chairman of the relevant Labour Party committee, whose main proposals were put into law a few years later. Six of the members of that committee were in the Labour government. My old friend Evelyn Waugh, a famous writer, wrote to another old friend that he was glad I was not going to be Home Secretary because otherwise we would all be murdered in our beds. Apart from the fact that I was a Member of the House of Lords, I do not believe that that was ever likely. Today the Home Secretary has his problems, and we are trying to help him.
The main facts have been pointed out. We have been told that it is reckoned that between 1993 and 2005, a period of 12 years, the prison population will double. Why? Does anyone know any reason why it should double? Someone arriving from Mars might say, "I suppose there has been a great increase in crime". According to official statistics, there is no increase in crime; there has been a decrease in crime in the past four years. If one applies to the Home Office—where, curiously, one department seems to deal with crime and another with prisons—for projections, there are not any, at least as far as I can discover.
Nevertheless, let us assume that crime will stay where it is, yet in the course of 12 years the prison population will have doubled. Some tremendous philosophy or, if you like, some bogus philosophy, must lie behind this extraordinary change in policy. We are all aware that when Mr. Michael Howard came to the Home Office he soon announced that prison works. That idea, of prison as a salvation of humanity, has been adopted all too brutally. It would be nice to say that with this enlightened Government of ours, the Labour Government, something different will come into operation, but there is no sign of it yet. I personally hope and believe that this high-minded Government will introduce some new atmosphere altogether, but there is no sign of it yet. We hope they will. We have been hoping for 10 months, but still we go on hoping. That is the situation.
I want to add a further thought. The Labour Party won a great election victory, and one of the important slogans was, "We are going to be tough on crime and tough on the causes of crime". No new meaning has yet been given to that in practice but it could be very important if interpreted in the right way. If we think of the 64,000 prisoners that there are now, we are all too well aware that a high proportion of them will offend again. We are also aware that the degree to which they offend and the extent of their offences will depend quite a lot on how they are treated in prison. So if we are looking for the causes of crime, we can find one cause, which is the maltreatment of prisoners in prison. That is something that gives a lot of meaning, in my opinion, to the attack on the causes of crime.

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So there it all is. I entirely agree with what has been said. An advisory committee would strengthen the hand of the Home Secretary, the well-meaning, Christian, socialist Home Secretary, in doing his duty. All alone, it is very hard to face public opinion and do something unpopular—on the face of it unpopular until the public is re-educated. I do not think that word was actually used today but the noble Lord has used it to me before now: the re-education of the public on penal matters. That is the essential task today, and I believe that that task will be very much facilitated by the amendment of the noble and learned Lord.
5.45 p.m.
Lord Hurd of Westwell: I would like to join those who support this amendment. Of course, as my noble friend Lord Carlisle has pointed out, there was such a body in the past. As he has also pointed out, it did valuable work; in fact it was largely responsible, as he said, for the introduction of the CSO. I do not think anyone could deny how useful, admirable indeed, a form of punishment outside prison that has been. The death of that earlier body is best recorded in the account by my noble friend Lord Windlesham in his classic work Responses to Crime. He wrote:
"In the ordinary way, no incoming Home Office minister, least of all one with the qualities and style of William Whitelaw, nor the officials advising him, would have contemplated abolishing the ACPS … But the times were not ordinary … In [the Prime Minister's] scornful view, many such bodies, known as quangos, were not simply unnecessary but represented an insidious spread of patronage, concealing at the same time the growth that had taken place in the apparatus of central government".
And so the word went out that the temple should be cleansed. I seem to remember that my noble friend Lord Renton wielded a particularly vigorous broom in that campaign, and not just the money lenders and those who sold doves but the runners of quangos were expelled from the temple. It can be noted that some of the quangos have crept back into the temple since then, but not this particular one.
I think a very strong case has been made for a body of this kind with a rather wider remit, as is now proposed, than the old ACPS, for two reasons, one of which has been given and one of which has not. It is desirable to move criminal justice policy to some extent from the sudden flash floods of emotion which follow a particular disaster or tragedy. It is silly to decry such emotion because we all share it and it is perfectly natural and human that there should be such very strong high feelings in the aftermath of a disaster. But it does not necessarily follow that these high feelings should dictate the future substance of the law.
There is an overwhelming case, it seems to me, for a pause for reflection and experienced advice. I speak as someone who was an actor in one debate, a spectator in another, the two debates following the firearms tragedies at Hungerford and Dunblane. That is the first point.
The second point is that I believe a body like this would be a good precaution and safeguard against the wear and tear which is imposed on a criminal justice system by too much adversarial argument. I join others
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who have made this point. Adversarial argument in this sphere can, like an acid, corrode the merits of a debate and the substance of a policy. We should not seek to inhibit the Home Secretary's freedom of action on consideration. Certainly, we should not seek to inhibit parliamentary discussion. I believe that there should be more parliamentary discussion on these matters. I feel that prisoners in particular are a neglected corner of our public life. I do not believe that a Prime Minister of this country has ever visited a prison. This is the first time that I have made this assertion in the hearing of a Minister of the Crown. I hope that perhaps on some occasion the noble Minister will either refute me, and I shall be delighted, or suggest that some remedy is at hand.
Of course, Parliament has a duty to society, a duty to protect society, and a duty to the victims of crime. So those of us who are interested in this subject should encourage and not stifle discussion. The question is not whether there should be discussion but whether it is sensible that it should be divided on mainly or principally party lines. I do not believe that the contest as to which party is toughest on crime is essentially a meaningful contest. I believe that those who strive for that prize are likely to find that its laurels fade quite fast.
I believe that there is now a chance for a reasoned truce because the heat, to some extent, has died out of this debate. In some political matters the line of debate seems to me to fall naturally between the parties: the role of the state, the balance between spending and taxation. These are, in a way, left/right issues and it is natural enough that they should be debated between parties as armies, as regiments, organised, divided on a left/right basis. But for foreign affairs and defence, as your Lordships know, as practised also in the other place, there is a different convention, for excellent reasons. These are not usually matters where the lines of debate are the same as the lines between parties. I believe that that should be true of debate on the criminal justice system.
The Home Secretary has to deal with, the Government has to deal with, we all have to deal with, very large numbers of people involved in making this system work. They are not servants of government and they certainly do not feel themselves to be adherents of a particular political party: the judge, the magistrate, the police officer, the prison officer, the probation officer. All these stand in somewhat different relationships to the Home Secretary and they are none of them creatures of government.
In the past few months, by good fortune, I have had occasion after a long gap to renew acquaintance with a good many of them as they go about their jobs. They are under great pressures from the nature of crime, the increase in crime, the nature of our society, the difficulties in dealing with these problems. We should not add to these people the extra pressures which come if we in Parliament tackle these matters on an adversarial and point-scoring basis. It is simply not fair

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to those who are trying to carry out the policies of the Government on behalf of the nation. I believe that this is an opportunity to make this point clear and to find a practical means of carrying it forward. I support the amendment.
Lord Lloyd of Berwick: The sentencing advisory panel proposed in Clause 67 of the Bill is welcome. It will have two effects. First, it will provide consistency and stability in the sentencing area. Secondly, it will have the effect of removing the political influence on sentencing which, regrettably, has been so apparent since just before the general election.
The amendment proposed by my noble and learned friend Lord Ackner will extend that principle to the whole realm of criminal justice in this country. For that reason, I lend my wholehearted support to the amendment. It will have the result of producing stability over the criminal justice system, as the advisory panel will in sentencing. It will, one hopes, remove once and for all from the realm of criminal justice the urge of the political say. I can see no disadvantages in the amendment and, with any luck, it will provide enormous advantages to our system of criminal justice.
Lord Merlyn-Rees: I support the general tenor of the amendment tabled by the noble and learned Lord, Lord Ackner, and notable others. I want to support it completely, but there is, I suggest, a different direction in which the proposal might go.
I still visit prisons. I am a vice-president of the Butler Trust, which was formed in honour of a great Home Secretary, whom I admired greatly. We operate in prisons and we reward what is done in prisons. I should tell the Committee that an enormous amount of good work is done in prisons. We know the bad things that go on in the prisons because we see them reported in the press. But a great deal of good work is done not only by prison officers but by civilians of all kinds. Their work is rewarded. I am a trustee of NACRO and of APEX. I keep in touch with the prisons, although I am no longer heavily involved.
In the work I have done as a politician, my involvement in prisons as Northern Ireland Secretary was greater than it was as Home Secretary. I speak on the basis of that experience. The old Advisory Council on the Penal System was extremely valuable. Sir Louis Blom-Cooper, who was a member of the ACPS from 1966 to 1978, commented in the Guardian on 2nd July 1997 that it,
"did valuable work on selected topics until it was unceremoniously 'quangoed' in 1980 by a Conservative government that abandoned its predecessor's desire for independent advice".
The Library provided me with a list with some of the ACPS's selected reports. The noble Lord, Lord Carlisle, has a similar list. They include: The regime for long-term prisoners in conditions of maximum security; Detention centres; Reparation by the offender; The length of prison sentences: interim report; Powers of the court dependent on imprisonment; Sentences of imprisonment: a review of
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maximum penalties—history repeats itself. In a pamphlet published by the Prison Reform Trust, Sir Louis Blom-Cooper and Sean McConville concluded:
"However helpful the ACPS was (and it issued some indifferent reports, as well as some outstanding ones) it … was not intended to provide the authoritative overview [that a Royal Commission could provide]".
My query is whether the resuscitation of this body will provide the overview that is required, copying the Gladstone Report of 103 years ago. I suggest that we need something that takes the overview far more than the ACPS could have done.
The pamphlet published by the Prison Reform Trust states:
"The case for a Royal Commission is compelling".
It must be broad in its terms of reference, not the individual selective reports on particular issues to advise the Home Secretary, or the Northern Ireland Secretary, or whoever it might be. As was pointed out by the noble Lord, Lord Hurd, it is then up to the Home Secretary or the Northern Ireland Secretary whether to accept the advice. The overview should be provided by a different body from the ACPS. The pamphlet goes on:
"It is quite impossible to bring any sense to penal policy without analysing how offenders are sentenced, and equally impossible to understand that without considering how offenders are selected for the criminal process by policing resources and priorities".
These are some of the general inquiries that might be carried out: the principal causes of changes in rates of offending; effective means of reducing certain crimes; maximising public benefits in repressing crime; the role of the police and prosecution; what punishment can and cannot achieve.
My query is whether a repeat of the old organisation is the right way to do what the noble and learned Lord, Lord Ackner, and his noble friends have been putting to the Committee. We need the broad view of what is happening in society; how it is changing; the crime in schools and the crime in inner cities. I represented an inner city area of a great northern city. Inner city crime is something unto itself. It is unnoted by many people because the middle classes do not live there. The teachers and the doctors come in like missionaries every day. An authoritative report on inner city crime would be extremely valuable as a general view of what is happening to society.
I support the amendment but I believe that we should give this matter a little more thought. To me, the old organisation worked at one time. I found that very valuable. But that was for one purpose. We should have a Royal Commission or something like it and resuscitate the old organisation. I support the noble and learned Lord, Lord Ackner, in his amendment.
Lord Mayhew of Twysden: I should like briefly to endorse what the noble Earl, Lord Longford, said, that this amendment is likely to help the Home Secretary. I would add that it would be likely to help all succeeding Home Secretaries.
The trouble with the great issues of crime and punishment with which the amendment, the Bill and the Committee are wrestling is that they attract powerful

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opinions which derive from prejudices and from what are sometimes called instincts. They are seldom faintly held prejudices or instincts. That makes life extremely difficult for Ministers, who are elected by many who hold these prejudices and instincts as well as others and who also have to face party conferences and form and shape their party's policies.
Some excellent phrases have been uttered in this short debate. The one on which I fasten is that uttered by the noble and learned Lord, Lord Bingham, "a reservoir of wise, informed, objective and non-partisan advice". That was echoed by the noble and learned Lord, Lord Ackner, "dispassionately, authoritatively and constructively" advising. It is not just Ministers who find life very difficult by reason of the very strong feelings—sometimes pejoratively called "instincts and prejudices"—which spring up from these great questions. Judges, too, have to exercise whatever discretion is allowed them. Does that not contract and expand according to the fashions of the politics of the day that Ministers and Parliament have given them?
I believe that if there were to be a council of this character it would—by reason of what that reservoir would contain—help to inform the public in a way which is lacking at the moment. It would also inform Ministers which would be of great help to them and to Parliament. The function of a reservoir, of course, is to be drawn on. I hope that it will be drawn on if we create this reservoir as I very much hope we shall.
6 p.m.
Lord Lowry: I promise to be brief. I speak as a former Lord Chief Justice in a much smaller jurisdiction. In that capacity I was not entirely unacquainted with politics. There was one important issue which I need not discuss, but which could easily have become a political football. On that issue I counted myself fortunate to enjoy the support of two Prime Ministers, two Lord Chancellors, a succession of dedicated law officers, one of whom has just sat down, and at least two Secretaries of State, one of whom has just addressed the Committee.
But it is not primarily from Northern Ireland that I draw the inspiration to support this amendment. My view is based on what, in recent years, has been said and done in this jurisdiction. The Committee has heard examples and I shall not repeat them. The Committee has also heard the noble Lords, Lord Carlisle, Lord Hurd and Lord Mayhew, who speak from experience and, in my respectful view, they speak wisely. Whatever precise solution is adopted, a way must be found to remove from the party political sphere the kinds of issues, examples of which have been given to the Committee. I say "party political" because the issues mentioned will often merit vigorous debate in this House and in the other place and will remain proper political issues in that sense. I support the amendment.
Lord Elton: After hearing from so many who carry so much more seniority that I do, I hope that it is not an impertinence if I join in a debate which I had no
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intention of joining until I came into the Chamber and discovered that the Committee was discussing something about which I feel with such passion.
For three years I was the Minister responsible for the Prison Service, although at a more junior level than that of other noble friends who have spoken and therefore, possibly, a little bit closer to the workface. I visited a great many prisons. The noble Earl, Lord Longford, must be right. Something must be wrong with a system which allows the current rate of growth in the prison population to persist. It cannot be right. The arguments that I used to advance as long ago as 1985 for the reason that our prison population compared so ill with those of other European countries, cannot survive in the face of the growth that has taken place since then.
Our prisons are filled with people, most of them young by the Committee's standards. As regards the millions of crimes committed by people under the age of 25 years, if Members of the Committee look at the report of the Audit Commission of November 1996—and I speak from memory and therefore subject to correction—one will find that only about 2.5 per cent. of all those criminals actually received any corrective treatment whatsoever even including the police caution. Yet those who are corrected cost a staggering amount. The effect on young people who go to prison is not rehabilitative. I wonder whether the aim of rehabilitation has been almost lost sight of by the Prison Service in the face of the weight of numbers now pressing within the cell doors.
But those people are put there for containment and punishment. That is unproductive, but produces hardened, more expert and more frequently offending criminals. They push up the statistics. That moves me. It is a tragedy because most of the people in prison need never have been there if they had received the right treatment in their early days.
All of us start more or less level. It is our experience, the way in which we exploit it and the way we are guided which decides whether we are to become criminals whether of the fraudulent, well-heeled sort of the City or of the ill-shaven, thuggish sort of the back streets. Children do not become criminals by chance but because of the effect on them of events and the failure of adults to guide them away from criminality, usually through a lack of love.
It is late. I had not intended to speak at all. Any amendment which takes the decision on imprisonment in particular out of the political forum, as my noble friend Lord Hurd said, must have my support. I beg the Minister to give it his.
Lord Goodhart: I support the amendment. As many Members of the Committee have said, the criminal justice system over the past few years has become far too politicised. As my noble friend Lord Thomas of Gresford said, in recent years and particularly in the run-up to the last election, both the Government and the Opposition parties were bidding against each other to see who could take the most repressive attitude towards crime. What is remarkable and very gratifying

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indeed is that an entirely opposite attitude has been taken on this occasion by everyone who has spoken in this debate from all parties and from the Cross Benches.
One result of the politicisation, as the noble and learned Lord the Lord Chief Justice, Lord Bingham, pointed out, is that there has been a mass of legislation. Since 1990 we have had, among other Acts, the Criminal Justice Act 1991, the Criminal Justice Act 1993, the Criminal Justice and Public Order Act 1994, the Criminal Procedure and Investigations Act 1996, the Crime (Sentences) Act 1997, all of them major pieces of legislation, now followed by this Bill, which is of at least equal significance.
This legislation concerns substantive law; the investigation of crime; the prosecution process and sentencing. But the legislation notably lacks consistency and a basic philosophy throughout. Of course, criminal justice is in a sense a political matter. The prevention and prosecution of crime and the conduct of the penal system are among the most important responsibilities of government. But criminal justice does not need to be the political battleground to the extent that it has. There is a clear need here to lower the temperature.
We now have a standing Civil Justice Council to oversee the important programme of the reform of civil procedure instigated by the noble and learned Lord, Lord Justice Woolf. Membership of that committee was announced in a Written Answer by the noble and learned Lord the Lord Chancellor last week. But surely there is a need at least as great to have a standing council on criminal justice as an authoritative and expert body to advise the Secretary of State. By advising the Secretary of State it will be advising the public. Above all, what is needed here is a better-informed public. I believe that this amendment will go a long way towards achieving that result.
Lord Henley: I feel that I shall appear to be like a character in a Bateman cartoon, as the man who spoke against the amendment of the noble Lord, Lord Ackner. I hope that I will have some support from the noble Lord, Lord Williams. when he responds and that I may offer him a degree of support in advance. Whether the noble Lord wants that support is another matter. He seemed to deal perfectly adequately with the remarks of the noble Baroness, Lady Masham, just as he dealt last week, with the utmost skill, with the amendment of my noble friend, Lord Windlesham.
Considering the eminence of all who have spoken—particularly my noble and learned friends—I speak with considerable diffidence in begging to differ on this amendment. I am filled with alarm by the very idea that party politics should be taken out of criminal justice and that it should merely be left to the consideration of the great and the good—which is, in effect, what the amendment seeks to do. We are told that the amendment's purpose is to establish a standing advisory council to inform the public. It looks much more like an attempt to imprison and impose constraints on the Home Secretary when he comes to make policy. The idea that such matters are best addressed by a council, not by democratic processes, is fundamentally wrong. They
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should be a matter for the Home Secretary, who is answerable to Parliament and responsible to the electorate. It ought to be for him to address policy and for that policy to be argued out in Parliament.
No one can argue that such matters do not receive sufficient time to be argued in Parliament. We have debated this Bill alone over some five days in Committee, and I believe that the Minister and others of your Lordships agree that it has not been debated in a party political manner. Noble Lords in all parts of the House have spoken. No support for the line I am taking has come from the Government Benches but I look forward to hearing from the Minister in due course.
Lord Renton: I invite my noble friend not to overlook that what is proposed is purely an advisory council. The Home Secretary will have to consider its advice, which he may or may not accept. In any event, the democratic process will operate and the two Houses of Parliament will have the last word.
Lord Henley: I accept that is what the amendment sets out but neither the Minister nor myself are naïve. I know exactly how a council of this sort will work and the constraints that it will impose on the Home Secretary. I speak from experience when I say that we have seen much the same in the realm of social security. The Minister will know of the Social Security Advisory Committee, which imposes constraints. It might be that there are better arguments for such a body in that case but it imposes constraints on what it is possible for the Secretary of State for Social Security to do. An amendment of this kind would impose just such constraints on the Home Secretary and limit what he could do. Once the council has pronounced on such and such a matter, it will be much harder to argue against it. We will be told that the matter has been considered a great deal by experts. The views of the people—about whom we hear so much from the new Labour Government—could be ignored.
The amendment proposes to establish a quango of the sort that was set up in the mid-1960s and which was very sensibly removed in 1980—to which my noble friend Lord Hurd referred. I do not think that this is the right moment to bring back a quango of that sort. I hope that the Minister will resist the blandishments of all who have spoken in favour of the amendment.
Baroness David: I have been provoked by the noble Lord, Lord Henley, to speak. I do not believe that any constraints would be imposed by the amendment. Such an advisory council might lead to ideas, as did the one before it. The noble Lord, Lord Carlisle, and others, mentioned community service and suspended sentences. I strongly support the amendment and hope that my noble friend the Minister will do the same.
6.15 p.m.
Viscount Tenby: I rise extremely briefly—my noble friend Lady David has done this for me—to redress the balance yet again. I warmly support the amendment in the name of my noble and learned friend, Lord Ackner. The compelling case for such an advisory council has

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been devastatingly made by distinguished lawyers in all parts of the House. It may be thought presumptuous of me to attach myself to their coat-tails. My only excuse for doing so is that I may in some small part be able to speak for the lower courts, in which I have had the honour to serve for a number of years.
Anyone sitting as a magistrate in the 1980s and 1990s will have been appalled by the changes in sentencing policy that went on during that period, as a direct result of what was seen by political parties to be beneficial to their interests at any particular time. Quite apart from the moral and judicial damage those parties caused throughout the legal system, and the lack of any identifiable long-term strategy in sentencing matters, the burden on—what are, when all is said and done—part-time contributors to the legal system was substantial.
Training programmes for one year were completely overturned by what took place 12 months later. As the prayer book says, there was no health in it. We must resist all attempts to go down a path where today's fashion dictates tomorrow's sentencing policies. That would be quite wrong. Let us step back and take a long, dispassionate and hard look at crime in all its multifarious aspects and plan an imaginative and decent strategy for the 21st century. Where better to begin than with the standing advisory council suggested by my noble and learned friend Lord Ackner?
Lord Williams of Mostyn: This area of crime and punishment and how to deal with it is central to most people's conscious existence. Whatever we do, we must take public opinion with us and we must earn and maintain confidence and trust in the judiciary, criminal justice system and penal system.
It is right that the Government should have available to them well-informed advice to inform and underpin their policies. There is nothing between us on that. The previous organisation, which lasted from 1966 to 1980, did good work. As the noble Lord, Lord Carlisle of Bucklow, may have hinted, it was not always the most speedy of mechanisms because sometimes it took three or four years to prepare its reports—but it did good work.
The real question on which the noble and learned Lord's amendment requires us to focus is how best to ensure that the Government are provided with useful and appropriate advice. He believes that the re-establishment of something like the former standing advisory council—although, I agree, with a different remit—is the answer. That is one possibility and one that needs to be thought through carefully.
Quite a lot has changed since 1980. The Government have a lot of post-1980 sources of advice. The Criminal Justice Consultative Council has representatives of the criminal justice system and is usefully underpinned by local area committees made up of local practitioners. The Trial Issues Group deals with improving the way in which the criminal justice process works and gives practical advice to the Government. The Law Commission, to which I willingly pay tribute, does masterly work on law reform.
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We also have reports—we have dealt with one in a little detail this afternoon—from the Chief Inspector of Prisons and from the Chief Inspector of Probation. As has been said, under this Bill we want to establish a youth justice board (Clause 32) which will advise the Home Secretary on the operation of the youth justice system, and in Clause 67 we propose a sentencing advisory panel. We also have reports from the Institute of Criminology; research papers from universities; international research material; and collation and co-ordination of research and statistical work in the Home Office itself.
There are, therefore, various mechanisms from which we can draw useful benefit. The real question is: would an advisory council of the sort proposed give further value? If it would, it is clearly worth considering, but not on the basis of simply looking to the past for solutions without being sure that they take proper account of more recent developments.
The noble and learned Lord's amendment indicates that the advisory council might provide advice to the sentencing advisory panel. It is probable that those who serve on both are likely to have much the same background. Will there be virtue in that particular structure? It seems to me that if an advisory council is to be of benefit, it is important to ensure that it has clear terms of reference and does not simply replicate existing sources of advice. Should it have a standing brief or should it be available to offer advice on issues specifically directed to it? Should its membership be fixed? Should it have the opportunity to co-opt further members on an ad hoc basis who might have a particular background and particular expertise to help it to consider specific issues? In the Government's view, all those matters deserve further thought. We would also have to decide whether the body should be statutory or non-statutory. I appreciate that the present form of the amendment indicates a statutory basis, unlike the former advisory council.
The noble and learned Lord the Lord Chief Justice put forward his carefully reasoned remarks which were intended to be constructive and helpful. Without. I hope, appearing presumptuous, I take his remarks entirely in that spirit and I know that the Home Secretary is of the same view.
There are a number of issues here which are worthy of further consideration and which would benefit from further discussion. Therefore, despite the criticisms made of my lack of openness, on this occasion the recidivist repents in part. As the noble and learned Lord, Lord Ackner, will appreciate, I do not make any promises. I hope that he will accept that we have attended to all the speeches that have been made this afternoon. On the basis of what I have said, with no promise but with the undertaking that I have given that we take your Lordships' observations seriously, I hope that the noble and learned Lord will feel able to withdraw his amendment.
Lord Ackner: I have not quite understood exactly what the noble Lord, Lord Williams, is offering. The lack of generosity which he has been instructed to show throughout the passage of this legislation is not

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something for which I blame him. That is his brief. No one could have carried out the obligations of his brief more courteously or more efficiently than the noble Lord, but we wish to know what the brief entitles him to say. If the brief merely says, "I will ask those in the Home Office to read Hansard", I find that particularly uninvigorating. It is not what we have been asking. On the other hand, if the noble Lord says, "If you do not divide the Committee, I will assure you that we will give favourable consideration (although we do not bind ourselves to agree with it) to what has been urged so forcefully and fully, with but one exception", that is quite another matter.
Perhaps I may deal with what the noble Lord, Lord Henley, said. As has been pointed out, he totally overlooked the word "Advisory" which occurs throughout the amendment. The council is to "advise",
"the Secretary of State on … adequacy and effectiveness".
It is to "advise" the Secretary of State on various aspects of the penal system. To show that the advisory council will not trespass on the sentencing panel, the amendment specifies,
"at the request of the sentencing Advisory Panel … providing such advice and assistance as may enable the panel the better to discharge its functions".
In relation to the attitude of the noble Lord, Lord Henley, and his party, one is reminded of the occasion when I successfully moved an amendment that there should be a right of appeal against the tariff which the judge pronounces in murder cases. That right of appeal exists in regard to the tariff for all other sentences which result in life imprisonment. The amendment was resisted although its purpose was to provide the Home Secretary with greater wisdom as to what the tariff should be, still leaving him the opportunity to make his own decision. It would have provided him with the advantage of having the trial judge's view either altered or confirmed by the Court of Appeal. The Home Secretary would not have it. This House said that he should have it and, by a large majority, we carried the amendment, but it was reversed in the other place.
What were the then government resisting? They resisted the giving of advice to the Home Secretary which he could accept or reject. But the Home Secretary might be embarrassed by that advice because, stupidly, he might go contrary to it and then he would be open to criticism in this House and outside it. The approach of the noble Lord, Lord Henley—I do not say that it is the approach of the noble Lord, Lord Williams, because he has not committed himself—is, "Don't embarrass me with advice; allow me to be as pigheaded as I wish to be". I find that a very unattractive stance. That is why I ask the noble Lord, Lord Williams, to be a little clearer about exactly what is the nature of his generosity, if any, before I decide whether or not I shall seek to divide the Committee.
Lord Williams of Mostyn: I thought that I had made it as plain as I possibly could by saying, "There are a number of issues here which are worthy of further consideration and which would benefit from
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further discussion". I think that that is fairly plain. I cannot guarantee "favourable consideration" because the noble and learned Lord would not expect me to come to a conclusion, standing here as I do; nor would he expect the Home Secretary to come to an instant conclusion because that would be contrary to the theme of the advice that he has been giving us so carefully which is, "You may listen carefully before you make up your mind".
Lord Ackner: Then I shall remove the word "favourable" and ask whether the noble Lord would accept the word "sympathetic". That in no way confines him to anything. It merely means, "Consider it with an open mind", but says that in one word. Perhaps the Minister will comment on that suggestion.
Lord Williams of Mostyn: We will consider this with an open mind because we believe the issues here are worthy of further consideration and would, I respectfully repeat, benefit from further discussion. So, the word "open" is attached to the word "mind" in the context of "further consideration and further discussion".
Lord Ackner: With the advantage of those further and better particulars, I am prepared to ask leave to withdraw my amendment, although obviously intending reculer pour mieux sauter should that be necessary.
Amendment, by leave, withdrawn.
6.30 p.m.
Clause 66 [Sentencing guidelines]:
[Amendment No. 257 not moved.]
[Amendment No. 257A had been withdrawn from the Marshalled List.]
Clause 66 agreed to.
Clause 67 [The Sentencing Advisory Panel]:
Lord Henley Lord Henley moved Amendment No. 258:
Page 53, line 33, at end insert—
("(1A) The panel shall contain—

(a) at least two members who have experience of working with or on behalf of victims of crime,

(b) at least one member who is a serving circuit or High Court Judge,

(c) at least one member who is a police officer,

(d) at least one member who is a magistrate, and

(e) at least one member who has experience of working as a small businessman.").

The noble Lord said: The Committee comes to the sentencing advisory panel. It is an advisory panel to which I can offer a degree of support, unlike the panel that the Committee spent a little over an hour discussing and, I daresay, will spend more time discussing in due course. At the moment the clause provides that the noble and learned Lord the Lord Chancellor shall, after consultation with the Secretary of State and the Lord Chief Justice, constitute a sentencing panel to be known as the sentencing advisory panel and appoint one of the members of that panel as chairman.
At this stage obviously the noble and learned Lord is unable to say who or what kinds of people are likely to be appointed. In general, I am not in favour of a prescriptive provision of this kind setting out precisely who should be sitting on the panel.
I move the amendment purely as a probing amendment to seek guidance from the Government as to what kinds of people are to be appointed to the panel and what kinds of interests they are expected to cover. I also make the more general point that it is very important that the various classes that I specify in the amendment should be represented in one way or another; in other words, those who have experience of working with or on behalf of victims of crime such as circuit or High Court judges, police officers, magistrates or small businessmen.
The problem about producing a list of this kind—the noble and learned Lord will no doubt make the point absolutely clear—is that it can be as long as one's arm and it will still not feature all those who should be included. I recognise the demerits of the amendment and have no intention of pressing it or anything like it, but I should be grateful if the noble and learned Lord could indicate the Government's thinking about the kinds of people to be included and the range of their experience. I beg to move.
The Solicitor-General (Lord Falconer of Thoroton): As the noble Lord indicated, Amendment No. 258 raises questions about who will serve on the new sentencing advisory panel. I am grateful to the noble Lord for the suggestions contained in his amendment and for giving the Government an opportunity to state their thinking in relation to the composition of the panel. Under Clause 67 appointments to the panel will be a matter for my noble and learned friend the Lord Chancellor to decide in consultation with the Home Secretary and the Lord Chief Justice. No final decisions have yet been taken on the composition of the panel. I can confirm however that the matter is under discussion between the Home Secretary, the noble and learned Lord the Lord Chancellor and the noble and learned Lord the Lord Chief Justice.
It may assist if I set out in outline the role of the panel and how we see it working as this will inform any decision on the membership. The panel has been set up to provide informed, well researched and objective advice to the Court of Appeal. It needs to be independent yet capable of reflecting the view of a wide range of interested parties and acting as a conduit for those views to the Court of Appeal. It must not however be seen to be dominated by any particular sectional interests. The panel has been set up to promote consistency in sentencing by providing the Court of Appeal with some additional but very important tools which will assist in the framing or revision of guidelines. It will be important for it to have the right mix of "coal face" experience and broad-based knowledge of the criminal justice system. At the same time however it should not be too big and unwieldy if it is to act quickly and in a corporate fashion as we want it to. This means that we are probably looking at about 12 members. Clearly, that limits to some extent the
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range of people and groups that can be represented on the panel. The panel however will consult widely so those whose interests are not directly represented on it will still have every opportunity to feed in their views.
The kind of people we expect to be on the panel may include for example academic lawyers, researchers, sentencers and sentence providers and one or two people completely independent of the criminal justice system. The Government are very interested to hear suggestions made by noble Lords tonight about possible membership. I am sure that the noble and learned Lord the Lord Chancellor will take those into account, along with the views of the noble and learned Lord, Lord Bingham, and the Home Secretary with whom he is in discussion. Similarly, on the question of who will be consulted, it is important that we do not seek to be too prescriptive at this stage about membership of the panel. Appointments to the panel will not be made until the Bill receives Royal Assent. It would be unfortunate if at some stage in the future we were prevented from appointing an eminently suitable candidate simply because he or she did not fit into some pre-determined category.
I hope that that explanation helps the Committee to understand how the Government see the panel at the moment. I hope very much that the noble Lord, Lord Henley, will not seek to press his amendment.
Lord Dholakia: I have just returned from a conference in Swindon of the Criminal Justice Consultative Council. The conference was very much devoted to race issues. One of my concerns is the victims within the criminal justice system, particularly those in ethnic minority communities. At Second Reading I said that 16 to 17 per cent. of the prison population consisted of black people and that 24 per cent. (or one in four) of female prisoners were black. A number of studies, including one by the department of criminology at the University of Oxford, illustrate discrepancies in the sentencing of black people. I ask the Minister to ensure that when this matter is considered people from the ethnic minorities in the criminal justice system are represented in the membership of the advisory panel. I also note that the Probation Service is omitted and suggest that that should be put right.
Lord Falconer of Thoroton: I am grateful for the comment of the noble Lord, Lord Dholakia, about ethnic minorities and victims. The panel will have certain members but it will consult people before it expresses its views to the Court of Appeal about the guidelines that it proposes. I cannot say at the moment whether these particular ideas will be taken on board, but I can assure the noble Lord that they will be considered. However, for the reasons that I have given I believe that it is wrong at this stage to be too prescriptive about both the panel and the consultees. The consultees may vary from case to case, but I assure the noble Lord that his remarks will be taken into account.
Lord Henley: I am grateful for the intervention of the noble Lord, Lord Dholakia. I agree that my group

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does not include those he mentioned. One could go on lengthening the list so that it becomes almost as long as one's arm. I do not recommend that approach, as I hope I made clear in moving the amendment. I do not believe that one should set out a prescriptive list. For that reason, therefore, I am very grateful for the explanation that the noble and learned Lord has given about the consideration that will be given to this matter when the panel is set up. I am entirely satisfied that all those who should be included will be included or, if they are not included, that they will certainly be consulted by the panel as and when appropriate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Henley Lord Henley moved Amendment No. 258C:
Page 53, line 36, at end insert—
("() The Panel may at any time, and shall if directed to do so by the Lord Chancellor, propose to him that guidelines for the sentencing of offenders by magistrates' courts be framed for any category of summary or either-way offence.").
The noble Lord said: This replaces an amendment I originally tabled as Amendment No. 257A which is now withdrawn. I am advised that it is possibly a better attempt to achieve what I tried to achieve in the earlier amendment. I daresay that again it will be found not to be the best way of dealing with the matter, but no doubt I can have advice from noble Lords when they respond.
The amendment seeks to achieve a greater degree of consistency in sentencing in magistrates' courts—something which, I understand, is dealt with in other courts by the sentencing advisory panel. My noble friend Lady Anelay will know from her personal experience that there is considerable inconsistency from one court to another. For example, someone may be sentenced in magistrates' court A for a serious road traffic offence and told in no uncertain terms by the Bench that, if he appears again before them having committed a similar offence, he will definitely lose his licence for six months or a year, but when, having repeated the offence, he appears before another magistrates' court 100 miles away, he is not dealt with appropriately. The original warning will therefore have had no effect and no meaning whatsoever.
The amendment will introduce greater consistency to the magistrates' courts while ensuring that the courts still have discretion to act as they wish, so they are not bound to follow the advice absolutely. It is important that they should have that discretion but there should also be a degree of consistency. I beg to move.
Viscount Tenby: I support the principle of the amendment in trying to achieve an overall standard throughout sentencing. It is undoubtedly a scandal that, according to various statistics, a person has a far greater chance of going to prison if he appears before court A for a shoplifting offence than if he appears before court C in another part of the country, where he may have his wrist slapped and get away with a small fine. That is clearly unacceptable. In the past, people have been
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inclined to be indulgent about the situation, saying that it is funny and quaint. I do not find it so. There is a great deal to be said for uniformity, at least in principle.
However, noble Lords, particularly those who are involved in these matters, know that there are regional peculiarities and differences. If a certain area is suffering from a plague of offences arising from football hooliganism, then one might be more severe in sentencing than if it were a rare occurrence. I understand the difficulties facing those who are trying to frame a workable amendment, but the principle is a good one.
Lord Falconer of Thoroton: I fully understand the principle underlying the noble Lord's amendment, to which the noble Viscount, Lord Tenby, has spoken so eloquently. In the Bill, the sentencing guidelines drawn up by the Court of Appeal would cover indictable-only offences, those offences which can only be tried in the Crown Court, or offences that are triable each way, in a Crown Court or a magistrates' court. They would not apply to summary-only offences which can only be tried in the magistrates' courts. The present position is that guidelines for summary offences are drawn up by the Magistrates' Association.
When we developed our proposals, we specifically considered the position of the magistrates' court and consulted the noble and learned Lord the Lord Chief Justice. His view was that it would be inappropriate for the Court of Appeal to take on this role and disrupt the current arrangements, given that summary-only offences almost never came before that court. We agreed with that view and concluded that it would be better to retain the existing position whereby the Magistrates' Association, which has great experience in this area, draws up such guidelines. It is worth underlining that, as the Bill is drafted, the Sentencing Advisory Panel advises the Court of Appeal and no other body, and it is not clear from the amendment—although I do not take this as a major point—who is supposed to produce the guidelines envisaged by the amendment.
Noble Lords might say that we should provide for the Sentencing Advisory Panel to have a role in advising the Magistrates' Association in these matters, but the Magistrates' Association is a non-statutory body and it would therefore be difficult to frame statutory responsibilities around it. In practice, the Magistrates' Association may wish, when considering guidelines for magistrates' courts, to have regard to the advice produced by the panel and the guidelines produced by the Court of Appeal. I am sure that fruitful discussions could take place between the two bodies: indeed, the Magistrates' Association is likely to be one of the bodies which the panel must consult when consultees are identified.
I fear that it is right to leave matters on that basis. These provisions are not intended to undermine the position of the Magistrates' Association in this regard, and it is very difficult to incorporate the Sentencing Advisory Panel by statute in relation to the Magistrates' Association. I hope the noble Lord will agree to withdraw the amendment.
Lord Henley: The noble and learned Lord is relatively sympathetic. I accept that the amendment is

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probably defective in some way but the noble and learned Lord did not offer a solution to deal with the problem of inconsistency which everyone, including the noble Viscount, Lord Tenby, recognises.
Can the noble and learned Lord and his colleagues in the Home Office between now and Report give some little consideration to whether there is not a measure that one could introduce which might go some way towards achieving what I wish to achieve; or is he saying that he regrets that there is very little that can be done?
Lord Falconer of Thoroton: I am saying that I regret that there is very little that can be done through the mechanism that is being proposed or any other mechanism that one can think of in relation to the clause. The reason for that is that the Sentencing Advisory Panel is there to advise the Court of Appeal. We consulted the Lord Chief Justice and he has said that it is inappropriate to expand the panel's role or to give an increased role to the Court of Appeal.
We have thought carefully about how we can help the magistrates' courts through this mechanism and we have concluded effectively that it cannot be done. I regret it, but I am afraid I cannot give any comfort at all in respect of the amendment. The noble Lord may have to take his medicine now.
Lord Henley: I thank the noble and learned Lord for his openness in offering his regret. I will consider the matter carefully between now and Report and decide whether to come back to it. If not, I will take my medicine like a man. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Henley Lord Henley moved Amendment No. 258A:
Page 54, line 7, at end insert—
("() Judges and magistrates shall not be required to adhere to, or even to consider, any guidelines proposed by the Panel for the benefit of the Court of Appeal.").
The noble Lord said: The amendment makes absolutely clear that the courts still have a discretion in sentencing. It does not conflict in any way with earlier amendments but addresses the situation in all courts, whether magistrates' courts or otherwise.
The amendment seeks to make the situation clear on the face of the Bill, which is the important point; that the courts must make decisions for themselves, even though they follow the guidance. In the end the courts have to make the decisions. I beg to move.
Lord Falconer of Thoroton: The effect of the amendment is to make clear that sentences need not have regard to advice from the Sentencing Advisory Panel. I make it quite clear that there can be no question of sentences being required or expected to have regard to the panel's advice to the Court of Appeal. The panel's advice is just that, advice to the Court of Appeal alone.
The Court of Appeal will be required to have regard to the advice of the panel. However, it will be for the court to decide how much account should be taken of that advice, and it may even reject it. Sentencers will
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and should have regard only to the final sentencing guidelines produced by the Court of Appeal. We do not believe that it is necessary to make that clear on the face of the Bill.
I hope that, given those assurances, the noble Lord will accept that the amendment is unnecessary.
Lord Renton: I listened with great interest to the discussions on this and the two previous amendments. All those who have been in practice, like Members on the Front Bench, know perfectly well that everyone undertaking judicial work at first instance is at the mercy of the Court of Appeal when it comes to sentencing principles.
I find the situation slightly strange because the Court of Appeal—what should be called the Criminal Division of the Court of Appeal, but for some reason generally is not—is presided over by the Lord Chief Justice and not by the Master of the Rolls, who presides over the civil side. The Lord Chief Justice is very influential in laying down the sentencing policies decided upon by the Court of Appeal. They are binding on the courts of first instance.
We now find that the Lord Chief Justice is to have another capacity. Not only will he be consulted on who should constitute members of the sentencing panel, but, under subsection (4), he will be consulted on the advice to be given by the panel. Therefore, the Lord Chief Justice will have a dual capacity, dealing with the same matters in a different way.
I hope and believe that the work which he does as Lord Chief Justice presiding over criminal decisions in the Court of Appeal will be dominant and that he will not have to submit himself to the relatively minor part which he may play in the work of the sentencing panel.
Lord Falconer of Thoroton: I agree with the noble Lord's observation that all sentences are at the mercy—if that is the right word—of the Court of Appeal. That will remain the position even after the Bill becomes law. I understand that as regards the sentencing advisory panel, the Lord Chief Justice will have two roles. First, he is to be consulted on its membership. Secondly, under subsection (4), where there is a reference to the panel or a reference originating from it, the Lord Chief Justice shall be consulted by the panel as to whom it shall then consult before giving its advice. I believe that that is a comparatively minor involvement in the deliberations of the panel and is not nearly as important as the role he will play in presiding in the Court of Appeal, determining what the sentencing guidelines should be.
Lord Renton: I am grateful to the noble and learned Lord for his explanation. He has made the position quite clear.
Lord Henley: I, too, am grateful to the noble and learned Lord for those two explanations. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 67 agreed to.
Clause 69 agreed to.
Viscount Tenby Viscount Tenby moved Amendment No. 258B:
Before Clause 80, insert the following new clause—
REMOVAL OF FACE COVERINGS
(" .—(1) Section 60 of the Criminal Justice and Public Order Act 1994 is amended as follows.
(2) In subsection (1), after the word "vehicles" there are inserted the words "and to demand the removal of face coverings".
(3) In subsection (4), at the end there is inserted—
"(c) to demand the removal of face coverings that might intimidate other persons or which might inhibit subsequent identification of offenders.".").
The noble Viscount said: In the unavoidable absence of my noble friend Lord Carnarvon, for which he tenders his regrets to the Committee, I move Amendment No. 258B. When my noble friend first raised the matter by way of a Starred Question on 5th February, I detected support for it from all sides of the House. I hope that that sympathy will be reflected in the Minister's response today.
The issue is simple. Many of those engaged in unlawful disputes—for example, on demonstrations such as the National Front rally in Dover last November, in crowd hooliganism as recently occurred at a football match in Bristol in the autumn, or in an armed robbery—use face and head coverings of various kinds. There are two objectives in doing so. The first and most obvious is to escape detection, a result far more likely with the use of close circuit TV and videos were they not to adopt such tactics. But there is another reason which is in a way even more sinister. It is to instil fear in those unlucky enough to be in the way of such deplorable activities.
Although the police have been aware of the problem for some considerable time, the Association of Chief Police Officers is against the creation of an offence for wearing such head and face coverings. In law, it would present considerable difficulties because some people might wear protective clothing for a variety of lawful reasons. I refer, for example, to a scarf wrapped around the face to counter toothache; a covering to ameliorate some other ailment; or—who knows?—even a motor cycle dispatch rider attempting to enter the Home Office with letters of support to Ministers for their sympathetic consideration of amendments to the Bill! But this is a serious matter which invites a speedy resolution.
The amendment, which carries the support of the Association of Chief Police Officers and the Police Federation, seeks to amend Section 60 of the Criminal Justice and Public Order Act 1994. It would permit a police officer to demand the removal of face coverings before crime and disorder took place. I beg to move.
Lord Henley: I support the amendment. The noble Viscount rightly reminded the Committee that we discussed the matter when the noble Earl, Lord Carnarvon, raised it at Question Time on 5th February. I then made it clear that if the Government wished to make changes through the mechanism of the Bill we would offer sympathetic support to try to ensure an easy
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passage. Having offered my support, I shall be interested to hear what the Minister has to say. Are the Government able to proceed with the Bill, or do they believe that further work and consultation is required before proceeding down this route?
Lord Hylton: I joined in the Starred Question on 5th February and suggested that a little care might be needed with the wording of any effective piece of legislation on this issue. My noble friends who have tabled the amendment have taken care to distinguish between people who for one reason or another are legitimately covered up and those who are not. I support the amendment.
Lord Williams of Mostyn: I am grateful to the noble Viscount, Lord Tenby, and to the noble Earl, Lord Carnarvon, who have discussed the problem with me; the noble Earl before his Starred Question on 5th February and the noble Viscount subsequently. On 5th February, on behalf of the Government I made it plain that when we had representations from the Association of Chief Police Officers we would give its views careful attention. We have received its views and it supports the measure, as does the Police Federation.
The result would be that Section 60 of the Criminal Justice and Public Order Act 1994 would be amended to give the police the power to demand the removal of face coverings in certain circumstances. There arises the question of a safety device, about which the noble Lord, Lord Hylton, was concerned on 5th February and tonight, as to how one deals with individual liberties and strikes a proper balance between that and the reasonable requirements of the police. The trick here, so to speak, is that the power is only exercisable within a given locality for up to 24 hours at present and only on the authority of an officer of at least superintendent rank, where that officer "reasonably believes" that violent incidents may be prevented by using that power. I should point out to Members of the Committee that that superintendent rank may well be reduced to that of inspector or above later this year. I just thought that I ought to mention that detail.
Our stance is that we believe there is a mischief here. People wear balaclavas or crash helmets partly to avoid identification and partly to intimidate. It is not limited to one category of demonstration quite often found, perhaps, on inner-city estates—for example, National Front marches and those of such organisations. Therefore, we wish to consider this as a matter of urgency with a view, if the practical issues can be resolved, to returning with a government amendment at a later stage of the proceedings on the Bill. On the basis of that undertaking, I hope that the noble Viscount will feel able to withdraw the amendment.
Viscount Tenby: I am grateful to the Minister for his helpful reply and to other Members of the Committee who have taken part in this brief but helpful discussion. I do not propose to rehearse the grounds involved. In the absence of my noble friend and in view of the extremely helpful remarks made by the Minister, I shall look forward with anticipation to future developments in this

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particular area. At the same time, because it is not my amendment, I suppose that I should reserve the right to return to the matter at a later stage. However, I hope that that will not be necessary. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.00 p.m.
Clause 80 [Remands and committals of children and young persons]:
Baroness David Baroness David moved Amendment No. 259:
Page 67, line 35, leave out subsection (1) and insert—
("(1) The Secretary of State may, by order made by statutory instrument, amend subsection (5) of section 23 of the 1969 Act (remands and committals to local authority accommodation) so that, for the words "a young person who has attained the age of fifteen" there is substituted any one of the following—

(a) the words "a young person aged fifteen";

(b)) the words "a young person who has attained the age of fourteen":

(c) the words "a child or young person who has attained the age of thirteen"; or

(d) the words "a child or young person who has attained the age of twelve".

(1A) Any order made under subsection (I) shall revoke any previous such order, shall be laid in draft before Parliament, and shall be subject to annulment by resolution of either House.").
The noble Baroness said: The intention and the effect of the amendment would be to require the Government to use local authority secure places and to remove remanded 15 and 16 year-olds from Prison Service custody before introducing secure remand for 12 and 14 year-olds.
Clause 80 amends the law to enable courts to remand juveniles aged 12 and over direct to local authority accommodation. Clause 81 provides for 15 and 16 year-old girls and "vulnerable" 15 and 16 year-old boys to be remanded to local authority secure accommodation if a place is available; and for other 15 and 16 year-old boys to be remanded to Prison Service custody.
Organisations working with young offenders have expressed concern about Clause 80 in particular because they consider that the Government should not use local authority places to lock up more 12 and 14 year-olds before removing all 15 and 16 year-olds from the prison system to secure accommodation. Sending juvenile defendants to penal establishments has long been regarded as a recipe for criminal contamination, intimidation, and, all too often, self-harm and suicide attempts. Since the mid-1970s there has been bi-partisan agreement that remanding this age group to Prison Service custody is undesirable and that, when remanded juveniles need secure conditions, they should be held in local authority secure units staffed by residential childcare workers.
I believe that the noble Baroness, Lady Masham, mentioned earlier the research document of the Howard League which showed how harmful prison was to 15 year-old girls. It is terribly important; indeed, we should not start locking up even younger people or putting them in secure accommodation when those
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places could be used for 15 and 16 year-olds. This time, I hope that my noble friend the Minister will accept that we have a point. I beg to move.
Viscount Colville of Culross: My amendment has been grouped with Amendment No. 259. With the leave of the Committee, I hope that I can ungroup it because it deals with a totally different subject and I was busy when the groupings were announced. I trust, therefore, that I can move it separately in a moment. I should be most grateful.
The Lord Bishop of Lichfield: I feel that I must rise to my feet again to support the noble Baroness because of my very grave concern that Clause 80. as she pointed out, will make it possible for children as young as 12 to be remanded to a young offender institution or prison rather than to local authority secure accommodation. While I am aware that the provision refers to serious crimes, we are still talking about children and young people who have either not yet been convicted or, if they have been, are still awaiting sentence.
Members of the Committee may or may not be aware that the Children's Society—one of the other organisations to which the noble Baroness referred—is a voluntary society of the Church of England and the Church in Wales, which has long been concerned about the current state of the law under which 15 year-olds can be, and are, remanded to prison.
In November last year, the Children's Society launched its Remand Rescue Initiative, a national campaign to end remand to prison for young people and to help those already imprisoned on remand. This campaign is not just one of persuasion: it is based on the society's work in Feltham Young Offender Institution and in Doncaster Prison, which it plans to extend to other prisons.
In the first six months of work at Feltham, the Remand Rescue Initiative worked with 176 15 and 16 year-olds. It was found that half of them had previously suffered sexual or physical abuse or bullying, or had engaged in self-mutilation of one sort or another. While something under a quarter had actually been in local authority care, 86 per cent. were known to social services, and 62 per cent. had not been attending school, either because they had been excluded or because they had got into the way of truanting. All these young people had either been charged with serious offences or were awaiting sentence following conviction. Some of those charged would, presumably, be acquitted. It is important to bear in mind that, according to a study by the Association of Chief Officers of Probation, only 12 per cent. of young people remanded into custody had committed violent offences. Yet here they all are, in prison, despite the fact that we have abundant evidence to show that it does them harm, and equally abundant evidence which shows that the constructive alternatives to prison remand have a positive effect.
The inclusion in the Criminal Justice Act 1991 of provision increasing the likelihood that such young people would be remanded to secure local authority accommodation rather than prison came at a time, which Members of the Committee may remember, of high

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concern over the suicide of the 15 year-old Phillip Knight, who was on remand in custody. His death is to our shame; and it is deeply to be regretted that he was not the last young person in prison to put an end to his life.
There have been calls for an end to remand into prison for young people from the following: the Chief Inspector of Prisons, Sir David Ramsbotham; from the General Secretary of the Prison Governors' Association, David Roddan; and from the Chairman of the Magistrates' Association's Youth Committee, Lynne Ravenscroft. They are not sentimental people, as bishops may be expected to be. They know what is required of a criminal justice system and they do not shy away from ensuring a necessary rigour of regime. If they believe that the current system is treating young people badly, how can we in this Bill continue along the same path?
Still more, how can the Government be contemplating catching even younger people in the net of remand into prison? Of course I am aware that the Government, all governments, are perpetually being asked to provide resources for a variety of needs. Previous governments have failed to do what it takes to ensure that local authorities can provide the required secure accommodation—I want to underline that—but some government, some day, must get this job done. In the meantime I am convinced that we should not be extending the scope of the problem to include 12, 13 and 14 year-olds.
The Government may say that the wording of the clause reflects their awareness of the vulnerability of children as young as 12, but I have to say that I would need to hear from the Minister a good case indeed for these changes before I could be persuaded of their rightness. I strongly support the amendment.
Baroness Hilton of Eggardon: The right reverend Prelate has made the case much more powerfully than I can. I entirely support what he said in particular about Feltham, which I have visited on a number of occasions. In addition to the bullying, self-harm and even suicides of young boys, the regime is wholly inappropriate for 15 and 16 year-olds who should be attending school, who have truanted for many reasons and who are often illiterate. If they are lucky, they receive one hour a week of education in reading and writing. That is totally inappropriate to provide them with skills to cope with life thereafter. Those who are not bullied or commit suicide or who do not subject themselves to self-harm, are probably those who adapt to living in this regime with older boys of 18, 19 and 20. In many ways they are being hardened, adapted and taught to lead the lives of criminals. In my view it is wholly inappropriate to remand 15 and 16 year-olds to establishments such as Feltham, although the staff there do the best they can with something like a thousand young boys and young men who are locked up there. I urge the Government to think again about the need to remand 15 and 16 year-olds to prison service custody.
Lord Addington: I had not planned to intervene in this debate but I visited Feltham when I was working
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for the Apex Trust a few years ago. The inmates were probably some of the most aggressive that I ever saw when considering penal reform. There were young, aggressive males who were keen on bullying and establishing their status. The environment in such an institution is probably tougher than in an adult prison. I strongly recommend that the Government consider these amendments as otherwise those who are most vulnerable will be accommodated with those who are most likely to oppress them.
7.15 p.m.
Lord Williams of Mostyn: Perhaps I can clear up one misunderstanding, if I have it correctly. Clause 80 will not allow 12 year-olds to be remanded to prison or to young offender institutions. They can be remanded only to local authority secure accommodation.
We recognise absolutely the need to deal with the remand to prison of 15 and 16 year-old boys. Our policy is quite unambiguous. We wish to move to a situation where the practice is no longer necessary. The 1991 Criminal Justice Act provided for the eventual replacement of courts' powers to remand 15 and 16 year-old boys to prison with a new power to remand 15 and 16 year-olds, boys or girls, to local authority secure accommodation. This power was widened by the Criminal Justice and Public Order Act 1994 to include 12 to 14 year-olds. As the present legislation stands, the power cannot be applied to this age group before it is applied to 15 and 16 year-olds.
The reason 15 and 16 year-olds are still being remanded in what the Government believe are inappropriate conditions is mainly the lack of suitable local authority secure accommodation. There has been a building programme which has added 170 places to the local authority secure estate but that has been outstripped by the numbers of 15 and 16 year-old boys on remand in prison which has stood recently between 220 and 270. What we therefore want to do is to start the process of implementing policy on court-ordered secure remands in stages. This means that the courts' power to remand in these circumstances will apply to all 12 to 14 year-olds, 15 and 16 year-old girls and 15 and 16 year-old boys who are adjudged by the courts to meet the vulnerability definition in Clause 81(3). For the moment we cannot extend powers to the remaining 15 and 16 year-old boys because at present there is no available local authority secure accommodation.
Quite reasonably the right reverend Prelate and the noble Baronesses stressed the urgency of the situation. On 15th October officials in the Home Office wrote to all directors of social services in England and Wales, representatives of the Local Government Association, the Welsh Local Government Association and the Association of Directors of Social Services for England and their Welsh equivalents to inform them of the Government's view. There was a first meeting with the associations and officials on 18th November to discuss questions of finance and the review that the Government have initiated—I mentioned it to the Committee earlier this evening—of the juvenile secure estate. It was agreed that a joint approach was required. There was a

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second meeting on 13th January this year and now further work is being done under a technical group made up of representatives from central and local government.
The review of the juvenile secure estate is part of the Government's comprehensive spending review. We are reviewing the whole range of secure accommodation for young people, including local authority secure units. We want to make sure that all assets and resources are used to the best effect, in particular—I refer to the point made by the noble Baroness, Lady Hilton—in meeting educational needs and tackling offending behaviour.
The outcome of the review, which is due shortly, will, of course, be considered as a matter of urgency by the Government. One of the points we shall have to decide is the nature of the further expansion of the secure estate. I have gone into a little detail on dates, which I know perhaps is not normal. I have done that to indicate that we recognise the concerns that have been expressed and to indicate the seriousness with which the Government are determined to do away with remanding 15 and 16 year-old boys to prison custody.
Baroness David: I shall need to read that response carefully. It seems to me that perhaps the Minister has the same horror that I have of 15 and 16 year-olds being in prison, and particularly 15 year-old girls. I am quite horrified at 12 to 14 year-olds having to be kept in secure accommodation, although I know that some of them can be real tearaways and need to be kept in secure accommodation, at least for a time. I hope that the Minister will not pay too much attention to public opinion. It seems to me that parliamentarians should lead public opinion and not bow down to it. Capital punishment would not have been got rid of if parliamentarians had not led public opinion. I think that too much attention has been paid to that lately. That is a great pity.
I was extremely grateful for the right reverend Prelate's speech in which he said everything better than I did. I remind my noble friend the Minister that all the children's associations, not only the Children's Society, feel strongly about a great deal of what is happening in this Bill. I have had an interesting response and I am happy to read it. Therefore, temporarily at least, I can only withdraw this amendment; but I am not committing myself to not coming back to it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Colville of Culross Viscount Colville of Culross moved Amendment No. 260:
Page 67, line 39, at end insert—
("() In subsection (5) of section 23 of the 1969 Act, for the words "serious harm from him" there shall be substituted the words "the risk of his committing further serious offences".").
The noble Viscount said: I offer this amendment to the noble Lord, Lord Williams, in the hope that it may be helpful. He knows my views about the adequacy of local authority secure accommodation and the number of occasions on which it can be used. I was extremely interested to hear what he has just said about the review that is being carried out. He told me last week—if I
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understood him rightly—that the youth court has a duty to remand children and young people to local authority secure accommodation. It is indicative of the muddle into which this legislation has arrived—it was discussed in the major debate earlier today—that had the noble Lord been talking about Section 23 of the Children and Young Persons Act 1969 which was inserted by the Children Act 1989, he would have been right. Another Section 23 has since been inserted by the Criminal Justice Act 1991. That does not put any duty on the youth court to remand children and young persons to local authority secure accommodation.
In the Bill we look forward to consolidation. That is the purpose of Schedule 6. At present, two places in the 1991 Act refer to the expression "protect the public from serious harm". The first is in Part I. The reference goes back to the provision for longer than normal sentences under Section 2. The interpretation is found at the end of Part I.
Very sensibly, I think everyone would agree, the Court of Appeal said that before sentencers pass longer than normal sentences they require some fairly extensive reports, often of a psychiatric nature, or at the very least a substantial pre-sentencing report before such sentencing is justified. The same phrase has been inserted into the new Section 23 of the Children and Young Persons Act 1969. Technically speaking, it does not occur in the 1991 Act. It has merely been inserted retrospectively into the 1969 Act. Nevertheless, the phrase is exactly the same.
We want to make a differentiation. It is difficult enough for youth courts to remand children and young persons to local authority secure accommodation. Since it is a matter of remand instead of bail, the matter has to be dealt with urgently. Therefore there should be no reference to having to obtain reports for psychiatric assessments or anything of that kind at that stage. That requirement comes when sentencing or other disposals are required.
In advance of consolidation, I suggest that we should use a different phrase. I believe that the words I have put forward mean exactly the same but they do not carry the overtones of longer than normal sentences in Part I of the 1991 Act. Equally, they would not carry the overtones of requiring extensive and complicated reporting before the powers were implemented. I beg to move.
Lord Williams of Mostyn: I am grateful to the noble Viscount for his explanation. Indeed, he had notified me of the intention behind the amendment.
The background to the secure remand criteria is that the 1991 Act has within it a test for remands to local authority secure accommodation which has two criteria: one related to the alleged offence; the other to the need for public protection.
The offence-related criterion has two elements. The young person concerned must have been charged with or convicted of a violent or sexual offence, or an offence punishable, were he or she an adult, with imprisonment for a term of 14 years or more. The second element is that the person has a recent history of absconding while

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remanded to local authority accommodation, and is charged with or been convicted of an imprisonable offence alleged or found to have been committed while he was so remanded. The first covers the more serious offenders. The second limb covers young people who, while on remand to local authority accommodation, continue to cause problems.
We believe that court-ordered secure remands should be restricted to the most serious cases. The seriousness of the offence or the persistence of the offending behaviour is not itself a sufficient justification for such a remand whether this be to prison or to local authority secure accommodation. In addition, therefore, the Act requires the court to be of the opinion that only such a remand would be adequate to protect the public from serious harm from the young person. In relation to sexual or violent offences, "serious harm" means death or serious personal injury, occasioned by further such offences committed by the young person. "Serious harm" is not defined in relation to other offences. However, the definition for sexual and violent offences gives an indication of the gravity of the harm to which the public would have to be exposed from a young person in other circumstances before the test is likely to be satisfied.
The amendment is to substitute the risk of his committing serious further offences. We are not entirely clear what "further serious offences" would be found to mean. The courts are, I think, familiar with the term "serious harm" but there is no real guidance about what "further serious offences" would mean. The existing criteria are designed to apply to the most serious cases. As we discussed earlier today, local authority secure accommodation is a limited resource. We believe that it should be limited to the most serious and persistent offenders. We think that there would be a danger that the noble Viscount's amendment would lower the threshold so that it would be applied to young persons who could and should be remanded to alternative and more appropriate accommodation more commensurate with their alleged offences.
We recognise that placing a young person in secure accommodation is a serious step. That is why in sentenced or remand cases we believe that secure accommodation should be reserved for the most serious and persistent offenders. I recognise the intention behind the amendment, but we are not prepared to support it.
Viscount Colville of Culross: I do not seem to have explained myself very well. The noble Lord tells the Committee that the test which now appears in Section 23(5) of the Children and Young Persons Act 1969 is the same as appears in relation to longer than normal sentences. I never believed that that was the case. The definition for the purposes of longer than normal sentences applies only to Part I. The new section inserted into the 1969 Act does not occur in Part I. It is true that the same expression is used. However, since that legislation was enacted the Court of Appeal has dealt with the tests for the purposes of Part I. It has said nothing about the Children and Young Persons Act 1969.
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I agree with the noble Lord that these are exceptional cases. We certainly do not want to devalue the seriousness that attends upon sending someone on remand to local authority secure accommodation. However, I am considering the consolidation point. I do not believe that the noble Lord's advisers have foreseen the problem that will arise when these exactly similar expressions occur in a single consolidation Act and have to be interpreted by a court in accordance with different criteria.
I seek only to help the noble Lord. I am not trying to devalue or reduce the thresholds. I wish only to make it possible in a suitable case for the youth court rapidly to remand someone to secure accommodation without having to obtain a lot of reports. I should have thought that it was a helpful and constructive suggestion. If the noble Lord does not like my wording, so be it; one never gets the wording right. But I should have thought that he would accept the idea underlying the amendment in particular in the light of the forthcoming consolidation. Is the noble Lord really not prepared to think about the matter again?
Lord Williams of Mostyn: I understand the intention because the noble Viscount and I have been in correspondence. We believe that the present wording is better. I am receiving contrary legal advice from the noble Viscount and officials. I may need to look at the issue again. I am always willing to do so. If the noble Viscount says I have got the law wrong, I shall recheck it. The answer may be found in Section 23(13)(c) of the 1969 Act. I readily agree that I may have got it wrong and the noble Viscount may be right. Perhaps he will give me the opportunity to reflect. I recognise that his intention is simply to be helpful, and I am seeking to respond in that way.
Perhaps the noble Viscount will allow me to revisit Section 23 of the 1969 Act. Whatever my conclusion is after revisiting the legislation and taking further advice, I shall write promptly to him.
Viscount Colville of Culross: I am very much obliged to the noble Lord. I understand the reference to Section 23(13)(c). However, I am wondering whether he has thought about the impact upon people aged 12 and 13 who will fall within the new Clause 80 as now proposed. I should have thought that it is the wrong test. I am not trying to devalue the provision. If the noble Lord is to re-examine the issue, I am grateful, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.30 p.m.
Baroness Anelay of St. Johns Baroness Anelay of St. Johns moved Amendment No. 260A:
Page 68, line 2, at end insert—
("() It shall be the duty of the local authority to provide accommodation for the purpose of any remand order made by the court.").
The noble Baroness said: In moving this amendment, with the leave of the Committee, I shall also speak to Amendment No. 260B grouped with it. I can be brief,

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the Minister having already given in some detail, in response to discussion on two previous amendments, the facts about the government review that is taking place with regard to the juvenile estate. It always seems that we use the most remarkable words to describe the facilities that will hold young people in custody. I am pleased to hear that such a review is going on. I hope that it may come to a fairly swift conclusion. I wish to make one or two points with regard to the problems of secure accommodation.
Amendment No. 260A would insert into Clause 80 the requirement:
"It shall be the duty of the local authority to provide accommodation for the purpose of any remand order made by the court".
Clause 80 deals with remands and committals of young people, about which so much information has been given. As stated, remands involve a speedy need to find accommodation for young children. We are talking about a circumstance in the near future where the numbers of such young people who require secure accommodation will presumably increase. I know that the Minister hopes that this provision may be precautionary rather than a measure that has to be implemented. However, one has to face the reality that these provisions, in the short term, if not in the long term, will lead to a larger number of young people requiring to be found secure accommodation.
Amendment No. 260B is included because, if one makes sure that secure accommodation has to be provided by the local authority, then line 22, after the word "applies", ceases to be relevant. The court does not first have to ascertain whether secure accommodation is available if we have already stated that it must be provided prior to action by the court.
My reason for proposing the amendment is based on experience of having to make an order committing a young person to secure accommodation in the knowledge not only that it might be difficult to find such accommodation locally—in the case of young people, surely that is what we must try to achieve, if nothing else—but also that it might be impossible to find secure accommodation anywhere within reasonable travelling distance. On occasions, that has happened simply because, within some local authorities, a position of political dogma has determined that there should be no provision at all of secure accommodation. That has meant children being sent outwith their county districts in order to find secure accommodation.
I hope that the government review has taken into account the "patchwork quilt" of provision that has heretofore existed and the resistance, on a dogmatic basis, of some local authorities to providing secure accommodation at all. I hope that the Minister is able to assure me that these matters have been taken into account. I beg to move.
Viscount Tenby: I support the amendment moved by the noble Baroness, Lady Anelay. In many ways, all these amendments on custodial sentences for young offenders are linked. Had it not been for the fact that others more distinguished than I spoke to the earlier amendment moved by the noble Baroness, Lady David,
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I could indeed have spoken to it as I supported it too. Since the amendments are linked one must be careful not to be repetitious or to make a Second Reading speech. It used to be said that Queen Mary, when she died, had Calais written on her heart. I sometimes think that if a future pathologist cuts me open, he will find written on mine, "secure local accommodation".
The Minister may reasonably reply to the spirit of the amendment—which is, after all, a probing amendment—that this condition cannot be made if such accommodation is not available. Under present trends I have to say with a heavy heart that that may be all too likely. With the power now to remand children over 12 direct to local authority accommodation. 15 and 16 year-old girls to local secure accommodation, and 15 and 16 year-old vulnerable boys also, one wonders how they will all fit in, despite the extra 170 places which are now available.
In that context, the review of juvenile secure estate is very much to be welcomed. I appreciate the Minister going to the trouble to spell out the meetings that have taken place as an indication of the commitment that the Government have in relation to this problem. We can only hope that the government survey will spotlight the need for more local secure accommodation and that ring-fenced funds will be made available for the purpose.
I know that there are competing demands on government finances. I know that health and education have an almost insatiable appetite. I know that there are few political brownie points to be won by expressing concerns about our prisoners and prisons, especially in the juvenile sector. Nevertheless, it is quite simply the sign of a civilised society that we should care about these matters, as indeed I know the Minister does. I therefore warmly support the amendment.
Lord Williams of Mostyn: Perhaps I may deal with Amendment No. 260A very briefly, as I believe the noble Baroness recognises that Section 61 of the 1991 Act already places a duty on local authorities to ensure that they are in a position to comply with any security requirement under Section 23 of the Children and Young Person Act 1969. So that amendment would not be of any practical utility.
Amendment No. 260B would in effect remove the requirement that in cases where the courts have adjudged a boy to be vulnerable—we discussed these matters earlier—a place has to be identified in advance. We understand that there is a case to be made for saying that there should be no limitation on the courts' powers to apply the legislation. However, we cannot overlook one of the reasons that has brought us to have the review referred to.
We are having to proceed step by step. I agree that a good argument can be made for matters to proceed more quickly. However, we have to have the review. We are dealing with the most vulnerable. For a court to decide to remand a most vulnerable boy or girl, it will need to have quite a lot of information: from the Probation Service, a social worker, a member of the youth offending team, and other information which it might

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think appropriate. Then an assessment has to be made by the probation officer, the social worker or the youth offending team member in advance as to whether the boy concerned is likely to come within the definition of subsection (5)(a).
We believe that it is in the interests of the probation officer, social worker or team member to have established in advance of the remand hearing that there is indeed a suitable secure place available. If one does not have that requirement, the whole exercise is pointless. I believe I was guilty of a slip of the tongue when I said "boy or girl." I meant "boy", of course, not "girl". I realised as soon as I said it that I had made a mistake. We believe that this requirement is necessary. It ought to be an essential part of the assessment process. If the amendment were agreed to, it would place the courts in a very difficult situation.
The noble Baroness was kind enough to say that I had already dealt in part with the review of the juvenile secure estate. Perhaps I may expand. It is a review of the whole range of secure accommodation for young people, including local authority secure units. What we are trying to achieve is that all the resources employed in the accommodation and care of accused or convicted juveniles who need secure accommodation are used to best effect. It includes educational needs and tackling offending behaviour. I can assure the noble Baroness that the review, which is of pressing urgency, is casting its net very wide indeed. It is, of course, within the context of a comprehensive spending review, and the noble Viscount, Lord Tenby, pointed to the fact that there are financial constraints.
I repeat what I said earlier: we wish to see an end to the practice of remanding 15 and 16 year-old boys to prison custody. I can speak with some personal knowledge of these matters because the case mentioned by the right reverend Prelate of Phillip Knight, who killed himself in Swansea Prison, formed part of an inquiry which I conducted. I can only reiterate our policy and our determination to see an end to the practice.
Baroness Anelay of St. Johns: I am grateful to the Minister for that response. I shall consider carefully whether we need to pursue the matter further at Report stage. I accept that Amendment No. 260B does not achieve the objective which we had intended and shall not wish to return to that.
I am grateful to the noble Viscount, Lord Tenby, for his comments. He underlines what is felt by all those involved in the sentencing process with regard to young people. Any decision taken to put a young person into any form of custody is a decision taken with a very heavy heart and one where sentencers need to feel that suitable accommodation is available for that young person, particularly in the context of this Bill.
Having heard the words of the Minister tonight, I shall at this stage beg leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 80 agreed to.
Clause 81 [Remands and committals: alternative provision for 15 or 16 year old boys]:
[Amendment No. 260B not moved.]
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 261:
Page 68, line 28, leave out from ("applies") to end of line 30.
The noble Earl said: Amendment No. 261 seeks to probe why there is a need for the use of prison for 15 and 16 year-old boys. The Bill allows the use of local authority secure accommodation, a remand centre or a prison. I am unhappy that that three-way choice should be open to magistrates. I should prefer to see in the Bill the Scottish process whereby a child may be admitted to a prison only after an "unruly" certificate had been obtained by the procurator fiscal. I prefer that situation to the one in the Bill because it would mean that a child would be placed in a prison only if it was proved that he could not be contained in secure accommodation or a remand centre. I believe that that approach has more justice in it. A child admitted to a prison would be there strictly as a result of his own actions. I beg to move.
Lord Williams of Mostyn: We have already discussed these problems and perhaps Members of the Committee will forgive my not repeating some of the observations I have made.
I say again that we are sensitive to these concerns. The Minister of State at the Home Office, Mr. Michael, has held a number of meetings recently on this issue. These have included discussions with the most reverend Primate the Archbishop of Canterbury and the Children's Society, who have campaigned for a long time for the abolition of remanding 15 and 16 year-old boys to prison.
If this amendment were passed, prison remands would immediately be abolished when the Bill became law. There are no remand centres designated for the purpose. Therefore the practical consequence of the noble Earl's amendment would be that all remands would be to local authority secure accommodation. As I identified earlier, there is a lack of such accommodation, and that might mean that the court would have no way of remanding to secure accommodation, even where the court adjudged it necessary in order to protect the public. I believe that that is not a consequence that anyone could sensibly look to. Bearing in mind what I said earlier about the way the Government's policy is set, I ask the noble Earl to withdraw his amendment.
The Earl of Mar and Kellie: I accept that we have in some respects returned to this subject. I should be happy to see the retention of the part of the Bill which I sought to strike out if it referred to prison as being a last resort. As the provision is framed, I believe that magistrates could decide on prison as one of three options. I do not believe that that is what anyone wants. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 81 agreed to.
7.45 p.m.
Clause 82 [Power to release short-term prisoners on licence]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 262:
Page 69, line 46, leave out ("38A(1)") and insert ("38A(1)(a)").
The noble and learned Lord said: In moving Amendment No. 262, I shall, with leave of the Committee, speak also to Amendments Nos. 263, and 265 to 269. This series of amendments concerns the workings of the home detention scheme, under which prisoners serving between three months and four years, who are near the end of their sentence, could be released on curfew, enforced by electronic monitoring.
We are keen to ensure that the new home detention curfew works as efficiently as possible, that those offenders who do not meet the discipline it imposes on them are dealt with effectively and that circumstances which are unforseeable when governors are assessing the suitability of a prisoner for release under curfew are suitably provided for.
We believe that those offenders who fail to comply with the terms of the curfew or who return to their offending ways should be quickly recalled to prison and debarred from future eligibility for release under home detention curfew. We are also, however, keen to ensure that offenders are given the opportunity to continue to benefit from the phased reintroduction to society which home detention curfew represents, even when their circumstances change to such an extent that compliance with the terms of their original curfew become difficult.
There will, of course, be occasions when a curfew cannot be monitored and it may well be that, despite the screening process provided by the risk assessment, further information comes to light about the possible threat posed by an offender who has been released under home detention curfew. Clearly the right thing to do in such cases is to recall the offender to prison.
It is with those aims that we propose the following amendments.
Amendment No. 262 is consequential to Amendment No. 269.
Amendment No. 263 ensures that any offender who is at any time returned to prison, having been convicted of an imprisonable offence committed while subject to a sentence from which he had been released early, will not be eligible for release under home detention curfew.
Amendments Nos. 265, 266, 267 and 268 allow prison governors, acting on behalf of the Secretary of State, to change the hours or place of curfew once the offender has started the home detention curfew licence period. This will ensure that changes in the circumstances of an offender, such as work commitments or a change of address, which would make compliance with the terms of the licence difficult, can be accommodated without first recalling the offender to prison.
Amendment No. 269 adds two further circumstances under which a licence can be revoked and the offender returned to prison. It will ensure that, in addition to
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those who have failed to comply with the conditions of the curfew, offenders who can no longer be monitored at the place specified in the licence and offenders who pose a threat to the public can be recalled to prison.
Clearly offenders who, having passed the risk assessment, are subsequently found to represent a risk to the public, should be returned to prison. Offenders who, for whatever reason, can no longer be monitored at the place specified in the licence, by the same token, should not be allowed to remain at large. If there is no way of monitoring their compliance with the terms of the curfew, the effectiveness of the curfew is negated. I beg to move Amendment No. 262.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 263:
Page 70, line 6, leave out from ("below") to second ("or") in line 7 and insert ("at any time").
On Question, amendment agreed to.
Baroness Anelay of St. Johns Baroness Anelay of St. Johns moved Amendment No. 263A:
Page 70, line 17, at end insert—
("() The Secretary of State shall publish guidance as to the criteria which will qualify a prisoner for early release under this section.").
The noble Baroness said: I beg to move Amendment No. 263A. Clause 82, which we have just considered, gives effect to the Government's policy for the early release of prisoners who are serving from three months to four years.
This amendment would require the Secretary of State to publish guidance as to the criteria which would qualify a prisoner for early release under this section.
At Second Reading I raised this issue and I am grateful to the Minister for writing to my noble friend Lord Henley in January on matters surrounding this point. He responded to my concerns in what I might call a three-pronged approach. I hope that today he can confirm that it is the Government's intention to adopt the proposals outlined in his letter.
He listed categories of prisoners who would not be eligible for a home curfew. Those were: those serving extended sentences within the meaning of Clause 46 of the Bill; those convicted under Section 1 of the Prisoners (Return to Custody) Act 1995; those subject to a hospital order, a hospital direction or transfer directions under the Mental Health Act; those liable to removal from the United Kingdom; those who have previously failed to comply with the requirements of a home detention curfew or a curfew order enforced by electronic monitoring, or those who have a due release date which means that they would spend fewer than 14 days on curfew.
That list is helpful. I am merely asking tonight whether the Minister can confirm that those are still the excluded categories within the Government's understanding of this matter, and whether any further thought has been given since that letter of January, and therefore whether any further additions have been made to that list.
The second part of that three-pronged approach is that the Minister further stated in the letter that the Government are considering what further considerations should apply when assessing which of the prisoners, among the other categories not excluded, shall then be selected for home detention curfew. That is among those who first of all fall within the categories who will be eligible for consideration, and of course among those who actually apply to be considered.
The Minister stated in the letter that prisoners who have already passed the release on temporary licence risk assessment or who have already successfully completed a period of temporary release will normally be considered as suitable unless other risk factors come to light. Again, that is a helpful indication of how individual suitability for release might be assessed. I would be grateful if the Minister would confirm that this is the Government's position on the matter.
The last part of the three-pronged approach was that the Minister stated that he hoped to be in a position to show draft guidance on eligibility to the House by the time the provisions were considered in Committee. I wonder whether he can fulfil that hope and my expectation tonight, and say whether that draft is now available.
Lord Monson: I do not object to the principle of Clause 82 but I think that this amendment, or something like it, will provide a very necessary and desirable safeguard. The public at large will not be very happy at the idea of prisoners being released, albeit on licence, after serving only a quarter, or just over a quarter, of their sentences. That goes completely against the grain of the last government's policy of honesty in sentencing, if I remember the phrase correctly. I think, however, they would be somewhat mollified if an amendment such as this were to be accepted.
Lord Belstead: Perhaps I may say a very brief word in support of my noble friend Baroness Anelay on this amendment. I have not seen the exchange of correspondence so I ask first of all, from my place in the Chamber, about those who are suitable to be chosen for electronic monitoring. It would be interesting, certainly for myself, to hear a little more from the Government Front Bench about those who will be suitable.
The real reason I have risen to speak is that if one looks at subsection (4) there is set out the eligibility date for the different groups of short-term prisoners, for all of whom the day of release will be very much earlier than it has been under the present arrangements. As the Government will know very well, at present prisoners serving fewer than four years are eligible for early release at the half-way point of their sentence, but under Clause 82(4) the times for all different groups of under four year prisoners will be very much earlier for their early release than now.
That leads me to the question I want to ask. Are the Government confident that electronic monitoring will create a situation where the rate of reoffending will not
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be higher than it is now and the prospects for rehabilitation will be better because of the electronic monitoring and the surveillance that goes with it? That is really quite a simple question.
I have some views of my own from having read papers about electronic monitoring but I am anxious to hear this evening the views of the Ministers, briefly but succinctly, as to the success as they see it, of electronic monitoring.
Lord Falconer of Thoroton: First of all, the points raised by the noble Baroness, Lady Anelay of St. Johns. The answer is that the contents of the letter still stand. I appreciate that only the noble Lord, Lord Henley, and the noble Baroness, Lady Anelay, to whom it was sent, have seen the contents of the letter so perhaps I should also undertake to send a copy to both the noble Lord, Lord Monson, and the noble Lord, Lord Belstead, who have intervened in the debate. Nothing that has been said in the letter has been departed from.
So far as concerns the publication of the criteria, I can assure the House that it is our intention to publish the criteria as part of the more detailed guidance that the Prison Service will use to assess suitability for home detention curfew. The assessment will seek to balance any risk to the public presented by the bringing forward of the release date against the potential benefits of incorporating a period of home detention curfew within the prisoner's sentence. We are currently preparing the guidance, and hope to issue it shortly. I will ensure that it is placed in the Libraries of both Houses of Parliament as quickly as possible.
I believe, however, that it would be very unusual for guidance of this kind to be given statutory status without any overriding reason. Moreover, with a new procedure of this kind, it would be beneficial to retain the flexibility provided by non-statutory guidance, which can be amended in the light of experience.
Questions have been asked about precisely what categories of prisoner will be considered for it. That will be dealt with in the guidance and, to a certain extent, has been dealt with in the letter that everybody will see.
What will be the criteria that the Prison Service will use to assess suitability for release under the scheme? The exact details of the risk assessment process are still being developed, but the type of factors that the Prison Service are likely to consider will include whether release on home detention curfew will pose an unacceptable risk to the public; whether there is a substantial risk of reoffending during the home curfew period and whether it is likely that the offender will fail to comply with the conditions of the curfew.
Who will decide? It will be for the prison governor to decide.
How can the Government claim that releasing these prisoners will not present a risk to the public? There will always be a risk of reoffending by these prisoners. Even if found unsuitable for release on this scheme, they will be automatically released at most two months later. Our job is therefore to minimise the risk they present. We

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believe that the electronic monitoring will help to that extent but to go further would be injudicious at this stage.
I think that answers, albeit not completely, all the questions that have been raised. In those circumstances, I invite the noble Baroness to withdraw her amendment.
8 p.m.
Baroness Anelay of St. Johns: I am grateful to the noble and learned Lord for that reply, particularly for his offer to distribute more widely the letter that was sent to my noble friend Lord Henley in January. I am also grateful for his comment that the guidance, although not with us in Committee, will be published "shortly". I have been advised by colleagues who have previously served in a ministerial capacity about the variations between the definitions of "soon", "very soon" and now "shortly". As a novice at the Dispatch Box, I shall have to keep a log of how the definition comes to be proved to exist in the end. At the moment, I need to cover myself because I do not yet quite know what the noble and learned Lord means by "shortly". In those circumstances, I cannot promise not to come back to this matter at Report. However, in the meantime, I ask the permission of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 82, as amended, agreed to.
Clause 83 [Curfew condition to be included in licence]:
Baroness David Baroness David moved Amendment No. 264:
Page 70, line 37, after ("person") insert ("aged 16 or over").
The noble Baroness said: This amendment would enable prisoners under 16 to be eligible for the early release provisions set out in Clauses 82 to 86 without having to be electronically tagged. In appropriate cases, school age children could be given early release under conditions other than tagging.
There are particular problems attached to the tagging of children of school age. The young people concerned would have to attend school with a tag strapped to their wrist or ankle, marking them out as an offender. Whereas adults can easily conceal a tag beneath their clothing, schoolchildren involved in physical education and taking showers will find it difficult to hide their tag. Some children will find this very humiliating and embarrassing while others are likely to react by boasting about their tag and wearing it as a badge of honour, adopting a hard image to live up to it. This is the opposite of the attitudes towards which we are trying to steer young offenders.
In view of the potential problems, it would make sense to allow discretion for school age children to be eligible for early release subject to supervision and conditions other than tagging. I beg to move.
Lord Goodhart: I rise briefly to say that the noble Baroness's amendment is a matter of plain common sense. It would be potentially devastating for a child to have to go to school wearing a tag. In extreme cases it could even lead to suicide. I am aware that the
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monitoring procedure does not have to be carried out during school hours, but the tag, as I understand it, will not be removable for the parts of the day when the child is at school. I hope very strongly that the Government will see fit to accept the amendment.
Lord Williams of Mostyn: I recognise the points which have been well made, if I may say so, by the noble Baroness and the noble Lord, Lord Goodhart. It has to be recognised that there are special factors to be considered in applying curfew orders and electronic monitoring to juvenile offenders. We do not want to exclude the opportunity of using this on under 16 year-olds, but further work needs to be done.
I hope it is of assistance to the Committee if I say that, in order to research these sensitive matters more fully, we have started to pilot in Norfolk and Manchester the use of curfews imposed as a sentence under the Crime (Sentences) Act 1997 for 10 to 15 year-olds. Obviously, that will not be the work of a couple of weekends. It is due to end in the summer of 1999. After that, we will evaluate their success and appropriateness for this age group.
In order for the lessons to be learnt and to give due weight to what has been said, we intend to introduce at the earliest opportunity a government amendment which will allow for the introduction of the home detention curfew for juvenile offenders to be delayed until the outcomes of these trial projects have been fully evaluated. In order that all juveniles are treated on an equal basis, the phased introduction would apply to all those aged 10 to 17. The amendment was well explained and I hope that our response is satisfactory.
Baroness David: I thank the noble Lord, Lord Goodhart, for his support for the amendment and I thank the Minister for his response, which I think is acceptable. I hope that the results of the pilot schemes will be made known to us. The response was fairly favourable and so I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 265 to 269:
Page 70, line 40, at end insert ("for the time being").
Page 70, line 41, after ("place") insert ("for the time being").
Page 70, line 44, at end insert ("for the time being").
Page 71, line 11, after ("periods") insert ("for the time being").
Page 71, line 28, leave out from ("State") to second ("the") in line 30 and insert (", as regards a person released on licence under section 34A(3) above—

(a) that he has failed to comply with the curfew condition;

(b) that his whereabouts can no longer be electronically monitored at the place for the time being specified in that condition; or

(c) that it is necessary to do so in order to protect the public from serious harm from him.").

The noble and learned Lord said: I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
[Amendment No. 270 had been withdrawn from the Marshalled List.]
Clause 83, as amended, agreed to.
On Question, Whether Clause 84 shall stand part of the Bill?
Lord Belstead: I wish to ask a question about Clause 84. Does subsection (1) of Clause 84 mean that short-term prisoners will be recalled henceforth, when the Bill becomes law, by the Parole Board and not by the courts? If I have that right, does subsection (1) also mean that a short-term prisoner henceforth can be recalled for not complying with the terms of his or her release licence whereas now a short-term prisoner must have reoffended in order to be recalled? I am perfectly happy if the Minister would like to write to me on that point.
I raise it because, if I have it right, Clause 84 marks a very substantial step forward with regard to the recall of prisoners. If I am not too far out of order, perhaps I may also say that Clause 85 undoubtedly marks a very substantial step forward with regard to the recall of all prisoners. That clause, which the Deputy Chairman of Committees will be calling in just a moment, shows that the Government have observed a major lacuna in the present arrangements and are putting it right by providing that a prisoner who has been recalled will, under the Bill, be released at the three-quarters point of his sentence, but under supervision to the end of his sentence, which is not the case at the present time.
I raise these points because, in terms of public protection and the rehabilitation of prisoners, I believe that the Government have got Clauses 84 and 85 absolutely right. Speaking from the opposite side of the House from the Government, it gives me pleasure to be able very respectfully to say so.
Lord Falconer of Thoroton: I am grateful to the noble Lord for his remarks. He is correct in the description he gives of the effect of Clause 84. I should point out that there are transitional provisions in Schedule 8 to the Bill to enable Clause 84 to be introduced later than other provisions in this part of the Bill. His remarks on Clause 85 were not a question but a congratulation. While I am on my feet, perhaps I may indicate that the letter I was so generously offering to send everyone—the letter of 29th January 1998 from my noble friend Lord Williams of Mostyn to the noble Lord, Lord Henley—is in the Library and so can be looked at.
Clause 84 agreed to.
Clauses 85 to 87 agreed to.
Schedule 6 [Pre-consolidation amendments: powers of criminal courts]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 271:
Page 95, line 40, leave out from second ("of") to end of line 41 and insert ("a relevant order (within the meaning given by that Schedule) or of a combination order);".").
The noble and learned Lord said: Perhaps I may, with the leave of the Committee, speak also to Amendments Nos. 272 to 287, 322, 324 to 329, 331 and 334. These are all technical amendments. There are 26 in all. They have been identified in consultation with the Law Commission. They are necessary to facilitate the consolidation of certain enactments relating to the powers of the courts to deal with offenders or defaults. The amendments are required before a consolidation Bill can be introduced in a future Session of Parliament. I beg to move.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 272 to 287:
Page 96, line 15, at end insert—
(". In section 12 of the 1969 Act (power to include requirements in supervision orders), after subsection (3) there shall be added the following subsection—
"(4) Directions given by the supervisor by virtue of subsection (2)(b) or (c) above shall, as far as practicable, be such as to avoid—

(a) any conflict with the offender's religious beliefs or with the requirements of any other community order (within the meaning of Part I of the Criminal Justice Act 1991) to which he may be subject; and

(b) any interference with the times, if any, at which he normally works or attends school or any other educational establishment."").

Page 96, line 28, at end insert—
(" . In section 16(11) of the 1969 Act (provisions supplementary to section 15), the words "seventeen or" shall cease to have effect.").
Page 97, line 7, at end insert—
(" . In section 1(8) of the 1973 Act (deferment of sentence), for paragraph (a) there shall be substituted the following paragraph—
"(a) is power to deal with him, for the offence for which passing of sentence has been deferred, in any way in which the court which deferred passing sentence could have dealt with him for that offence; and".").
Page 97, line 11, leave out ("In section 14(7)") and insert ("Section 11 of the 1973 Act (which is superseded by the paragraph 8A inserted by this Schedule in Schedule 2 to the 1991 Act) shall cease to have effect.
—(1) For subsection (2) of section 12 of the 1973 Act (supplementary provision as to probation and discharge) there shall be substituted the following subsection—
"(2) Where an order for conditional discharge has been made on appeal, for the purposes of this Act it shall be deemed—

(a) if it was made on an appeal brought from a magistrates' court, to have been made by that magistrates' court;

(b) if it was made on an appeal brought from the Crown Court or from the criminal division of the Court of Appeal, to have been made by the Crown Court."

(2) In subsection (3) of that section, for the words from "any question whether a probationer" to "period of conditional discharge," there shall be substituted the words "any question whether any person in whose case an order for conditional discharge has been made has been convicted of an offence committed during the period of conditional discharge".
(3) For subsection (4) of that section there shall be substituted the following subsection—
"(4) Nothing in section 1A of this Act shall be construed as preventing a court, on discharging an offender absolutely or conditionally in respect of any offence, from making an order for costs against the offender or imposing any disqualification on him or from making in respect of the offence an order under section 35 or 43 of this Act or section 28 of the Theft Act 1968."
—(1) In subsection (7) of section 14").
Page 97, line 13, at end insert—
("(2) Subsection (8) of that section shall cease to have effect.").
Page 97, line 28, at end insert—
(" . In subsection (3) of section 22 of the 1973 Act (suspended sentences of imprisonment)—

(a) for the words "make a probation order in his case in respect of another offence" there shall be substituted the words "impose a community sentence in his case in respect of that offence or any other offence"; and

(b) at the end there shall be inserted the words "; and in this subsection "community sentence" has the same meaning as in Part I of the Criminal Justice Act 1991."").

Page 97, line 36, at end insert—
(" .—(1) In subsection (2) of section 32 of the 1973 Act (enforcement etc. of fines imposed and recognizances forfeited by Crown Court), for the words "section 85(1)" there shall be substituted the words "section 85(2)".
(2) In subsection (3) of that section, after the words "to the Crown Court" there shall be inserted the words "(except the reference in subsection (1)(b) above)".
(3) For subsection (4) of that section there shall be substituted the following subsection—
"(4) A magistrates' court shall not, under section 85(1) or 120 of the Magistrates' Courts Act 1980 as applied by subsection (1) above, remit the whole or any part of a fine imposed by, or sum due under a recognizance forfeited by—

(a) the Crown Court,

(b) the criminal division of the Court of Appeal, or

(c) the House of Lords on appeal from that division, without the consent of the Crown Court."

(4) Subsection (5) of that section shall cease to have effect.").
Page 97, line 36, at end insert—
(" . For subsection (5) of section 57 of the 1973 Act (interpretation) there shall be substituted the following subsection—
"(5) Where a compensation order or supervision order has been made on appeal, for the purposes of this Act (except section 26(5)) it shall be deemed—

(a) if it was made on an appeal brought from a magistrates' court, to have been made by that magistrates' court;

(b) if it was made on an appeal brought from the Crown Court or from the criminal division of the Court of Appeal, to have been made by the Crown Court."").

Page 98, line 33, leave out ("In section 13(3)") and insert ("In section 3(1) of the 1982 Act (restriction on imposing custodial sentences on persons under 21 not legally represented)—

(a) in paragraph (a), the words "under section 1A above" shall cease to have effect;

(b) in paragraph (c), for the words "section 8(2)" there shall be substituted the words "section 8(1) or (2)"; and

(c) in paragraph (d), for the words "section 53(2)" there shall be substituted the words "section 53(1) or (3)".

.—(1) In subsection (3) of section 13").
Page 98, line 36, at end insert—
("(2) In subsection (6) of that section, for the words "section 8(2)" there shall be substituted the words "section 8(1) or (2)".").
Page 98, leave out line 40 and insert (".—(1) In subsection (1) of section 17 of the 1982 Act (attendance centre orders), after paragraph (b) there shall be inserted the following paragraph—
"(bb) has power to deal with a person under 16 years of age under that Part of that Schedule for failure to comply with any of the requirements of a curfew order, or".
(2) For subsection (8) of that section").
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Page 99, line 11, leave out ("section 12(5)(c)") and insert ("subsection (5)(c) of section 12").
Page 99, line 12, at end insert—
("() After subsection (6A) of that section there shall be inserted the following subsection—
"(6B) The court by which a curfew order is made shall give a copy of the order to the offender and to the person responsible for monitoring the offender's whereabouts during the curfew periods specified in the order."").
Page 99, line 15, at end insert—
(" .—(1) In subsection (3) of section 40 of the 1991 Act (convictions during currency of original sentences), for the words from "for sentence" to the end there shall be substituted the words "to be dealt with under subsection (3A) below".
(2) After that subsection there shall be inserted the following subsections—
"(3A) Where a person is committed to the Crown Court under subsection (3) above, the Crown Court may order him to be returned to prison for the whole or any part of the period which—

(a) begins with the date of the order; and

(b) is equal in length to the period between the date on which the new offence was committed and the date mentioned in subsection (1) above.

(3B) Subsection (3)(b) above shall not be taken to confer on the magistrates' court a power to commit the person to the Crown Court for sentence for the new offence, but this is without prejudice to any such power conferred on the magistrates' court by any other enactment."
(3) In subsection (4) of that section, for the words "subsection (2)" there shall be substituted the words "subsection (2) or (3A)".").
Page 99, line 20, leave out from beginning to ("for") in line 21 and insert (".—(1) In paragraph 1 of Schedule 2 to the 1991 Act (enforcement etc. of community orders), after sub-paragraph (3) there shall be added the following sub-paragraph—
"(4) Where a probation order, community service order, combination order or curfew order has been made on appeal, for the purposes of this Schedule it shall be deemed—

(a) if it was made on an appeal brought from a magistrates' court, to have been made by a magistrates' court;

(b) if it was made on an appeal brought from the Crown Court or from the criminal division of the Court of Appeal, to have been made by the Crown Court."

(2) In each of paragraphs 3(1) and 4(1) of that Schedule, for paragraph (c) there shall be substituted the following paragraph—
"(c) where—

(i) the relevant order is a probation order and the offender is under the age of twenty-one years, or

(ii) the relevant order is a curfew order and the offender is under the age of sixteen years, and the court has been notified as required by subsection (1) of section 17 of the 1982 Act, it may (subject to paragraph 6(6) below) make in respect of him an order under that section (attendance centre orders); or".

(3) In paragraph 4(I) of that Schedule—

(a) after the word "failed" there shall be inserted the words "without reasonable excuse"; and

(b) in paragraph (d), for the words "by or before the court" there shall be substituted the words "before the Crown Court".

(4) In paragraph 6 of that Schedule, in sub-paragraph (1),").

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Page 99, line 22, at end insert—
("(5) After sub-paragraph (3) of that paragraph there shall be inserted the following sub-paragraph—
"(3A) A community service order shall not be made under paragraph 3(1)(b) or 4(1)(b) above in respect of a person who is under the age of sixteen years."
(6) For sub-paragraph (5) of that paragraph there shall be substituted the following sub-paragraph—
"(5) Where the provisions of this Schedule have effect as mentioned in sub-paragraph (4) above in relation to a community service order under paragraph 3(1)(b) or 4(1)(b) above—

(a) the power conferred on the court by each of paragraphs 3(1)(d) and 4(1)(d) above and paragraph 7(2)(a)(ii) below to deal with the offender for the offence in respect of which the order was made shall be construed as a power to deal with the offender, for his failure to comply with the original order, in any manner in which the court could deal with him if that failure to comply had just been proved to the satisfaction of the court;

(b) the reference in paragraph 7(1)(b) below to the offence in respect of which the order was made shall be construed as a reference to the failure to comply in respect of which the order was made; and

(c) the power conferred on the court by paragraph 8(2)(b) below to deal with the offender for the offence in respect of which the order was made shall be construed as a power to deal with the offender, for his failure to comply with the original order, in any manner in which the court which made the original order could deal with him if that failure had just been proved to the satisfaction of that court;

and in this sub-paragraph "the original order" means the relevant order the failure to comply with whose requirements led to the making of the community service order under paragraph 3(1)(b) or 4(1)(b)."
(7) After sub-paragraph (5) of that paragraph there shall be added the following sub-paragraph—
"(6) The provisions of sections 17 to 19 of the 1982 Act (making, discharge, variation and breach of attendance centre order) shall apply for the purposes of paragraphs 3(1)(c) and 4(1)(c) above but as if there were omitted—

(a) subsection (13) of section 17:

(b) from subsection (4A) of section 18 and subsections (3) and (5) of section 19, the words ", for the offence in respect of which the order was made," and "for that offence"; and

(c) from subsection (6) of section 19, the words "for an offence"."

(8) In paragraph 8(2) of that Schedule, for paragraph (b) there shall be substituted the following paragraph—
"(b) revoke the order and deal with the offender, for the offence in respect of which the order was made, in any manner in which the court which made the order could deal with him if he had just been convicted of that offence by or before the court which made the order."
(9) After paragraph 8 of that Schedule there shall be inserted the following paragraph—
"8A.—(1) This paragraph applies where a probation order is in force in respect of any offender and on the application of the offender or the responsible officer it appears to a magistrates' court acting for the petty sessions area concerned that, having regard to circumstances which have arisen since the order was made, it would be in the interests of justice—

(a) for the probation order to be revoked; and

(b) for an order to be made under section 1A(1)(b) of the 1973 Act discharging the offender conditionally for the offence for which the probation order was made.

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(2) No application may be made under paragraph 7 above for a probation order to be revoked and replaced with an order for conditional discharge under section 1A(1)(b) of the 1973 Act; but otherwise nothing in this paragraph shall affect the operation of paragraphs 7 and 8 above.
(3) Where this paragraph applies and the probation order was made by a magistrates' court—

(a) the magistrates' court dealing with the application may revoke the probation order and make an order under section 1A(1)(b) of the 1973 Act discharging the offender in respect of the offence for which the probation order was made, subject to the condition that he commits no offence during the period specified in the order under section 1A(1)(b); and

(b) the period specified in the order under section 1A(1)(b) shall be the period beginning with the making of that order and ending with the date when the probation period specified in the probation order would have ended.

(4) Where this paragraph applies and the probation order was made by the Crown Court, the magistrates' court may send the application to the Crown Court to be heard by that court, and if it does so shall also send to the Crown Court such particulars of the case as may be desirable.
(5) Where an application under this paragraph is heard by the Crown Court by virtue of sub-paragraph (4) above—

(a) the Crown Court may revoke the probation order and make an order under section 1A(1)(b) of the 1973 Act discharging the offender in respect of the offence for which the probation order was made, subject to the condition that he commits no offence during the period specified in the order under section 1A(1)(b); and

(b) the period specified in the order under section 1A(1)(b) shall be the period beginning with the making of that order and ending with the date when the probation period specified in the probation order would have ended.

(6) An application under this paragraph may be heard in the offender's absence if—

(a) the application is made by the responsible officer; and

(b) that officer produces to the court a statement by the offender that he understands the effect of an order for conditional discharge and consents to the making of the application; and where the application is so heard section 1A(3) of the 1973 Act shall not apply.

(7) No application may be made under this paragraph while an appeal against the probation order is pending.
(8) Without prejudice to paragraph 11 below, on the making of an order under section 1A(1)(b) of the 1973 Act by virtue of this paragraph the court shall forthwith give copies of the order to the responsible officer, and the responsible officer shall give a copy to the offender."
(10) After paragraph 11 of that Schedule there shall be inserted the following paragraph—
"11A. Where under this Part of this Schedule a relevant order is revoked and replaced by an order for conditional discharge under section 1A(1)(b) of the 1973 Act and—

(a) the order for conditional discharge is not made in the circumstances mentioned in section 1B(9) of the 1973 Act (order made by magistrates' court in the case of an offender under eighteen in respect of offence triable only on indictment in the case of an adult), but

(b) the relevant order was made in those circumstances,
section 1B(9) of the 1973 Act shall apply as if the order for conditional discharge had been made in those circumstances."").

On Question, amendments agreed to.
Schedule 6, as amended, agreed to.
Clauses 88 and 89 agreed to.
The Lord Advocate (Lord Hardie)The Lord Advocate (Lord Hardie) moved Amendment No. 287A:
After Clause 89, insert the following new clause—
(" .—(1) Section 16 of the Crime and Punishment (Scotland) Act 1997 (designated life prisoners) shall have effect and shall be deemed always to have had effect with the amendments made by subsections (2) and (3) below.
(2) In subsection (2), at the beginning, there shall be inserted the words "Except in a case to which subsection (3A) or (3B) below applies,".
(3) After subsection (3), there shall be inserted the following subsections—
"(3A) This subsection applies in a case where a person—

(a) was sentenced, prior to 20th October 1997, in respect of a murder committed by him before he attained the age of 18 years; and

(b) has been released on licence, other than under section 3 of the 1993 Act, whether before or on that date.

(3B) This subsection applies in a case where a person—

(a) was sentenced, prior to 20th October 1997, in respect of a murder committed by him before he attained the age of 18 years; and

(b) has been released on licence, other than under section 3 of the 1993 Act, after that date without his case having been considered under subsection (2) above.

(3C) In a case to which subsection (3A) or (3B) applies, Part I of the 1993 Act shall apply as if the person were a designated life prisoner, within the meaning of section 2 of that Act, whose licence had been granted under subsection (4) of that section on his having served the designated part of his sentence.".
(4) Where, prior to the commencement of this section, a certificate has been issued under subsection (2) of section 16 of the Crime and Punishment (Scotland) Act 1997 in respect of a case to which subsection (3A) of that section applies, the certificate shall be disregarded.").
The noble and learned Lord said: In moving this amendment I shall also speak Amendment No. 307A. For all its complex appearance, Amendment No. 287A has a simple purpose, which can be summed up simply. It is to make good an omission from the transitional provisions contained in Section 16(2) of the Crime and Punishment (Scotland) Act 1997 dealing with persons sentenced for murder committed while they were under the age of 18. This amendment aligns them with the earlier transitional provisions made for discretionary life prisoners contained in the Prisoners and Criminal Proceedings (Scotland) Act 1993 in order to avoid possible unfairness to prisoners in a small number of cases.
The amendment deals with under 18 years of age murderers who have already been released on licence. The 1997 Act gives under 18 years of age murderers who come within the definition of designated life prisoners the right to a review by the Parole Board for Scotland. The Parole Board (Scotland) Rules 1993, as amended, constitute the Parole Board for Scotland as a court for this purpose once the offenders have served the designated part of their sentence, as certified by the Lord Justice General.
Under the current transitional provisions of the 1997 Act, an under 18 years of age murderer who has already been released under the statutory provisions which
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pre-dated the coming into effect of the relevant provisions of the 1997 Act must have a designated part certified by the Lord Justice General in order that the new provisions governing his release can apply to him. That is notwithstanding that at the time he was first released the Secretary of State and the then Lord Justice General considered that he had served a sufficient period to satisfy the criminal justice requirements for punishment and general deterrence.
Therefore, this amendment would provide that where an under 18 years of age murderer has been released by the Secretary of State under the pre-1997 Act procedures, he will be deemed to have served the designated part of his sentence for the purposes of the new procedures. That means that the Lord Justice General does not require to set a designated part and arrangements thereby mirror the transitional arrangements made for discretionary life prisoners. The amendment further provides that in any relevant case in which the Lord Justice General has made a certificate setting the designated part, it shall be disregarded. This ensures that all the transitional prisoners gain the benefit of the amendment. To that extent the amendment provides for retrospective application.
Amendment No. 307A is consequential to the new arrangements. I beg to move.
On Question, amendment agreed to.
Clause 90 agreed to.
Clauses 92 to 94 agreed to.
Schedule 7 [Minor and consequential amendments].
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 288:
Page 100, line 14, at end insert ("or paragraph 3 of Schedule 4 to that Act (breach of requirements of reparation order or action plan order)"").
The noble and learned Lord said: In moving this amendment I shall speak also to Amendments Nos. 289 to 298 inclusive and Amendments Nos. 301, 302, 304 to 306; 308 to 311; 323, 330, 333 and 340 to 345 inclusive. This group of 29 government amendments contains minor and consequential amendments to Schedule 7, as it relates to England and Wales, to Clause 96 and to Schedule 9. The Schedule 9 amendments, which are Amendments Nos. 323, 330 and 333, are all consequential on the amendments to Schedule 7. I do not want to take up the time of the Committee by going through these minor and technical amendments one by one although I can, of course, expand on any individual amendment should the Committee so wish. Suffice it to say that these minor and consequential amendments to existing legislation are necessary either as a consequence of earlier government amendments to the Bill or to make changes consequential upon provisions in the Bill, which were overlooked when the Bill was first produced or to correct errors in existing legislation. I beg to move.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton: moved Amendments Nos. 289 to 298:
Page 100, line 14, at end insert—
(" . In section 58 of that Act (power of Secretary of State to send certain young offenders to approved schools), for the words "subsection (2)", in both places where they occur, there shall be substituted the words "subsection (3).").
Page 100, line 39, leave out ("under 18 years of age").
Page 100, line 43, at end insert—
("4A.—(1) In subsection (1) of section 49 of that Act (persons unlawfully at large), for the words from "imprisonment" to "secure training centre" there shall be substituted the words "imprisonment or custody for life or ordered to be detained in secure accommodation or in a young offenders institution".
(2) In subsection (2) of that section—

(a) for the words from "imprisonment" to "secure training centre" there shall be substituted the words "imprisonment, or ordered to be detained in secure accommodation or in a young offenders institution"; and

(b) for the words from "in a prison" to "secure training centre" there shall be substituted the words "in a prison or remand centre, in secure accommodation or in a young offenders institution".

(3) After subsection (4) of that section there shall be inserted the following subsection—
"(5) In this section "secure accommodation" means—

(a) a young offender institution;

(b) a secure training centre; or

(c) any other accommodation that is secure accommodation within the meaning given by section 62(7) of the Crime and Disorder Act 1998 (detention and training orders)."").

Page 101, line 8, after ("Wales)") insert—
("(a) in paragraph (b), for the words "section 53(2)" there shall be substituted the words "section 53(3)"; and
(b)")
Page 102, line 14, leave out ("and "of a probation order" shall cease to have effect") and insert ("shall cease to have effect and for the words "the supervision of a probation officer" there shall be substituted the word "supervision"").
Page 103, line 10, leave out ("In") and insert ("After").
Page 103, line 11, leave out from ("sentences)") to end of line 14 and insert ("there shall be inserted the following subsection—
"(6A) Where in respect of a conviction a detention and training order was made under section 60 of the Crime and Disorder Act 1998, the rehabilitation period applicable to the sentence shall be—

(a) in the case of a person aged fifteen years or over at the date of his conviction, five years if the order was, and three and a half years if the order was not, for a term exceeding six months;

(b) in the case of a person aged under fifteen years at the date of his conviction, a period beginning with that date and ending one year after the date on which the order ceases to have effect."").

Page 103, line 21, at end insert—
(" In paragraph 8(1) of Schedule 1 to that Act (persons entitled to bail: supplementary provisions), after the words "subsection (6)(d)" there shall be inserted the words "or (e)"").
Page 103, line 26, leave out ("(2)") and insert ("(1)(a)").
Page 103. line 27, after ("offence),") insert ("for the words "that subsection" there shall be substituted the words "subsection (3) of that section".
(2) In subsection (2) of that section,").
On Question, amendments agreed to.
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 299:
Page 103, line 31, at end insert—
(". In subsection (1) of section 65 of the 1980 Act (meaning of "family proceedings"), after paragraph (o) there shall be inserted the following paragraph—
"(p) sections 11 and 12 of the Crime and Disorder Act 1998;"").
The noble Lord said: I spoke to this amendment on 10th February. I beg to move.
On Question, amendment agreed to.
Lord Hardie Lord Hardie moved Amendment No. 300:
Page 104, line 23, at end insert—
("Mental Health (Scotland) Act 1984 (c. 36)
30A.—(1) In subsection (8A) of section 74 of the Mental Health (Scotland) Act 1984 (effect of certain directions), for the words "the Crime and Punishment (Scotland) Act 1997" there shall be substituted the words "Part I of the Prisoners and Criminal Proceedings (Scotland) Act 1993".
(2) The amendment made by sub-paragraph (1) above shall be deemed to have had effect from 1 January 1998.").
The noble and learned Lord said: In moving this amendment I shall speak to Amendments Nos. 307, 307B, Amendments Nos. 312 to 317, 335, 336A, 336B, 337, 338 and 338A. This group of 15 government amendments contains minor and consequential amendments in relation to Scotland. The amendments are to Schedules 7 and 9 and Clause 96. The amendments to Clause 96 and to Schedule 9 are consequential on amendments to Schedule 7.
Like the noble and learned Solicitor-General, I do not propose to go through each amendment individually, but if Members of the Committee have any questions about particular amendments I shall answer them. There is one matter that I wish to draw to the attention of the Committee, which concerns Amendment No. 307B. Section 18(2) of the Criminal Procedure (Scotland) Act 1995 was amended by Section 47 of the Crime and Punishment (Scotland) Act 1997. The effect of that amendment was to substitute a reference to "relevant physical data" for a reference to,
"fingerprints, palm prints and other prints and impressions from an external part of the body".
Unfortunately, the consequential amendment to Section 18(3) was not made. This amendment rectifies that. Section 47 of the 1997 Act came into effect on 1st August 1997, hence the reason for subsection (2) of this amendment. The retrospective effect of this provision is in favour of the person from whom the samples have been taken. I beg to move.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 301 to 306:
Page 105, line 40, leave out ("accused has been arraigned") and insert ("indictment has been preferred").
Page 106, line 12, at end insert—
("Legal Aid Act 1988 (c. 34)
.—(1) In subsection (4) of section 20 of the Legal Aid Act 1988 (competent authorities to grant representation under Part V), after paragraph (a) there shall be inserted the following paragraph—
"(aa) which sends a person for trial under section 42 of the Crime and Disorder Act 1998 (no committal proceedings for indictable-only offences),".
(2) After subsection (5) of that section there shall be inserted the following subsection—
"(5A) A magistrates' court which has a duty or a power to send a person for trial under section 42 of the Crime and Disorder Act 1998 is also competent, before discharging that duty or (as the case may be) deciding whether to exercise that power, as respects any proceedings before the Crown Court on the person's trial."
(3) In subsection (3)(a) of section 21 of that Act (availability of representation under Part V), after the word "committed" there shall be inserted the words "or sent".
(4) In subsection (4) of that section, after the word "commits" there shall be inserted the words "or sends".").
Page 106, line 16, leave out ("section 11") insert ("sections 11 and 12").
Page 107, line 20, leave out from ("orders),") to end of line 21 and insert ("for the words "the supervision of a probation officer" there shall be substituted the word "supervision").
Page 107, line 22, leave out ("(3)(a)") and insert ("(3)").
Page 107, line 23, leave out from ("orders)") to end of line 24 and insert—
("(a) in paragraph (a), after the words "probation officer" there shall be inserted the words "or member of a youth offending team"; and
(b) after that paragraph there shall be inserted the following paragraph—
"(aa) in relation to an offender who is subject to a drug treatment and testing order, the probation officer responsible for his supervision;"").
The noble and learned Lord said: I have already spoken to Amendments Nos. 301 to 306, and I beg leave to move them en bloc.
On Question, amendments agreed to.
Lord Hardie Lord Hardie moved Amendments Nos. 307 to 307B:
Page 111, line 35, leave out from beginning to ("(interpretation)") in line 36 and insert ("67.—(1) After subsection (1) of section 4 of the Prisoners and Criminal Proceedings (Scotland) Act 1993 (persons detained under the Mental Health (Scotland) Act 1984) there shall be inserted the following subsection—
"(1A) This Part of this Act shall apply to a person conveyed to and detained in a hospital pursuant to a hospital direction under section 59A of the 1995 Act as if, while so detained, he was serving the sentence of imprisonment imposed on him at the time at which that direction was made.".
(2) The amendment made by sub-paragraph (1) above shall be deemed to have had effect from 1 January 1998.
67A. After subsection (7) of section 27 of that Act").
Page 111, line 41, at end insert—
("67B. In Schedule 6 of that Act (transitional provisions), after paragraph 6B there shall be inserted the following paragraph—
"6C. Where a prisoner released on licence is treated by virtue of the provisions of this or any other enactment as a prisoner whose licence was granted under section 2(4) of this Act, the validity of his licence shall not be affected by the absence in the licence of such a condition as is specified in section 12(2) of this Act.".").
Page 112, line 25, at end insert—
("74A.—(1) For section 18(3) of the 1995 Act (prints and samples) there shall be substituted the following subsection—
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"(3) Subject to subsection (4) below, all record of any relevant physical data taken from or provided by a person under subsection (2) above, all samples taken under subsection (6) below and all information derived from such samples shall be destroyed as soon as possible following a decision not to institute criminal proceedings against the person or on the conclusion of such proceedings otherwise than with a conviction or an order under section 246(3) of this Act.".
(2) The amendment made by sub-paragraph (1) above shall be deemed to have had effect from 1st August 1997.").
The noble and learned Lord said: I have already spoken to the amendments. I beg to move them en bloc.
On Question, amendments agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 308 to 311:
Page 113, line 19, leave out from ("evidence") to end of line 23 and insert ("have been served on the accused under regulations made under paragraph 1 of Schedule 2 to the Crime and Disorder Act 1998; and
(b) a copy of the notice under subsection (5) of section 42 of that Act has been served on him under that subsection."").
Page 114, line 2, at end insert ("under section 30 of the Crime and Disorder Act 1998"").
Page 114, line 4, at end insert (", and for the words "the words in parentheses" there shall be substituted the words "subsection (2A) above").
Page 114, line 7, at end insert—
("(2) In subsection (5)(e) of that section, for the words "paragraph 3(2)(a)" there shall be substituted the words "sub-paragraphs (2)(a) and (2A) of paragraph 3".
(3) In subsection (8) of that section—

(a) in paragraph (a), the words "to revoke the order and deal with an offender for the offence in respect of which the order was made" shall cease to have effect;

(b) in paragraph (b), for the words "paragraph 3(2)(a)" there shall be substituted the words "sub-paragraphs (2)(a) and (2A) of paragraph 3".").

The noble and learned Lord said: I have already spoken to Amendments Nos. 308 to 311. With the leave of the Committee, I beg to move those amendments en bloc.
On Question, amendments agreed to.
Lord Hardie Lord Hardie moved Amendments Nos. 312 to 317:
Page 116, line 37, leave out ("shall cease to have effect") and insert ("is hereby repealed").
Page 116, line 39, leave out ("shall cease to have effect") and insert ("are hereby repealed").
Page 116, line 48, leave out ("shall cease to have effect") and insert ("is hereby repealed").
Page 117, line 2, leave out ("shall cease to have effect") and insert ("are hereby repealed").
Page 117, leave out lines 3 to 16 and insert—
("() In the entry relating to the Prisoners and Criminal Proceedings (Scotland) Act 1993—

(a) the words relating to sections 1, 3(2), 5, 6(1), 7, 9, 12(3), 16, 17(1), 20, 24, and Schedule 1;

(b) in the words relating to section 14, the words "and in subsection (4), the words "short-term";

(c) in the words relating to 27(1)—

(i) the words "the definitions of "short term prisoner" and "long-term prisoner" and";

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(ii) in the words relating to the definition of "supervised release order" the words "and the words from "but" to the end":

(d) the words relating to section 27(2), (3), (5) and (6), are hereby repealed.").

Page 117, line 18, leave out ("shall cease to have effect") and insert ("are hereby repealed").
The noble and learned Lord said: With the leave of the Committee. I beg to move the amendments en bloc.
On Question, amendments agreed to.
Schedule 7, as amended, agreed to.
Clause 95 agreed to.
Schedule 8 [Transitional provisions and savings]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 318:
Page 117, leave out lines 25 to 28.
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 319 to 321:
Page 118, line 34, leave out ("(2)(e)") and insert ("(2)(f)").
Page 118, line 43, leave out from ("words") to ("there") in line 44 and insert (""sections 37(5) and 39(1) and (2)" there were substituted the words "section 37(5), 38(2) and 39(1) and (2)", and for the words "section 39(1) or (2)"").
Page 118, line 47, leave out from ("Act)") to end of line 1 on page 119.
The noble and learned Lord said: These are three minor amendments to Schedule 8, which is concerned with transitional provisions. Amendment No. 319 corrects a printing error, and Amendments Nos. 320 and 321 concern the transitional arrangements necessary for the implementation of Clause 84—under which short-term prisoners who breach their licence conditions will be recalled to prison in the same way as long-term prisoners—that is to say, on the recommendation of the Parole Board. As I have already indicated, we have no plans to implement Clause 84 at present. With the leave of the Committee, I beg to move the amendments en bloc.
On Question, amendments agreed to.
Schedule 8, as amended, agreed to.
Schedule 9 [Repeals]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 322 to 331:
Page 119, column 3, leave out line 34 and insert—
("In section 16, subsection (10) and, in subsection (11), the words "seventeen or".")
Page 120, line 3, column 3, leave out (-and "of a probation order"").
Page 120, line 4, column 3, at end insert—
("Section 11. Section 14(8).")
Page 120, line 10, column 3, at end insert—
("Section 32(5).")
Page 120, line 21, column 3, at end insert—
("In Schedule 7, paragraph 120(b).")
Page 120, line 28, column 3, at end insert—
("In section 3(1)(a), the words "under section 1A above".")
Page 120, line 34, column 3, at end insert—
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("Section 66(3).")
Page 120, line 38, column 3, at beginning insert—
("Section 69(2).")
Page 120, column 3, leave out lines 42 and 43.
Page 121, line 24, column 3, leave out ("paragraph") and insert ("paragraphs 10, 11 and").
The noble and learned Lord said: I have already spoken to Amendments Nos. 322 to 331 and, with the leave of the Committee, I beg leave to move those amendments en bloc.
On Question, amendments agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 332:
Page 121, line 24, column 3, at end insert—
("In Schedule 12, paragraph 17(3).").
The noble and learned Lord said: Amendment No. 332 provides for the repeal of paragraph 17(3) of Schedule 12 to the Criminal Justice Act 1991. That paragraph deals with transitional arrangements for sentences of detention in a young offender institution for 15 to 17 year-olds. The paragraph will become redundant on the introduction of the detention and training order, so therefore should be repealed. I beg to move.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 333 and 334:
Page 121, line 44, column 3, at end insert—
("In section 35(8)(a), the words "to revoke the order and deal with an offender for the offence in respect of which the order was made"")
Page 121, line 44, column 3, at end insert—
("Section 43(4).")
The noble and learned Lord said: I have spoken to these amendments and, with the leave of the Committee, I beg leave to move them en bloc.
On Question, amendments agreed to.
Lord Hardie Lord Hardie moved Amendment No. 335:
Page 122, line 47, column 3, after ("(7)"") insert (", in the entry relating to the Prisoners and Criminal Proceedings (Scotland) Act 1993, the words relating to sections 1, 3(2), 5, 6(1), 7, 9. 12(3), 16, 17(1), 20, 24, 27(2), (3), (5) and (6) and Schedule 1, in the words relating to section 14 the words "and, in subsection (4), the words "short-term" and in the words relating to section 27(1), the words "the definitions of "short term prisoner" and "long-term prisoner" and" and "and the words from "but" to the end"").
On Question, amendment agreed to.
Schedule 9, as amended, agreed to.
Clause 96 [Short title, commencement and extent]:
[Amendment No. 336 had been withdrawn from the Marshalled List.]
Lord Hardie Lord Hardie moved Amendments Nos. 336A to 339:
Page 76, line 18, after ("section") insert ("and paragraphs 30A, 67 and 74A of Schedule 7 to this Act").
Page 76, line 31, leave out ("section 89") and insert ("sections 89
and (Transitional provisions in relation to certain life prisoners)").
Page 76, line 32, after ("paragraphs") insert ("30A,").
Page 76, line 32, after ("67,") insert ("67A,").

1187
Page 76, line 32, after ("67,") insert ("67B,").
Page 76, line 34, at end insert—
("() section 52(9);").
The noble and learned Lord said: I have already spoken to these amendments and, with the leave of the Committee, beg to move them en bloc.
On Question, amendments agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendments Nos. 340 to 345:
Page 76, line 37, after ("paragraphs") insert ("4A(1) and (3),").
Page 76, line 41, after ("Paragraphs") insert ("4A(1) and (3),").
Page 77, line I. leave out ("Paragraph") and insert ("Paragraphs 4A(1) and (3) and").
Page 77, line 2, leave out ("that paragraph") and insert ("those paragraphs").
Page 77, line 3, leave out ("Paragraph") and insert ("Paragraphs 4A(1) and (3) and").
Page 77, line 4, leave out ("that paragraph") and insert ("those paragraphs").
The noble and learned Lord said: I have spoken to Amendments Nos. 340 to 345 inclusive and, with the leave of the Committee, I beg leave to move them en bloc.
On Question, amendments agreed to.
Clause 96, as amended, agreed to.
Baroness Farrington of Ribbleton: My Lords, I beg to move, That the House do now resume.
The Deputy Chairman of Committees (Lord Dean of Harptree): The Question is, That the House do now resume. As many as are of that opinion say "content". To the contrary, "not content".
Viscount Colville of Culross: Should not the noble Lord report the Bill to the House with the amendments?
The Deputy Chairman of Committees: I beg the Committee's pardon. I am grateful to the noble Viscount for reminding me of my duties.
Baroness Farrington of Ribbleton: I beg to move, That the House do now resume.
The Deputy Chairman of Committees: The Question is, That the House do now resume. As many as are of that opinion say "content". To the contrary, "not content". The contents have it.
House resumed: Bill reported with amendments.

Greater London Authority (Referendum) Order 1998
8.28 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)rose to move, That the draft order laid before the House on 23rd February be approved [24th Report from the Joint Committee].
The noble Baroness said: My Lords, this order covers all the detailed provisions needed to enable the London referendum to take place on 7th May in accordance with the provisions of the Greater London Authority (Referendum) Act 1998. As will be evident, the order is neither a lightweight nor a simple document, but a draft was made available in the Library of the House during the later stages of the Act and I hope that it has proved useful.
In preparing the order, we have drawn heavily on the valuable precedents set by the Referendums (Scotland and Wales) Act 1997. The supplementary provisions worked well in that legislation; indeed, noble Lords will recall that they were specifically debated and approved by this House as a schedule to the Bill.
Of course, in London there are special circumstances because we are combining the referendum poll with the local elections. We have had extensive consultations with returning officers, chief executives and electoral administrators at all stages in drafting this order and I would like to support the comments made earlier today by my honourable friend the Minister for London in thanking these people for all their hard work. They have made a major contribution to our preparations.
The order as a whole takes the usual local election procedures and adapts them for the purposes of the referendum. This approach gives the referendum procedures the usual protections afforded by election law, while also making it possible for the London borough council elections to be held at the same time.
At first glance, the order appears rather complex, but that is not the case as in many places much of it amounts to little more than changing the word "election" to "referendum". However, as I have said, the order contains a number of provisions particular to the referendum and I shall explain the most significant in a little detail.
Article 7 of the order sets out who will act as returning officers for the referendum. This would be the returning officer in the local council election for each London borough.
Article 9 sets out the form for the back of the ballot paper. It is very similar to that used in local elections and follows the form used in previous referendums. The wording on the front of the ballot paper is something about which we had a great deal of debate in this House, and is as prescribed in the schedule to the Greater London Authority (Referendum) Act 1998.
We have held careful consultations on the form of the ballot paper with chief executives, electoral administrators and in particular with the Royal National Institute for the Blind—for whose help we are indebted.
As a result we have devised a ballot paper which I am told is a fine shade of daffodil yellow and uses a large and bold typeface. I am sure that noble Lords will agree that the design is clear and comprehensible; it is intended to make sure that the referendum ballot paper is able to be read without difficulty by almost everybody. I am placing copies of the proposed ballot papers in the Library of the House.
Article 10 deals with counting the votes. The principal Act provided for the appointment of a chief counting officer for London and of counting officers to count the votes in each borough. It places on those counting officers the normal requirements to make arrangements for the count and gives them the powers to enable them to do so.
Finally, as I indicated earlier, the adaptations made in Articles 12 and 13, and the schedules associated with them, make all the necessary amendments to representation of the people legislation to enable the referendum to go ahead. The adaptations made are broadly equivalent to those in the schedule to the Referendums (Scotland and Wales) Act 1997.
The order follows a well precedented formula which draws upon the valuable work done in the recent Scottish and Welsh referendums. We have consulted extensively with experienced returning officers and others in preparing these considered proposals and have sought to make the whole process as open as possible. The order is essentially a technical measure, but we believe that it will enable an efficient and smooth referendum to take place on 7th May. I commend it to the House.
Moved, that the draft order laid before the House on 23rd February be approved [24th Report from the Joint Committee].—(Baroness Hayman.)
Baroness Hamwee: My Lords, I am grateful to the Minister for explaining various of the order's provisions. I should like to ask just a few questions which I am sure I could have answered for myself had I devoted more attention to the fine print of the order. I am afraid that there has been a little laziness on my part.
Article 9, to which the Minister referred, relates to the number printed on the back of the ballot paper and counterfoil. Can the Minister confirm that the same provisions with regard to official marks will apply to both the ballot for the referendum and that for the local elections? I am not seeking to make particular comments about perforations, but I am anxious to be assured that voters will not be required to check for different things when they enter a polling station. We know what happened at Winchester and on other occasions. My concern is merely that there are not different procedures.
I have some minor questions relating to Schedule 2. The hack of the ballot paper is to carry a reference to the name of the electoral ward in the borough. I understand that it is intended to announce the count for each borough at that borough—in other words, the public will know how each borough has voted in the referendum. What is the purpose of having the name of the ward on the ballot paper? Is it intended that the count shall be detailed on a ward-by-ward basis?
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Why is it intended that the same ballot box should be used, given that that will mean that counting officers have the job of separating the ballot papers? I am sure that the matter has been discussed with returning officers, but simply as a matter of procedure I am interested in understanding why it is thought that that is more satisfactory than attempting to have separate ballot boxes. I recognise the problems that are likely to arise if even one or two ballot papers are placed in the wrong box. Inevitably, the whole lot has to be emptied.
My final comment relates to Part I(7) of Schedule 2 and to applications for postal and proxy votes. I rather laboured the point during our debates on the Bill, and I am grateful to note that I need not have done so because the provision is here. Indeed, the Minister gave assurances to that effect during the passage of the Bill. I am glad that only one application will be required.
Baroness Seccombe: My Lords, perhaps I may add the thanks of these Benches to the Minister for her explanation and presentation of the order. Our only comment is to express our sadness that there are not to be two questions. However, we debated that at earlier stages. We wish the referendum well and we shall watch with the greatest of interest to see what the people of London decide.
Baroness Hayman: My Lords, I am grateful to both noble Baronesses for their comments and for their welcome for the procedures that we have established.
The noble Baroness, Lady Hamwee, asked about the numbers on the back of the ballot papers. I can confirm that the provisions for official marks will be the same for both polls, so there will not be the problem to which she alluded. As I understand it, the inclusion of the name of the ward on the backs of individual ballot papers is at the request of the returning officers and is for their own administrative reasons. I confirm that the count will be on a borough, not on a ward-by-ward, basis. That will be the way in which the results are announced. There was considerable concern that it should be possible for borough results to be seen. There is no intention of sub-dividing the results to ward level.
On the issue of the two ballot boxes, the noble Baroness is absolutely right. Returning officers expressed the view, from their experience, that the likelihood—indeed, the certainty—that some ballot papers would be put in the wrong box was such that having two boxes would not simplify matters, but would complicate them. It was felt that a full separation would be needed anyway. As I understand it, when two polls have been held on the same day in the past, it has been found to be more efficient to have one ballot box and to carry out the separation afterwards.
I was grateful for the remarks of the noble Baroness about the provisions for applying for absent votes. As I have said many times in the House, the Government hope that the campaign on absent votes will be successful and will filter through to other elections.
On Question, Motion agreed to.
House adjourned at twenty-one minutes before nine o'clock.

Official Report of the Grand Committee on the Bank of England Bill
Tuesday, 3rd March 1998.
The Committee met at half-past three of the dock.
[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 noble 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 will be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.
If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division bells are rung and then resume after 10 minutes.
Title postponed.
Clause 1 [Court of directors]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 1:
Page 1, line 8, at beginning insert—
("() The Bank of England shall henceforth be known as the Central Bank of the United Kingdom ("the Bank").").
The noble Lord said: In moving Amendment No. 1, I shall also speak to Amendments Nos. 74, and 75 and to Clause 41 stand part of the Bill. I am deeply disappointed to hear that I cannot carry on my roller-coaster of victories on behalf of Scotland that I started yesterday evening, but I shall have to have some forbearance in this Committee stage.
I have put down this series of amendments for two reasons. One is that the name of the central bank of this country—of Great Britain and Northern Ireland—being the Bank of England does seem a little unusual in the newly devolved geography of our constitution. Secondly, it allows me to ask what, if any, parts of this Bill will fall to be devolved to the Scottish parliament. I shall start with the second point.
As far as I can see, none of its parts will fall to be devolved—they are all reserved—but I asked the question at Second Reading. I rather hoped that the noble Lord and his officials have been able to look through the Bill and decide whether, indeed, any parts
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are to be devolved. The Scottish parliament will, of course, have considerably more powers than the Welsh assembly or than any potential Northern Irish assembly which may be introduced. My question is therefore directed largely at the Scottish parliament, but it would also be helpful if the Minister would indicate whether any parts of this Bill will be devolved responsibilities of the Welsh assembly.
The Scottish parliament will have considerable economic powers, and I shall come to those issues later in the Bill. It seems to me that, in every piece of legislation that we now pass, we ought to have a clear statement from the Government as to what, in any Bill we are discussing, will be devolved in the future so that we know whether this is the last time your Lordships' House and the other place will have the chance to address the issue.
If all the matters in this Bill are reserved, as I suspect they are, I wonder, as a second question, whether any of those matters will be the subject of the various concordats which I understand are to be drawn up between the United Kingdom Government in Westminster and the Scottish government in Edinburgh. I am not entirely sure whether the Scottish parliament will meet in a brewery or in the former headquarters of Strathclyde Regional Council. That seems to be the subject of considerable debate in Scotland at the moment, as indeed does the question of a knighthood for Mr. Sean Connery. Those are, however, side issues, and I am sure I would be out of order if I developed them any further. We ought to have a straightforward answer, and it should be quite easy for the noble Lord, Lord McIntosh, to give a fairly straightforward answer about the position of this Bill following devolution.
The first reason I raise this matter is the reason I mentioned as to why the central hank of England, Scotland, Wales and Northern Ireland—collectively known as the United Kingdom—is not known as the central bank of the United Kingdom. Every Scottish schoolboy knows, but I am not entirely sure whether every English schoolboy knows, that the Bank of England was founded by a Scot. But then anybody who goes into the Square Mile of the City today will find that the place is, by and large, run by Scots. However, that is a different issue.
It is interesting that of all the European Union states, the United Kingdom is the only one whose central bank does not carry a clear identification of the state for which it is the central bank. The Bank of England has fulfilled the role of the central bank of the United Kingdom since the Bank Charter Act 1883. In 1832 a so-called secret committee on the Bank Charter focused on the desirability of one bank of issue for Great Britain and whether that should be the Bank of England. The committee report resulted in the Bank Charter Act 1833. The Bank Charter Act 1844 prohibited new banks of issue in the UK and that piece of legislation has been revised many times, most recently in the 1987 Banking Act.
The Bill before us today introduces some further statutory provisions for the Bank of England. It contains reform of its constitution, of the duties of the court of

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directors and makes new provisions relating to funding, the accounts and profits of the Bank. Most importantly, it sets up a Monetary Policy Committee within the Bank. That Monetary Policy Committee is given a statutory basis for the operational responsibility in relation to monetary policy: the setting of interest rates, in fact, as far as most ordinary people and most business people will be concerned. The Bill sets out the framework in accordance with which the Bank's monetary policy functions are to be exercised. I suspect that that is what will probably take us most of today to discuss.
It seems to me, as I said on Second Reading, that what we are looking at today is the first step in the process towards the independence of the Bank of England consistent with being a member of the single currency. As I believe I said on Second Reading—if I can remember the phrase—if the Prime Minister ever plucks up the courage of the Chancellor of the Exchequer to join the single currency, quite clearly we shall have to have a second Bill to make the Bank totally independent and not just of operational independence.
It has been suggested to me by, among other bodies, the Law Society of Scotland that in this new circumstance where the Bank will have a much greater role as the central bank of the United Kingdom within the European monetary system and where that role will be played out in the new geography of the constitution of the United Kingdom. we should perhaps ask ourselves whether it is not time that the central bank of the United Kingdom should be called just that.
After all, we are to have a government in Scotland—with perhaps limited powers but nonetheless with powers. I am not sure whether I can call it a government, but we are to have an organisation in Wales which will take many of the decisions regarding Wales—and not here at Westminster. It does seem to me that many people in Europe might find it rather odd, especially when they find that in Brussels they are dealing with a government of Wales and a government of Scotland, that the central bank covering those two countries is not called the central bank of the United Kingdom but is called the Bank of England.
I know the historical precedents are all there and everybody is probably well aware of what the Bank of England does at present. However, in the new geography of the constitution of our country, the central bank will hold a new position, initially through its Monetary Policy Committee in deciding monetary policy and eventually—and I suspect eventually will not be too long delayed—in being an independent central bank according to the Maastricht Treaty, in order to allow us to take part in the euro. I make no observations about whether we should or not. I just see that as being the direction of government policy. The Minister really ought to address the question of whether we should take this opportunity to call our central bank what indeed it is—the central bank of the United Kingdom. I beg to move.
Lord Peston: I guess that the noble Lord introduced this amendment in order to talk about Scotland, which I will not talk about. However, I assumed that it was also
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relevant to the second point he raised, which was our membership of EMU. As the noble Lord knows, I am in favour of joining EMU and still take the view that I would rather we joined earlier than later.
The country which is the member of the European Union is the United Kingdom; as far as I know, Scotland, Northern Ireland, Wales and England are not members of the European Union. This is a technical point, which leads to my question. It is clear that this Bill does not meet the requirements for EMU independence of a central hank. What is interesting, although academic—and I do not use the word "academic" in the pejorative sense ever but in the sense meaning important—is whether there is anything in the various treaties that we have signed that will oblige us to call our central bank the central bank of the member country, namely the United Kingdom. I do not know whether my noble friend has an answer to that. Do we have an obligation to give it the national title, or in theory could it be called the "Bank of England", even though England is not a member of the European Union? I look forward to the answer to that question.
Baroness Carnegy of Lour: I would like to support this amendment. I too have the problem of the Law Society of Scotland explaining a number of points which seem similarly technical to me. What the noble Lord, Lord Peston, has just said is absolutely right—whether we will be in or not, it would be right that the bank should be called that which describes the country of which it is the central hank. That makes sense.
There is perhaps also a political point—with a very small "p"—which is that people in Scotland had not noticed until comparatively lately that there is anomaly in calling the Bank of England the Bank of England. They probably did not realise the extent to which it had to do with them until it began to set interest rates. Since that has happened there has been quite a lot of comment that it is rather an odd thing that the bank setting the interest rates for all of us should be called the Bank of England, which in a way is understandable.
With this matter, as with so many others, points which have been taken for granted with the United Kingdom will be highlighted as devolution happens. That is because of the discussion on reserved powers. People will see a distinction between the powers that are reserved and the powers that are devolved, and doubtless there will be a good deal of argument about that. So far it is not very great and the facts are emerging in the other place as reserved powers are discussed, but it will become an issue. Perhaps it is a hit unwise not to make a change. I can quite see that it will be a great shame for a great many people, because the Bank of England is known very lovingly as "Auntie" and everyone will wonder whether Auntie is the same with a changed name; and I hope the Government will take this point.
Lord Barnett: I share the noble Baroness's love of Scotland, in a different sense. It has adopted my name for some strange reason that I have never quite understood. The Barnett formula now seems to make the headlines in newspapers all over Scotland, or so I hear, although I do not read them too often.

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I deal first with the amendment moved by the noble Lord, Lord Mackay of Ardbrecknish. He is smiling now, as he smiles when he moves amendments, for the very obvious reason that he is enjoying himself, and quite right too because he is no longer in government. He is going to be in opposition for a long time; he might as well enjoy it. May I add one or two questions to those of my noble friend Lord Peston? I share his view about joining as early as possible, although he did not quite put it in that way.
I should like to ask my noble friend whether it is government policy that we should join a single currency and, therefore, the European Central Bank, as early as possible. I am sure that is government policy, although my own definition of it might he somewhat different, not necessarily from that of the Chancellor, but from that of the Prime Minister. I would he glad if my noble friend would confirm that as government policy. He need not wait for notes, he will know the answer.
I hope he will also confirm that this Bill will need to be overtaken by the event of our joining and becoming part of the European Central Bank, because there are matters within the Bill—and, I hope, some others that we would propose putting in it—that would not be compatible with our membership. I should like him to confirm that when he says he is not accepting the amendment of the noble Lord, as I assume he will. I myself, however, would have no objection whatever to it being called the "Bank of the United Kingdom". I have no problem with that amendment personally and make that clear, although I gather it cannot be pressed to a vote today, which was never the intention of the noble Lord who I see smiling. Incidentally, the Select Committee, which I have the honour to chair and of which the noble Lord, Lord Boardman is a member, went to Frankfurt last week and is going to Bonn tomorrow. We have looked at the European Central Bank in some depth and as far as I know, there is nothing in there concerning what the different national central banks should be called.
I would imagine that those who set up the European Central Bank could not give a damn what the national banks were called! At the end of the day—and indeed I put this question last week, in Frankfurt—I am not sure what the role of the national central banks will be. They will not have much of a role but they will remain in existence. Again, perhaps my noble friend will confirm that. I assume there will remain national central banks, whether they be called "of England" or "of the UK", even when we have a European Central Bank. For the moment, I will simply ask my main question to my noble friend, that I assume this Bill will fall once we join a European Central Bank.
3.45 p.m.
Lord Boardman: I must say that I find convincing the arguments of my noble friend but, frankly, I am worried about them. First, if EMU, to which the noble Lord, Lord Barnett, referred, should come about—and there are grave reservations over it—there will need to be so many changes that the name of what we call our central hank will he a minor issue. Secondly, we should not forget what the Bank of England really means.
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It is a hallmark of respectability and responsibility throughout the world. I should personally be very sorry to see the disappearance of its name. It means much more for the United Kingdom as a whole, around the world, than any name we might produce. Nevertheless, having said that, I must accept that the arguments put forward by my noble friend are convincing.
Lord Montague of Oxford: One can quite understand that people outside England are hoping there might be a different title. However, I am mindful of the tremendous reputation throughout the world that the Bank of England already possesses, as well as the confusion that might come about. We know that we are to have a Central Bank for Europe; I do not think we shall talk about the "Central Bank of the United Kingdom". We shall probably go in for shorthand, and call it simply the "Central Bank", and we shall not know which we are talking about!
When I am in America, I am often asked to explain how it is we always refer to Queen Elizabeth of England. I have no doubt that provides irritation in some places, but we do not seek to amend it. I suggest that we stay with this great reputation we already hold and do nothing to harm that.
Lord McIntosh of Haringey: It is always nice to start off the Committee stage with a wide-ranging debate and it is particularly nice when, from time to time, it grazes on the margins of the subject matter of the Bill, as this debate has. For that I am very grateful. The noble Lord, Lord Mackay of Ardbrecknish, is still on an emotional and psychological high after having achieved 50 per cent, victories with his huge majority in this House. If he thinks that is good statistically, then I leave him happy in that thought and I do not seek to challenge it.
I shall deal with the serious matters that have been raised before I go on to talk about the name of the Bank. The serious matters are, of course, that there are no matters within the Bill which are to be devolved. As the noble Lord recognised, they are all reserved to Westminster. There is no likelihood of any concordat between the Scottish parliament and the Westminster Parliament on any of the matters covered by the Bill. The Bill is concerned with one currency and a single set of financial markets. Although I recognise that all legislation going through Parliament now has to be consistent eventually with devolution, and I have been grappling with that problem on the National Lottery Bill concurrently with this Bill, no such question arises on the Bill itself.
In answer to my noble friend Lord Peston, we can call the Bank what we like as far as the European Union is concerned. We can call it the Bank of Brobdingnag, and they would not be worried about it. The European Monetary Institute has given its opinion on the contents of the Bill, and has not seen fit to make any comment on the name of the Bank.
My noble friend Lord Barnett seeks to tempt me into a restatement of government policy which would he more precise about the timing of our joining of EMU, but I shall not succumb to that temptation. As he knows

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perfectly well, the Government believe that in principle British membership of a successful single currency would be beneficial to Britain and to Europe. The key factor is whether the economic benefits of joining for business and industry are clear and unambiguous. If they are, there is no constitutional bar to British membership of EMU. That is not to say sooner rather than later; that is a statement of fact.
My noble friend Lord Barnett also asked me to reassure him that the Bill will not fall when we eventually join EMU—those were his words. I can confirm that it will require amendment, but the basic provisions of the Bill will not be changed as a result. It will require substantial amendment. It is not designed to conform to the Maastricht criteria, which we shall consider with later amendments. Of course the Bank of England will remain in existence. It has many roles other than that which is concerned with European monetary union, and, again, we are free to debate those as we go through the Bill.
As to the issue of the name itself, I was glad to hear from the noble Lord, Lord Boardman, the true voice of conservatism. I am slightly worried about the headlong rush of the Hague opposition into new conservative, new iconoclasm. They are perfectly willing to throw away 304 years of distinguished history. The noble Lord, Lord Mackay, gave us a little bit of history himself about the Bank of England, which was very welcome. But the Bank has a reputation after 300 years, and to make a change of this kind, which is neither strictly necessary nor, as everybody agrees, particularly important, would not be of any great value. If we were going to do so, surely we should do it in anticipation of EMU. Should we not call it the "Central Bank of some offshore regions of the European Union", which would have the great advantage of having the acronym CENSOR, which I commend to the noble Lord, Lord Mackay of Ardbrecknish? If it ain't broke, don't fix it—let us leave it alone.
Lord Mackay of Ardbrecknish: I am grateful to noble Lords who took part in this short debate. I am grateful to the Minister for confirming what I thought was the position: that all the matters in the Bill are indeed reserved in the devolutionary settlement, and that there will be no need for concordat in any of them.
I fully accept the point made by the noble Lord, my noble friend Lord Boardman and the noble Lord, Lord Montague, about the position of the Bank of England, and the fact that it is known throughout the world and its reputation, and so on. I fully accept that and I see the force of their argument. However, I must say to the Minister that to argue that if it has been running for 300 years nothing should be done to change it comes ill from a Government who are changing the Constitutional Settlement and the Treaty of Union which has been running for something like 300 years. If the Government are truly radical, they should be looking at
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all the ancient traditions and not just the Treaty of Union, which some of us feel is even more sacrosanct than the Bank of England ought to be.
Lord McIntosh of Haringey: I think the noble Lord would enjoy this afternoon and tomorrow afternoon rather more if he recognised that the Bill makes substantive changes to the role of the Bank of England. We are interested in the proper conduct of economic, fiscal and monetary policy, which is why we are making changes. What we are not doing is making trivial changes to the name.
Lord Mackay of Ardbrecknish: I fully understand. In fact I said in my introduction that we were making major changes, which is why I thought we ought to look at the name, especially as the major change, in my view and in the view of the noble Lord, Lord Barnett, and the noble Lord, Lord Peston, is but an introductory change to the greater change to come when we move to be part of the European single currency. The noble Lord, Lord McIntosh of Haringey, should not dismiss this too much out of hand.
The noble Baroness, Lady Carnegy of Lour, made some telling points about the Scottish position. One source of great irritation to the people of Scotland is to come south and find that Royal Bank of Scotland bank notes are not accepted here. In the new geography we are creating in the United Kingdom, I suspect that by the time the noble Lord comes back with the next Bill to make the Bank of England truly independent there will be a devolved government in Scotland. He will then find that it will be a little more than just myself and the Law Society of Scotland who will be asking, "Isn't it time we looked at the reality of this and called the Bank what it really is, not the central Bank of England, hut the 'Central Bank of the United Kingdom'?".
Whether the noble Lord, Lord McIntosh of Haringey, will be discussing these matters two or three years down the road, who knows? We may have been translated to other responsibilities. But if we are, I hope he will remember my prophecy, that the government of Scotland will be suggesting that this ought to be changed.
I am grateful to the noble Lord for his assurances about the position of the Bill vis-à-vis devolution and for his understanding at least of the importance of the Bank in the economic life of the whole of the United Kingdom. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Schedule 1 [Court of directors]:
4 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 2:
Page 18, line 9, leave out ("3") and insert ("5").
The noble Lord said: In Schedule 1 we are dealing with the composition of the court of directors. I do not want to make too much of this because further on we come to the terms of engagement of the members of the

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Monetary Policy Committee where this issue is much more important. I have separated it exactly for that reason.
The court of directors is important, although later on we are going to tease out just exactly what its role is going to be vis-à-vis the Monetary Policy Committee. At present the court is composed of people whose appointment is on a four-year term basis. The Government propose here as elsewhere to change it to a three-year term. That is quite a short term. Indeed, it is much shorter than the life of Parliament. In the course of the schedule it is suggested, quite rightly, that the Government will look to stagger some of the appointments. They will not make them all for one year to begin with. Perhaps the Minister can give us some of the Government's thoughts on how they will do it. Will they make a few of the appointments for one year, a few more for two years, and a few more for three years in order to get to the position that I believe is necessary? I welcome what the Chancellor of the Exchequer said in the Official Report in the other place on 20th May:
"The Court will be substantially reformed, so that it is able to take account of the full range of industrial and business views in this country, and for the first time it will be fully representative of the whole of the United Kingdom".—[Official Report, Commons, 20/5/97: cols. 508–9.]
Given what I said in my first amendment, I obviously welcome that. Indeed, five of the recent appointments very much accord with the Chancellor's view.
We have Mr. Graham Hawkes from Wales, Roy Baillie from Northern Ireland, and we have Mr. Jim Stretton from Standard Life from Scotland. Although two of the others do not currently live in Scotland, they both have their roots there—Sheila MacKechnie of the Consumers' Association and Mr. John Neil, the Unipart boss. I am sure we could add some more names, reflecting the whole of Britain. In fact Mr. John Neil, although he does not reflect Scotland now, reflects other parts of Britain. I welcome these appointments, and I welcome the decision of the Chancellor being brought into reality to broaden the geographical base and the spread of interest of members of the court. I would like to see a similar spread of interest, and I notice that the noble Lord, Lord Montague, also wants to see it in relation to the Monetary Policy Committee.
In its preliminary report on corporate governance, the Hampel Committee recommended that directors should submit themselves for re-election at regular intervals and at least every three years. I suspect that the noble Lord, Lord McIntosh, might pray that in aid. However, we are not talking about quite the same thing, because we are not talking about re-election by a company but we are actually talking about reappointment, and about the control by the Chancellor of a bank which is supposedly moving towards independence. That will be the theme of many of our discussions on amendments this afternoon.
In the court's terms, three years does not seem to me to be long enough to show proper independence. It gives the Chancellor the opportunity to weed out anyone
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whose views turn out not to accord with those of the Government. Indeed, given the majority down the corridor, I do not think I could be accused of straying into pessimism about my party's position when I say that whoever the Chancellor appoints this year is likely—whether the appointments are for one year, two years or even three years—to be in a position to sack them or reappoint them before this Parliament comes to an end. That calls into question, at least in my mind, the independence of the Bank from the Chancellor.
I suggest to the Minister that it might be worth considering a longer term of engagement for the members of the court, so that at least some of them—perhaps not all of them—will inevitably spill over into another parliament. One Chancellor in one parliament will not be able to clear out the whole lot if he discovers that his appointments do not sing from the hymn sheet from which he thought they should.
I accept that the court is not as important as the Monetary Policy Committee. It is not quite the same issue as I believe it is for the Monetary Policy Committee, but it is nevertheless important. It is a reflection of the independence of the Bank. I welcome the decision about appointing members to the court representing a wider spread in Britain that perhaps we have had heretofore. That would be greatly helped if the Government would accept my amendment of five years, or even put in their own amendment of four years, for the term of office for the court of the Bank. I beg to move.
4 p.m.
Lord Montague of Oxford: In some areas, we are thinking along the same lines. I am just rather nervous about this idea. Attention has rightly been drawn to the distinguished members of the court, but they are distinguished because they are already well into their careers. If we appoint them for five years, I am worried that we could well have within the court a very large number who have retired, although I have not looked at the statistics of this. It is wise to bear in mind that there is nothing to stop these people being reappointed. There is the political risk, to which reference has been made, but I venture to suggest that the noble Lord may he over-stating that. For example, as regards quangos, we do not say that no quango leader should be appointed for less than five years. We should bear very much in mind the flexibility that comes with three years, and the possibility of reappointment.
Lord McIntosh of Haringey: I notice that the noble Lord has not explained why it is different from the amendment moved by his party in Committee in the House of Commons. The existing provision is that members of the court should serve for four years. When we proposed in the Bill that it should be reduced to three, his colleagues in another place suggested that it should stay at four. He has not given any particular justification for it going up to five, but it is a sign of welcome flexibility of which I am sure we shall see more this afternoon and tomorrow.

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The reasons are straightforward for reducing the term. These are issues of corporate governance which are pretty widely accepted nowadays. The noble Lord anticipated me by quoting the Hampel Committee:
"All directors should be required to submit themselves for re-election at regular intervals and at least every three years".
That seems to us a perfectly good justification in itself for what is being proposed. We have to balance the possible conflict of having people there long enough to gain experience to learn on the job with ensuring that we have an opportunity to get rid of people after their terms of office are completed if they are not pulling their weight—not so much if they disagree. They are there to disagree and their disagreements will be well known, but if they are not acting actively as members of the court it is right that without undue formality it will be possible simply not to renew their terms of office.
The noble Lord asked me about staggering appointments to get a staged turnround. All the existing members will be reappointed for the balance of their existing terms which vary in expiry date from 1999 to 2001, and then the new members, as the Chancellor announced on 18th February, will have terms designed to ensure that roughly equal numbers of appointments expire each year. I believe that that meets the noble Lord's objective.
This is not an issue of fundamental principle. However, we believe that, on balance, the interests of good corporate governance lead to a term of three years as proposed.
Lord Mackay of Ardbrecknish: I thank the noble Lord for his reply and the noble Lord, Lord Montague, for the points that he made. They are reasonable points. Having sat on Government Benches and discussed these things, it does come down to a matter of judgment.
I have to say to the noble Lord, Lord McIntosh, that paragraph 8 in the schedule gives the Bank, with the consent of the Chancellor, the power to remove people who do not attend or are unable or unfit to discharge their functions, so the idea that somebody could be stuck on the court without attending and pulling his weight in that way is not really a good argument.
However, I appreciate the point that has been made about the three years. I put in five years rather than four years simply because I was attempting to be logical with the appointment of the governor three or four lines above. If the noble Lord had given me four years I would have been more than happy to accept that. The point is that three years is rather short.
As I have said, I am not sure where the election is. The electorate seems to be about one man, the Chancellor of the Exchequer, unless there is to be a cabal in No. 11 Downing Street and various Ministers are to be brought in and they are to have a vote on who should be on the court. To describe it as a "re-election" is not strictly accurate; "reappointment" perhaps, but not re-election. I understand that people can be reappointed.
I am grateful to the Minister for his explanation of the position. There does seem to be a major difference between the court and the Monetary Policy Committee
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and I give him notice that I shall be taking the position on the Monetary Policy Committee a good deal more seriously than this essentially probing amendment. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Clause 2 agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 3:
After Clause 2, insert the following new clause—
PARLIAMENTARY SCRUTINY OF BANK APPOINTMENTS
(" .—(1) A joint committee of both Houses of Parliament may, within thirty calendar days of a nomination being made in relation to an appointment under section 1(2) or 13 of this Act, make a report to both Houses—

(a) stating its conclusion that a nominee for the post of Governor or Deputy Governor meets the criteria of competence and personal independence or that a nominee for membership of the Monetary Policy Committee meets the criteria specified in section 13(4); or

(b) giving its reasons for considering that a nominee for the post of Governor or Deputy Governor does not meet the criteria of competence and personal independence or that a nominee for membership of the Monetary Policy Committee does not meet the criteria specified in section 13(4), and inviting the Chancellor of the Exchequer to reconsider the nomination.

(2) A nomination of which the Committee signifies its approval or on which it decides not to make a report to both Houses shall be confirmed by the Chancellor of the Exchequer on receipt of the Committee's report or after thirty days, whichever is the sooner.
(3) A nomination which the Committee invites the Chancellor of the Exchequer to reconsider shall not be confirmed until seven days after the Chancellor has written to the joint committee giving his reasons for continuing with the nomination.
(4) The provisions of subsections (1), (2) and (3) above shall apply only when the joint committee has been formally constituted.").
The noble Lord said: In moving Amendment No. 3, I shall speak also to Amendment No. 28, and the noble Lord, Lord Newby, will speak to Amendment No. 24, which all cover the same subject.
The problem here is that there are a number of amendments that try to address the same problem; that is, the independence of the Monetary Policy Committee. The way in which this particular amendment is framed includes the court but, if it is of any help to the Minister, I am not addressing the substance of these amendments to the court. I wish to address our attention to Clause 13 of the Bill and the Monetary Policy Committee. Because the court is not nearly such an important body as far as economic and monetary policy is concerned, I am content to leave it the way it is. However, the Monetary Policy Committee is entirely different.
As I said at Second Reading—a number of other noble Lords drew attention to this also—the members of the Monetary Policy Committee are either appointed directly or indirectly by the Chancellor, who has his finger in every one of the pies. I refer to the Governor and the deputy governors, the two members appointed by the Governor after consultation, and the four members appointed by the Chancellor of the Exchequer. A number of amendments, of which this is just the first, suggest that perhaps it would be better if the Monetary

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Policy Committee was less beholden- to the Chancellor; less the creature of the Chancellor—or at least his creature on appointment and potentially his creature on reappointment if it does not perform in a way the Chancellor wants it to perform. That may not be because it performed badly, but that it performed in a different way because it has a different view of monetary policy than the Chancellor thought when he appointed it.
In the other place the Treasury Select Committee came forward with an amendment—agreed, I believe unanimously, by all the members of that committee, Labour and Conservative, and indeed with a Labour Chairman—to say that there should be confirmatory hearings. There was considerable discussion in the other place as to whether it would be a case of nodding through after a hearing, or whether it would be confirmatory hearings as per the hearings in the United States where, if the Treasury Select Committee said, "We do not like this person", it could black-ball them, and there are variations on that theme. I fully accept that to go down the American road would be a huge break with the traditions in this country hut, on the other hand, granting the Monetary Policy Committee even operational independence is also a huge break in the way in which we have operated things in this country, because the Chancellor is no longer directly responsible for these matters.
If we go to the next step—and inevitably one cannot avoid looking at the next step—the Monetary Policy Committee will have even greater independence, and therefore the appointment of people to the Monetary Policy Committee will be of huge concern to the monetary and fiscal policy of the United Kingdom and to the well-being of almost all the people of the United Kingdom. It is important therefore that we look at how the members of the Monetary Policy Committee will be appointed.
I have changed the amendment a little simply to introduce the fact that perhaps some of your Lordships have enough expertise and interest in these matters to want to play a part in any hearings that may be conducted by both Houses of Parliament. I should not like the poor people suggested by the Chancellor to have to go through two grillings, one from the Treasury Committee of the other place and another from a committee set up in this House. I therefore suggested that we have a Joint Committee of both Houses to look at the nominees and question them, and to explore whether or not they meet the criteria of Clause 13(4) of the Bill. If they do not meet the criteria in the opinion of the Joint Committee, it should give reasons why they do not. It would then approve or not approve and report to both Houses, which report the Chancellor would receive as well. The implication here is that if the Chancellor is advised that the committee does not approve his nominee, he would not proceed with that nominee; but that if it approved, then of course he would proceed.
The way Clause 13 is currently tabled gives the Chancellor considerable powers of patronage. There is not much accountability. We will explore what accountability there is to the court, but there will in fact he precious little. We believe that the Select Committee
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of the other place and a suitable committee of this place joined together would be a proper forum in which to examine the people nominated by the Chancellor.
In the other place an amendment was moved by my right honourable and honourable friends, but there was also an amendment moved by the chairman of the Select Committee, who is a Labour Member. The Labour members of the Select Committee have not exactly been chosen from the potential rebels in this issue. I did not note, for example, the names of Mr. Austin Mitchell or Diane Abbott on the Treasury Select Committee, or indeed other Labour Members who are a little unhappy. It seemed to me to be a collection of people whom, in the nicest way, one could describe as pretty reasonable loyalists who could be expected to be kind to the Government. I am not complaining about the Government doing that; all governments try to do that if they possibly can. So the proposal from the Treasury Select Committee is made stronger by the fact that some of the Government's critics, as far as the monetary policy moves here are concerned, were not members of the Select Committee.
The noble Lord, Lord Newby, simply dealt with the Treasury Select Committee. Perhaps because I have been here a little longer, I decided to take the feelings of noble Lords into account and suggest a Joint Committee. Undoubtedly, the Treasury Select Committee will be able to call on the members of the Monetary Policy Committee and will be able to discuss matters with them. What it will not be able to do, however, is to say whether or not it approves of their appointment, which I accept is a major step for us in this country. Indeed, in the other place the Government made much of the fact that we were not asking for this to be done in relation to other quangos.
I know that there are many other important quangos in the country, but I honestly cannot think of a more important quango than the one we are setting up in the Monetary Policy Committee. It is very important. It will play a key role in the economic life of our country, and there ought to be some checks and balances on the Chancellor's ability to appoint his own nine good men, or women, and true. This is one suggestion as to how we might go about it. I beg to move.
4.15 p.m.
Lord Newby: Amendment No. 24, which seeks to do essentially the same as the amendment moved by the noble Lord, Lord Mackay of Ardbrecknish, equally has as its root the thought that the appointments that are here being made are among the most important public appointments which a Minister has to make. When one thinks of the absolute importance that Ministers or Chancellors in the past have given to the setting of the interest rate, the secrecy in which that has been shrouded and the importance with which that decision has been taken, we must recognise that this is not just any run-of-the-mill series of appointments. These really are important appointments. It is therefore important that the people who are appointed have the confidence of Parliament and, as far as possible, the confidence of the country.

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As far as the country is concerned, it is probably the case that members of the Monetary Policy Committee will never be household names. However, one of the advantages of confirmation hearings is that they at least have some exposure to the public gaze, which at the moment they do not, and at a time when members are being appointed rather than a month—or, as may be the case, months—later when a decision is being made which changes interest rates.
I believe also that it is important that Parliament should feel that it has had a say in quizzing people who are appointed to this particular committee as well as, indeed, to other important public appointments. The very fact of having confirmation hearings will have some influence, or could do, on appointments at the margin. There is an idea, or concern, held by some people, that the Chancellor could put all his chums on this committee to obtain the result he wished for. However remote a possibility that may be—and one, I am sure, to which the current Chancellor would never fall prey—the very fact that the appointments have to stand public scrutiny at the point of appointment, rather than later on, may give him pause.
Again, at the margin, the Chancellor has to be made aware of any proposed change in the appointment and any decision to appoint someone else to the Monetary Policy Committee, rather than continuing with an existing member. If the Chancellor knows that that change is to be considered by the committee and the new appointment scrutinised, it may give him pause from standing down an independent-minded committee member.
As we have looked at the arguments for what seems to us a sensible and relatively modest change, which would enhance the credibility of this committee, we have tried to understand the reticence of the Government to agree to it. There seems to be an increasing tide of opinion in Parliament that confirmation hearings of various kinds are the way to proceed. It is interesting to note that not only do we now have the Treasury Select Committee proposing, in effect, confirmation hearings here, but as the Liaison Committee reported last year in another place, a number of committees are now doing this informally. The Defence Committee, for example, effectively has confirmation hearings for the Chief of Defence Procurement. There are also a number of other cases where Select Committees in the other House see this as being a sensible use of their authority and influence. This is an area of activity which will gain—and is gaining—support.
We have therefore looked to see what major arguments in principle the Government have adduced for not agreeing to that change at this stage. In another place, the Minister explained that the Government had an open mind, but that the issue needed more thought; that it should not be bolted on to the Bill. I always grimace at the idea of something needing more thought, particularly when it is not exactly a difficult or complicated issue. To say that the matter needs consideration is often, in my experience, a substitute for real thought. That does not, by itself, constitute a good reason for delay.
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There is an argument that these poor characters might be questioned across too wide a range of their experience. Indeed, they might be asked about their private life—the John Maynard Keynes question, as it became known in another place. The Treasury Select Committee has already dealt with that point adequately by producing its report on confirmation hearings. That sets out exactly how it would constrain the areas of questioning, so that one was looking at the technical competence of the people, rather than their private lives, or their stances on monetary policy. To the extent that there was an argument about questioning, it has been answered.
It has been argued also that the confirmation hearings would give members of the committee the opportunity to get at the government of the day. Perish the thought that Select Committees should get at the government of the day, but I thought that was their purpose: to make the government of the day, and their nominees, justify themselves! I do not believe that is an adequate explanation.
Finally, the paradoxical objection has been raised—having said that this is a major change and we should not rush—that it would be wrong to have the change without a whole raft of other confirmation hearings, across the whole range of public authorities and that it cannot be done alone. If one is to have any at all, a whole raft of public appointments must be dealt with. That seems to be extremely thin gruel.
If one believes, as we do, that it makes sense to have confirmation hearings for these appointments, one should go ahead and do it. Confirmation hearings for other public appointments could equally be made on their merits and we could have an evolutionary development that as changes occur in the structure of the appointments made by government, the whole question of confirmation hearings could he dealt with on a case-by-case basis. I am looking forward to the Minister's reply today, but I have not heard any compelling arguments as to why this change should not take place.
I make one final point about the difference between our amendment and that of the noble Lord, Lord Mackay of Ardbrecknish. It relates to the question of a Joint Committee between this House and another place, as opposed to the hearings being heard by the Treasury Select Committee alone. My first thought was that this was an extremely good idea, not least because of the experience which we see in the Committee today and elsewhere in this House. I have been persuaded in discussions with colleagues that given the role that this plays in respect of taxation and macro-economic policy is very limited and given that we do not have a committee which looks at economic policy across the board, it would be strange to select this small area and suddenly give the House an authority which it does not have in any other area of economic policy.
While I believe it is an on-balance argument, we remain of the view that the most appropriate way of dealing with this at the moment would be to give power to the Treasury Select Committee to scrutinise these appointments.
Lord Peston: In speaking to these amendments, I start with Amendment No. 24 in the name of the noble Lords, Lord Newby and Lord Taverne. I am loath to tell the other place what it should do. Therefore, I certainly reject their amendment. It is up to them to make what progress they can. In so far as the subject is tempting, it seems to me that the noble Lord, Lord Mackay of Ardbrecknish, is nearer to a position than noble Lords could come to, although it is not one that I would go along with.
As I understand the argument of the noble Lord, Lord Mackay of Ardbrecknish, certainly as it is written down, I would regard the central wording as "competence and personal independence". That is what he is about. In a sense he is implying that the Chancellor, whether the present one or one of his successors, would be prone to appoint people who are not competent, incompetent, not personally independent or biased in some critical way. It is an example of the state that this country has come to that what we say about present and future Chancellors could be tabled as an amendment to a Bill. In the old days, given a Committee of this sort, we would have taken it for granted that although they would certainly appoint people that they thought well of, they would appoint the best people. That does not mean that the noble Lord, Lord Mackay of Ardbrecknish, is wrong in worrying about these things.
My view, however, proceeds along the following lines. For this to make sense, we have to ask ourselves whether in practice confirmatory hearings improve matters. Our main experience of confirmatory hearings is in the United States of America, and anybody who has seen those would walk a million miles before introducing anything like that into the British constitution; I certainly would.
I am well passed this sort of thing now, but in my younger days, I would have liked to have been thought of as a possible member of the Monetary Policy Committee. But being the arrogant person I was and still am, the notion then that a group of Members of Parliament could remotely query me on my competence or independence would mean that I should not want to be considered as a candidate. I know that is arrogant, but I am not alone in being the kind of person in this Committee who might take that view. We may have confirmatory hearings in this country because we occasionally make errors of that kind, but I would not like us to go down that path.
What I would like to see happen—and I believe it can happen—is for the Monetary Policy Committee to be seriously scrutinised by the Treasury Select Committee. I hope the Minister will confirm that there is nothing to stop the Treasury Select Committee sending for these people as individuals and saying to them, "Why did you take the line that you did in the minutes? Is it not strange that in your academic writings of several years earlier you took exactly the opposite view until you came on to this committee?", and so forth.
To refer to the noble Lord, Lord Newby, we do not have an equivalent committee, but he will recall that in my Second Reading speech I suggested that your
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Lordships should have the kind of committee which I regard as well within the Parliament Act where we, too, could scrutinise the Monetary Policy Committee. Indeed your Lordships might like to know—not to put on the face of the Bill—that my noble friend Lord Barnett and I will be writing to the relevant authorities in the House suggesting that we have such an all-party committee, itself independent, because it is a matter in which we are interested. As the noble Lord, Lord Mackay, pointed out, we might be able to make a small contribution on these matters.
I am glad that the topics have been raised. I certainly believe the Monetary Policy Committee must be subject to very powerful scrutiny, including scrutiny which would imply when it comes to reappointment that perhaps there was a lack of independence or a lack of competence—not necessarily, hut perhaps. I am glad the amendments were raised, although I do not believe we should go down that line. However, in the case of your Lordships we should go down the line of positive response to the Monetary Policy Committee.
4.30 p.m.
Lord Boardman: I find it strange that a Government who held themselves up very clearly as requiring to give the Bank of England a larger degree of independence have managed to retain to themselves the control of the key appointments—those of the Bank of England and the monetary committee. The Chancellor of the Exchequer, under the scheme that is proposed, has control over both those bodies.
I can understand that the noble Lord, Lord Peston—although I do not agree—should find greater fear of being examined and rejected by a committee than being examined by a hostile Chancellor and rejected. I am sure none of us would wish to discard his experience. But the independence which is granted in the appointments by my noble friend's amendment is one which is compelling. I am particularly attracted by his suggestion of having a Joint Committee of both Houses. It saves a lot of duplication on time, and my short experience of Joint Committees when they have operated has been entirely fruitful. They seem to cut through a great number of the problems which arise in one House and with which the other House disagrees. That is one I would commend.
Turning to the monetary committee, my noble friend has already said that all of the nine members are either appointed by the Chancellor or appointed with his consent. There is no possible way in which one can claim this is giving them independence. I am sure they will be men of independent character, but they are appointed for only three years. My noble friend pointed out why five years would be more appropriate, but they are appointed only for three years, and in the last year, when they are coming up for reappointment, one wonders whether their judgment can be influenced by the longer-term outlooks that may he held within the Treasury. Assuming that would not be so, it still remains that it is the Chancellor's discretion to call for them.
I would urge in both the amendments put down by my noble friends for a Joint Committee that they should look at the directors of the Bank and decide whether

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they are appropriate people. I preferred Amendment No. 28, that with regard to the parliamentary scrutiny of the board appointments. This should also apply to members of the monetary committee. They should be coming in here with that degree of independence where the Government's reins have been handed over to the Bank of England. If it had been said, "We are asking the Bank and our nominees to do such-and-such a thing and they will tell us what they want", that would be one thing, and understandably would make the Bank of England quite independent in certain matters. What has not been said is, "We will make sure who runs the Bank of England".
I ask that these amendments should be carefully considered and supported.
Lord Barnett: I say to my noble friend Lord Peston, too little ability maybe to be a member of the Monetary Policy Committee, but too old—most certainly not! I would not accept that. As to whether any member of the Monetary Policy Committee could be brought before a Select Committee of the House of Commons, I must tell my noble friend that I would not want to be a member of a monetary policy committee, or any other committee, who refused to go before a Select Committee of the other place. He would find himself in serious trouble, and as a former chairman of the Public Accounts Committee. I do not know of anyone who ever refused to appear. I am sure that that will apply to the Treasury Select Committee.
Let me turn to the amendments. The noble Lord, Lord Newby, suggested that it should be done by the House of Commons Treasury Select Committee. As my noble friend said, that is nothing to do with us; this particular point is nothing to do with financial matters in the same sense as your Lordships' House does not deal with financial matters such as the Finance Bill. This is a quite different issue altogether. Of course this House can deal with it.
The noble Lord, Lord Mackay, talked about a joint committee. The words he used were "a suitable committee of this House". As my noble friend Lord Peston said, there is not such a suitable committee of your Lordships' House. That is nothing to do with this piece of legislation—or rather it is to do with this piece of legislation in the sense that there should be a suitable committee of your Lordships' House, and my noble friend Lord Peston and myself, as he indicated, will be seeking to ensure that there is such a committee. My noble friend will be pleased that he does not have to deal with that particular point because he does not have to decide that issue. Certainly it is quite wrong that there is no suitable committee.
It was suggested that the European Communities Committee Sub-Committee A could deal with it. As the noble Lord, Lord Boardman, will agree, it already has more than enough to do without having to deal with this as well.
I do not like confirmation hearings either, as the noble Lord, Lord Newby, has suggested, but the new clause that the noble Lord, Lord Mackay, has suggested is not unreasonable. On the other hand, even if it is not in the
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Bill, members of the Monetary Policy Committee, the Government and anybody else will undoubtedly be called before the Treasury Select Committee in another place, and I hope in due course a committee in this place, and they would be very foolish indeed to seek to refuse to appear.
That is the answer. I am not trying to usurp the role of my noble friend in replying to the amendment, but Amendment No. 3 with the new clause is unnecessary. I would think, if I may reply on his behalf. I personally do not support that, but I believe that there should be a Select Committee of this place to deal with these matters.
Lord Montague of Oxford: Perhaps I might make a further point. This does sound rather alluring, but there is an aspect of it that might he rather worrying. We have heard from the noble Lord, Lord Newby, of the tight parameters about the examination that would be given to these confirmatory hearings. Could that tight examination also apply to the press? Surely if the media knew that an individual was going to come up for consideration, they would trawl every aspect of that individual prior to the hearing. It is no good saying to the media, "Oh, it's irrelevant. The Committee cannot take that into account at all". By the time the confirmatory hearing arrives the person's reputation might be ruined. It might also be enhanced. but that is less likely.
I fear that with that prospect, candidates of great quality might not want to risk that. I believe it is a rather dangerous course. We see it with the media at the moment and I would urge that we be a little hesitant at this time until the whole question of confirmatory hearings has been thought through.
Lord McIntosh of Haringey: I am grateful to the noble Lords, Lord Mackay and Lord Newby, for clearly explaining their amendments and the differences between them. I suspect that the differences between them lie more with the fact that the amendments of the noble Lord, Lord Mackay, are about a joint committee of both Houses, rather than the fact that the noble Lord stopped short of giving a veto to his joint committee. In practice, as I am sure he recognises, if a parliamentary committee had declined to give its support to a candidate, it would be very difficult for the Chancellor to press ahead with the appointment, despite the wording of the amendment.
It is true that, if that is the case, we would be embarking on a very substantial change. Like the noble Lord, Lord Newby, I am not against embarking on substantial change, but we must look at the circumstances rather more closely than we have done.
First, let us look for common ground. We agree, and the Bill makes clear, that we are looking for candidates who are selected for their professional competence and personal independence. Clause 13 on the Monetary Policy Committee requires the Chancellor to appoint only people with,
"knowledge or experience which is likely to be relevant to the Committee's functions".

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Noble Lords will agree that the appointments that the Chancellor has made have been welcomed on all sides as meeting those criteria, just as the reappointment of the Governor of the Bank of England has achieved a wide welcome.
The issue of parliamentary confirmatory hearings, however, is indeed a very much wider issue than the Bank of England. I am not suggesting that Giles Radice, the Chairman of the Treasury Select Committee, has delusions of grandeur or that he would suddenly turn strongly about this matter, holding up potential candidates to ridicule and abuse before they even appeared before his committee.
I agree with my noble friend Lord Peston. I do not think that the experience of the United States Senate is a very propitious example for us. The power which the Senate has over the appointment of all sorts of people—ambassadors, judges and who knows what—has been distinctly double-edged. It might have been a necessary result at the time of the framing of the United States Constitution of a particular view of the relationship between the Legislature and the Executive, but we do not have that view of the relationship between the Legislature and the Executive. I am bound to say that the example we have been set in the last 224 years of the effects of the division of powers and the way in which that division of power is implemented by means of confirmatory hearings does not fill me personally with great confidence. I have to say "personally" because, as is well known, the Government have an open mind about whether parliamentary committees should have greater involvement in the selection of candidates.
Lord Boardman: If I may, I would like to recall the Joint Committee between both Houses on the consolidation of Bills, for example. This brings together the best legal minds in this House and in the other place, and it works extremely effectively.
Lord McIntosh of Haringey: Yes, indeed, but there are many examples of effective parliamentary scrutiny. The Government are certainly not against parliamentary scrutiny, whether in a single House of Parliament or in both Houses of Parliament. But that is quite a different issue from confirmatory hearings on individual candidates for particular posts. There is no conflict at all between what I am saying here and our admiration for parliamentary scrutiny, whether of legislation or of any other aspect of public life. We have not in any way opposed the view of the Select Committee, which has already said it will take the opportunity which it has to interview and interrogate individual members of the Monetary Policy Committee and to provide detailed scrutiny of the activity of the Monetary Policy Committee.
I am not sure that I like the example of my noble friend Lord Peston saying to them, "As an academic before you were appointed you said one thing, now you are saying another". I remind him of his hero, John Maynard Keynes, who said:
"When circumstances change, I change my mind—what do you do, Sir?".
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I agree with that and that he, as somebody who expresses his views and has done all his life, should adhere to doing so.
I am particularly pleased that the noble Lord, Lord Mackay, should feel strongly about this matter since in his Amendment No. 31 he rules himself out from consideration as a member of the Monetary Policy Committee. However, we will come to deal with that later. It is a tribute to his objectivity if not to his judgment.
There are those who feel that this major constitutional change deserves consideration. I am not one of them. The Government are certainly prepared to consider the issue in its broader sense but I have to say that, if they did consider it, it is unlikely that the Monetary Policy Committee of the Bank of England is where it would start.
4.45 p.m.
Lord Mackay of Ardbrecknish: I have to say to the noble Lord. Lord McIntosh, that if that was an offer he was making, I happily withdraw Amendment No. 31.
We have had an interesting debate. There was a slight difference between the noble Lord, Lord Newby, and myself as to whether it would just be the Treasury Select Committee of the other place or a Joint Committee of both Houses. There was also the question of what role either would play in taking evidence and in bringing members of the Monetary Policy Committee before it.
Perhaps I might start with the Treasury Select Committee or the Joint Committee. As the noble Lord, Lord Peston, said very clearly, there is nothing to prevent this House looking at monetary policy; it is taxation matters that we are forbidden to look at. When I looked at this debate in the other place I noticed that it was only the Treasury Select Committee and I remembered the many times at OFT at which I spoke for the Treasury, as does the noble Lord, Lord McIntosh. I was chided for not having debates after we had the Budget and after we had budgetary-type Statements. People pointed out to me that this House had a role to play, even though it was limited in what it could do with regard to taxation. Without flattering anyone or looking at anyone, there are some prominent academic economists and there are some prominent former Treasury Ministers who would certainly perform quite an interesting role in a Joint Committee of both Houses. I decided to bring in the Joint Committee in order to bring this House into play as it rightly should be in play.
I was interested to hear the noble Lords, Lord Barnett and Lord Peston, say that they intended in this new situation to suggest to the powers-that-be that we should consider having a committee in this House on Treasury-type matters where members of the Monetary Policy Committee could be interrogated, brought before the committee and their views explored. That would be a useful step forward.

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The real point here is that of confirmatory hearings. I am in little doubt that the Treasury Select Committee in another place is going to have hearings. Indeed, in its report it said:
"We believe very strongly in the importance of ensuring that the appointment process is carried out with openness and independence from political influence. We therefore intend, even in the absence of statutory provision, to instigate hearings and make reports to Parliament".
So the Treasury Select Committee intends on its own say-so, to have confirmatory-type hearings, not just hearings after people have been put in post.
I say to the noble Lord, Lord Peston, that the reason I put in,
"criteria of competence and personal independence",
was simply to try to ensure that any confirmatory hearings did not go down the kind of route that they tend to go down in the United States, where they seem to be much more interested in a person's marital fidelity and so forth than they are in their competence as monetary policy-makers. It was therefore an attempt to limit the kind of ground which a Joint Committee could plough that led me to put in the words that appear in paragraph (a).
We have an had interesting debate. I have a sneaking agreement with those noble Lords who have asked whether we really want to go down the road of the United States. We are quite different, in that the Chancellor, whether he likes it or not, will be called to account in the other place for any appointments he makes. Similarly, I suspect the noble Lord, Lord McIntosh of Haringey, might also be, if some members of your Lordships' House do not particularly like certain appointments.
I can, therefore, see the strength of the argument that confirmatory hearings are introducing into constitution in this country, something which really does not fit with parliamentary democracy on the Westminster model. One can understand it in the divisions of power in the United States, but not here. So, I take the argument, but find it interesting that, whatever is decided upon in this matter, in this House or the other place, the Select Committee is going to have hearings, confirmatory or otherwise. I suspect it will put those involved through the hoops. We should, as a House, look at what role we might play in this important, new field, for which the Monetary Policy Committee is to have responsibility. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Functions to be carried out non-executive members]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 4
Page 2, line 15, at end insert ("except in relation to monetary policy,").
The noble Lord said: I beg to move Amendment No. 4, with which we have Amendment No. 35. Before the noble Lord, Lord McIntosh, rushes to tell me that they are contradictory, in some ways they are contradictory! Diametrically opposed is indeed what the officials wrote—or what the noble Lord wrote—and they are
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diametrically opposed. I decided, however, that we would take them together because they are an attempt, which is easier to do here where we have agreed that nothing will be pressed to a Division, to tease out the relationship between the court and the Monetary Policy Committee, if there is one, which is the important thing.
When I read the Bill, I understood, on reaching Clause 2(1), the position. It is very clear:
"The court of directors of the Bank shall manage the Bank's affairs, other than the formulation of monetary policy".
That seemed fair enough. However, it seemed at variance with a letter which the Chancellor of the Exchequer wrote to the Governor on 6th May. At paragraph 13 of that letter he said:
"The non-executive members will review the performance of the Bank as a whole, including the MPC".
So there we have, in the letter, the possibility of the court reviewing, yet in the legislation it states that the court shall not play any part in the formulation of monetary policy and the work of the Monetary Policy Committee.
In Schedule 3, paragraph 14, it says:
"The Committee [that is, the Monetary Policy Committee] shall submit a monthly report on its activities to the court of the directors of the Bank".
I have no problem with the Monetary Policy Committee submitting a monthly report, nor indeed with the court discussing these reports, including the decisions which the Monetary Policy Committee has reached regarding the state of the economy, the position on monetary policy it is pursuing and the need to raise, lower or leave interest rates as they are.
I wonder, however, and this is why I put down the second amendment in my name, whether there will be any flow of information in the other direction. Can the court say to the Monetary Policy Committee, "We have indeed"—in the words of the Chancellor's letter—"reviewed what you are up to. We have been looking at your monthly reports and I am afraid we disagree with your analysis. We do not agree with your analysis about the health of the economy and the way it is going, nor with your conclusions. We suggest—if I may go one step further—"that at your next meeting you should lower, or increase, interest rates", or whatever it may be. In other words, will there be a flow of information in the opposite direction from the one laid out?
That is why I have suggested in Amendment No. 4 in Clause 3(2)(a) that we add to the sentence,
"keeping under review the Bank's performance in relation to the objectives and strategy for the time being determined by the court of directors of the Bank".
and I have put in,
"except in relation to monetary policy",
to ask whether the objectives and strategy of the Bank include what the monetary policy does or does not do. Amendment No. 35 asks whether the court will be able to send a minute back to the Monetary Policy Committee when it reviews what the Monetary Policy Committee is doing and when it receives the monthly

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report from the Monetary Policy Committee. I hope I have explained why I have moved two such diametrically opposed amendments.
Lord Peston: I am a bit lost. Is my copy of the Marshalled List a misprint? Amendment No. 35 is in the name of my noble friend Lord Montague.
Lord Mackay of Ardbrecknish: I am indeed sorry. That means that I have fallen into the trap of not really looking. I have been on my feet for an hour-and-a-half on every amendment that was mine. I apologise to the noble Lord, Lord Montague. He can explain now why he has a diametrically opposed amendment to mine, and the Minister can remove that criticism from his speech.
Lord Montague of Oxford: I am not sure that I am diametrically opposed, but I will explain what is in my mind and the way I am trying to flush out, as the noble Lord is trying to flush out, this relationship between the Monetary Policy Committee and the court.
It seems to me that in terms of the image that is attempting to be conveyed in the country by presenting this court of diversified experience as encompassing the wisdom one would hope to make available, the implication is that that will have some input into the policy decisions of the Monetary Policy Committee. As I read the Bill, what it is proposing is that the court will provide information: no views, just information.
I am suggesting that it should go a little further:
"and shall provide advice to the Committee on monetary policy".
I would not object to that reading "shall be among those who provide advice to the Monetary Policy Committee". Providing information seems to me to be a little lacking, particularly until we get to that part of the Bill where we come to look at the composition of the Monetary Policy Committee. As we know, at the present time it consists almost exclusively of economists. I have heard those economists, and I will turn to having heard them in a moment. I am not sure that they have quite the rounded view of the economy that one might expect of them.
I said at Second Reading that I had noted in the minutes that it was recorded that it was believed that an increase in interest rates automatically led to a moderation in requests for wage increases. That has not been my practical experience from running factories up and down the land. The moment there is an interest rate rise, within seconds the unions have arrived saying that in order to meet the cost of increased mortgages they must immediately have an increase in wages.
I referred a moment ago to listening to the members of the Monetary Policy Committee, and I did. Some three weeks ago the members of the Monetary Policy Committee went before the Treasury Select Committee and were cross-examined. One heard those economists responding to everyday life as perhaps all of us in this room understand it. And they did it yet again—not this time about wages. This time it was about something called asset values—the inflationary effect of asset values and how we must keep asset values under control. I sat there thinking all the time that this must be housing, but it was not. When asked to clarify, it was
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share values and the extraordinary inflationary effect of an increase in share values. I almost thought the economists were waiting for the collapse of the Stock Exchange to bring inflation under control. Once more, I had the feeling that they were a little out of touch. That is why, later on, I am among those who are suggesting that the composition of the Monetary Policy Committee be looked at more tightly.
Perhaps I may say in passing that I was a little surprised that, when I asked for the minutes of this particular meeting of the Treasury Committee, I was told they would not be available for another three weeks. I am new to this House, and I find this House remarkably efficient, but it seems extraordinary that when these committees sit the minutes of their meetings are not available for some six weeks since last they met. This seems to be a deficiency which should be looked at elsewhere.
One other question was asked of the committee, which I draw to noble Lords' attention because it was a very interesting meeting. One member asked the Governor—and I was enormously impressed by the openness of the Governor—"Tell me. Governor, there are four representatives of the Bank of England. Are you always going to vote as a block?". And the Governor replied, "No, no way. It is absolutely inevitable that at some time we shall disagree". I thought that was quite interesting. If it might be argued that the Governor is the chairman of the court, and he is the chairman of the Monetary Policy Committee, and therefore he is conveying the view of the court on monetary policy, that does not really hold up if we have been told by the Governor that it is inevitable that the four representatives will at some time disagree. That is why I have put my amendment down.
5 p.m.
Lord Boardman: I am afraid I fail to understand the run of the amendment of the noble Lord, Lord Montague of Oxford. It suggests that the monetary committee should provide advice to the Committee on Monetary Policy—that the court of directors should keep the procedure followed by the monetary committee under review and provide advice to the Committee on Monetary Policy. The whole of this has isolated it: the Monetary Policy Committee has its own remit, not to be interfered with by the directors of the Bank, and nor is the Bank involved in the monetary policy. It is running completely contrary to that. I very strongly support the amendment by my noble friend, which puts the matter perfectly clearly, excluding from the directors of the Bank anything in relation to monetary policy. So I support this amendment, and I find it difficult to go along with the other one.
Lord McIntosh of Haringey: First, I congratulate the noble Lord, Lord Mackay, on a bravura performance. The noble Lord spent a whole speech, like Houdini, extricating himself from the contradiction into which he had not actually fallen. I know that this will be recorded in Hansard but I think it should be engraved in stone—it is worthy of the greatest of all conjurers!

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Despite that, I have to say that the Bill is perfectly clear. The role of the court of directors vis-à-vis the Monetary Policy Committee is entirely clear. The job of a court of directors is to review the performance of the Bank in all of its functions, except monetary policy. That is laid down in Clause 2(1):
"The court of directors of the Bank shall manage the Bank's affairs, other than the formulation of monetary policy".
In every other respect, it is managing the Bank's affairs. The only way in which it relates to the Monetary Policy Committee is in its responsibility for reviewing the procedures of the Monetary Policy Committee, and that is laid down in Clause 16(1):
"The court of directors of the Bank shall keep the procedures followed by the Monetary Policy Committee under review".
The purpose of that is that it should be concerned, as the management body of the Bank. that the Monetary Policy Committee has had before it the regional, sectoral and other information necessary for the formulation of monetary policy. It is quite clear from the Bill that the court of directors is reviewing the Bank's performance in relation to objectives of strategy as determined by the court, but that does not in turn relate to monetary policy. The formulation of monetary policy is the statutory responsibility of the Monetary Policy Committee alone. Hence the formulation of monetary policy is already a matter excluded from the review of the sub-committee of non-executive directors of the Bank specified in this particular clause of the Bill.
It is important that we should recognise that and that there should be no confusion, otherwise we would have two separate bodies making decisions in public about the monetary policy of this country and that would not be acceptable. The amendment of the noble Lord, Lord Mackay of Ardbrecknish, would not overturn that because it is formed in such a way that his insert would be overruled by Clause 2(1). Therefore his amendment is strictly unnecessary.
The amendment of my noble friend Lord Montague is rather different. It would undermine the autonomy of the Monetary Policy Committee by confusing responsibilities in the way I set out. The monetary policy framework gives the MPC operational autonomy. It has statutory responsibility and therefore it can be held to be properly accountable. The role which the wider court and non-executives have is enormously important, but it must not duplicate or conflict with the role of the Monetary Policy Committee. I invite the noble Lord, Lord Mackay of Ardbrecknish, in the first instance to withdraw his amendment.
Lord Mackay of Ardbrecknish: I am grateful to the Minister for not making too much of the fact that I slightly misread this. I was a bit surprised myself when I read it and wondered why I had done it. I assume it is the new role in which I find myself as part of the Opposition. I need to make up amendments to Bills. I hope I do not get too used to it.
I wanted to explore the two-way relationship. I thought that the noble Lord, Lord Montague of Oxford, made some telling points about the relationship
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flowing in the other direction from the court, widely drawn, to the Monetary Policy Committee. We will have an interesting debate when we come later to the composition of the Monetary Policy Committee and whether it is entirely right that its members should all be drawn from the narrow circle of Oxford, Cambridge and London. That debate is still to come.
This debate has been useful. If I understand the Minister correctly, and I am sure I do, my amendment is not necessary because Clause 3 is governed by Clause 2, which makes it perfectly clear that the court,
"shall manage the Bank's affairs, other than the formulation of monetary policy".
My slight concern is that when I went on to read Clause 3(2)(a), it looked as if it perhaps had a wider role. I will read with some interest what the noble Lord, Lord Montague of Oxford, said. I may return to it because I may decide that a belt and braces exercise is needed. However, I understand the point that the noble Lord made. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 5:
Page 2, line 25, leave out ("Chancellor of the Exchequer") and insert ("Governor").
The noble Lord said: Amendment No. 5 refers to Clause 3 and to the subsection which tells me that,
"The Chancellor of the Exchequer may designate one of the directors to chair the sub-committee".
The question which I put down in the margin when I looked at the Bill initially was, "Why him?". One theme that has already run through the Committee is just how independent the Bank is; how independent the Monetary Policy Committee will be, and just how much control the Chancellor will really have.
I notice that this particular wording uses the word "may" and that, by implication, I take to mean that he may not. If he decides not to, how is the director who chairs the sub-committee to be chosen? I notice the use of the word "chair" but I shall use "chairman", as chair is what we are all sitting on, and I do not suppose this director will be sat upon by anybody—at least I hope he will not. If the Chancellor of the Exchequer decides not to designate, will the Governor then have to do it, or will the chair, so to speak, be left empty?
I am not sure why the Government used the word "may" and not "shall" here. If they really mean "may", why cannot they accept that the Governor will appoint the chairman or—even better—the court will appoint the chairman? The Governor may perhaps suggest to the court who might chair this sub-committee, but surely the Governor and the court can be trusted to pick one of the directors of the Bank to do that job. After all, they are all perfectly satisfactory people, otherwise one would hope that they would not have been appointed. The Minister keeps telling me that the Chancellor and everybody else will be careful about appointing people to these positions and that they will all be perfectly sensible. Therefore, why cannot he take his hands off this appointment and allow the Governor to appoint? In any case—do I read this correctly?—is it possible that

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the Chancellor may not appoint and that therefore the Governor will have to? I would be grateful for some clarification from the Minister. I beg to move.
Lord Peston: Before my noble friend replies, perhaps I can say that I wrote a question mark beside this when I first read the Bill because I was completely mystified by this sentence. I tried to reflect on anything I knew about management theory that would tell me that this sentence had any use whatsoever. I came to the conclusion that, if the sentence were not there at all. it would make no difference to the way this sub-committee would operate. I would take it for granted that if a sub-committee was set up, it would appoint its chairman. Then I thought, "We are New Labour; we are very clever; we must have some brilliant idea about the management of sub-committees". However, I could not come up with any idea myself at all. Therefore, I say to the Minister that I am looking forward to his answer as to why we have any need to tell a sub-committee who ought to appoint its chairman. That is my helpful in formation.
Lord McIntosh of Haringey: First, I have to be clear what I am answering. The noble Lord, Lord Mackay, put in another bravura performance in which he moved one amendment and spoke to two other amendments which he had not tabled. He moved an amendment which provides for the Governor to appoint the chair of the sub-committee of directors. He then spoke to an amendment which would have provided that the Governor, or the Chancellor, "shall" designate one of the directors—an amendment which he had not tabled—and then he spoke to a third amendment which is his idea that the court should appoint its own chairman. He must make up his mind which of the three alternatives to the Bill he wants to promote. I am restricted to the amendment he tabled.
Lord Mackay of Ardbrecknish: The Minister is giving me a "teach-in". It seems to me that all he is doing is suggesting ways in which I might have elongated the Committee proceedings by putting down three amendments. Indeed, I tabled the one about the Chancellor, and felt that I should throw in the "may" and "shall", I am sure the Minister can answer me. However, I will take his "teach-in" to heart.
Lord McIntosh of Haringey: Perhaps I may respond to that point. The noble Lord, Lord Mackay, as a Minister, used to do this all the time. It used to infuriate me when government Ministers would generally tell me that "may" really meant "shall", and I could never accept that from the Opposition Benches. Now the noble Lord, Lord Mackay, will have to accept it from the Opposition Benches.
However, the possibility of the Chancellor not designating a member has been raised and the question has to be answered. And the answer is that if he does not designate somebody as chairman, then the sub-committee of the court itself will have to make that designation, because Clause 3(7) says that the sub-committee shall be responsible for its own procedures. I hope this answers that question.
5.15 p.m.
Lord Boardman: Would the noble Lord answer the point of the noble Lord, Lord Peston, a point with which I am equally intrigued, as to why a sub-committee needs to have an outsider to appoint its chairman?
Lord McIntosh of Haringey: That is a more substantial point and I certainly will answer, as I intended. This comes back to the issue of corporate governance with which we were concerned on an earlier amendment. The noble Lord, Lord Mackay, and I both quoted the Hampel Report, and I would like to do so again, and also to quote the Cadbury Report. The Hampel Report said,
"we see a need for vigorously independent non-executive directors. These should be led by a director other than the chairman and the leader publicly identified in the annual report''.
The Cadbury Code of Conduct says:
"The majority"—
that is of non-executive directors—
"should be independent of management and free from any business or relationship which could materially interfere with the exercise of their independent judgment".
The point here is that you cannot pursue the analogy with private business too far because there are no shareholders other than the Chancellor. The Chancellor is, on behalf of the people in this country, the shareholder in the Bank of England, and that is why it is appropriate that he should appoint the chairman of this non-executive committee.
Lord Boardman: The report does not say that the Chancellor, or anyone else, shall appoint the chairman. The implication is that the committee would, as indeed any committee, public or private, would appoint their own chairman in a circumstance such as this.
Lord McIntosh of Haringey: That is one possibility, but this brings me back to a point to which I failed to respond when the noble Lord, Lord Boardman, spoke on an earlier amendment. He was suggesting that somebody other than the Chancellor should appoint the members of the Monetary Policy Committee at that time. I wondered when he said it who else he thought should. If it is not the Chancellor acting on behalf of an elected government, who else should it be? The only realistic alternative is a self-perpetuating oligarchy of members of the Monetary Policy Committee, and I am glad to have the opportunity of getting in that dig which I failed to make on the earlier amendment.
The answer here is that it is perfectly possible for the non-executive directors, who are a sub-committee of the court, to appoint their own chairman if the Chancellor decided not to designate a chairman. I do not feel very strongly about the matter. The word "may" is there and allows for that possibility, but it also provides for the Chancellor to make a designation.
Lord Barnett: Before my noble friend sits down, what is coming through to me is how often committees like the Hampel Committee and the Cadbury Committee get it wrong. They often do, and have done so. I honestly cannot see it, and I have made the point; they do not need this sentence. If that sub-committee is set

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up of members of a named body, one of them will be chosen as a chairman. I can see now why our legislation is as long as it is, because we put in unnecessary sentences. What is the point of having the criticism of this? I am sure the noble Lord, Lord Mackay, would not mind deleting the whole sentence. Why is it in here? Perhaps he can tell us.
Lord McIntosh of Haringey: Let me reflect on all three of the amendments of the noble Lord, Lord Mackay, both the one he put down and the two that he did not put down but discussed. If there is anything to be said at a later stage I will come back.
Lord Stewartby: I hope I "may" raise a question with the noble Lord, because I "shall". In reading this clause and looking at the composition of this committee, right at the top it says that this sub-committee should consist of the directors of the Bank, which is presumably all the directors, both executive and non-executive, although the root of the clause refers only to non-executive directors. I have looked elsewhere in the document and have been unable to find where it is stated that this is a sub-committee which is meant to be of non-executive directors, but I assume that it is pointless if it is a committee of the whole board.
Lord McIntosh of Haringey: No, my Lords, Clause 1(2) states that the court consists of a governor, two deputy governors and 16 directors of the Bank; in other words, the executive committee of directors excludes the Governor and two deputy governors.
Lord Stewartby: I read the same words as the noble Lord. The Governor and the two deputy governors are directors. Are they not directors? Clause 1(1) says:
"There shall continue to be a court of directors of the Bank",
and Clause 1(2) that:
"The court shall consist of a Governor, 2 Deputy Governors and 16 directors".
That seems to me to make it clear that they are directors of the Bank.
Lord McIntosh of Haringey: No. there are three groups which are mutually exclusive: there is one Governor, two deputy governors and 16 directors.
Lord Stewartby: Will the noble Lord look at this at leisure? It seems to me that if one says that there should be a court of directors of the Bank and the court consists of different categories which include the Governor and the two deputy governors, I do not see how they can fail to be directors.
Lord McIntosh of Haringey: Schedule 1, paragraph 5(2), states on page 18:
"A person is disqualified for appointment as director of the Bank if he is a servant of the Bank".
The Governor and two deputy governors are servants of the Bank.
Lord Stewartby: I thank the noble Lord for that explanation, but in that case it casts doubt on the wording of Clause 1(2). May I suggest that he has another look at that because I believe that it conveys the opposite meaning?
Lord McIntosh of Haringey: I am always willing to have another look at things, but it does not cast doubt.
Lord Mackay of Ardbrecknish: For all that I put the wrong amendment down, or I should have put three amendments down, we have had quite an interesting little chat. I should have remembered the rule that if one is putting down amendments, every time one sees "may" one should put "shall" and every time one sees "shall" one should put "may", but I forgot about that; I was attempting to get to the heart of the matter rather than to put down all the amendments. I well remember the noble Lord and his noble friends putting down amendments to irritate me, as he said; perhaps I should be trying to irritate him!
May I say to the noble Lord that I see what he is saying: the 16 directors are, as explained in Clause 1(2), the non-executive members referred to in the margins of Clause 3, In truth, one has to work quite hard to come to that conclusion and perhaps the noble Lord could look at that.
I am grateful to the noble Lord for saying that he will look at the whole debate we have just had. The amendment of the noble Lord, Lord Barnett, went a little further than mine. I indicated that I thought that the Governor could designate the chairman of the sub-committee, but I can see the argument for going one step further and mentioning the non-executive directors—which is what we are talking about, and they were all appointed by the Chancellor, so I cannot believe any of them will be that unsound as to be not fit to be chairman of this sub-committee. There is merit in the noble Lord having a look at this and I am grateful to him for that. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Annual report by the Bank]:
Lord Peston Lord Peston moved Amendment No. 6:
Page 3, line 1, at end insert—
("(ia) the Bank's objectives and strategy as determined by the court under section 2(2),").
The noble Lord said: Although Amendment No. 6 is an amendment to Clause 4. in my attempts to understand Clause 2(2) I wrote in the margin where it refers to the Bank's objectives—this is other than the Monetary Policy Committee—"what objectives?", and therefore what strategy? I was completely mystified by what the court was actually up to.
It then seemed that a more sensible way to amend the Bill would be to add the wording that my noble friend and I have put into Clause 4. What we are anxious to do is to discover what the Bill has in mind by way of those objectives, what is meant by strategy, and then to do it in the way that says that the court will say, "These are our objectives. This is what we are trying to do

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under this general heading. This is our strategy". In due course it will then say, "These were our objectives. This is what we were trying to do, this is how we were trying to do it and these were the outcomes". I hope my noble friend will respond sympathetically to this amendment. It does not change in any way the nature of this prospective legislation. It seems to be an example of what the Committee should be doing, which is to clarify the Bill and make it achieve what I assume the Government were hoping it would achieve. I beg to move.
Lord Mackay of Ardbrecknish: Like the noble Lord, Lord Peston, I wrote in the margin of Clause 3(2)(a) "What are these?" beside "objectives and strategy". I shall be very interested to hear the Minister's explanation in response to the amendment of the noble Lord, Lord Peston, which would require the Bank to spell out its objectives and strategy in its annual report. I presume, because we have just had the debate, that monetary policy will not come into that at all. So what are these objectives and what is the strategy?
Lord Montague of Oxford: All our minds have been working along similar lines. I telephoned the Bank to ask whether it was a fact that it possessed a mission statement, and it told me it did. I asked whether I could have a copy of it, but they said they were sorry but they could not make the mission statement public.
Lord McIntosh of Haringey: I was congratulating myself on the fact that the Bill contained nothing like a mission statement—a particularly objectionable piece of management jargon, as far as I am concerned, and one to which I have objected for many years. I am sorry that they have a mission statement, and I am sorry they did not give my noble friend a copy of it. However, if he looks at the annual report of the Bank, of which I have pages 10 to 15 in front of me, he will see that this covers the Bank's core purposes, which sounds rather close to a mission statement to me, although it takes up a whole page. The report sets out the Bank's strategy, including monetary stability, monetary analysis, monetary operations, banking activities, financial stability, supervision and surveillance, financial structure, other areas, finance and personnel, and implementation. That is quite thorough. It sets forth the Bank's core purposes and strategy for the forthcoming year.
My noble friend's amendment would provide a statement of the objectives and strategy for the previous year, the year which is being reported on. I am not sure whether that is all he wants. I suspect he wants a statement which covers both years in comparable terms, which would seem the sensible way to proceed. It would be best if I say to him and to my noble friend Lord Barnett that we will take their amendments away, consider them, and come back at Report stage with suitable wording which would cover the point which I understand lies behind Amendments Nos. 6 and 7.
Lord Barnett: Before my noble friend sits down, I wonder, when we come to Report stage, whether he will be able to obtain a copy of this mission statement. If it is different from what he has read out to us, I am
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sure the Committee would love to hear it. If there is a mission statement which my noble friend Lord Montague was refused sight of, then the Committee and the House should ask for it. I hope my noble friend will do so.
Lord McIntosh of Haringey: I suppose I will have to, yes.
Lord Peston: I thank my noble friend for his positive answer. I am somewhat torn. We are not making very rapid progress. I would like to debate with him whether "mission statement" is worse than "core objectives"—I find both equally loathsome. Equally horrible is the word "chair" instead of "chairman", which I regard as the worst solecism of all, and which I never use. I thank my noble friend, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.7 not moved.]
5.30 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 8:
Page 3, line 12, at end insert ("and make a statement to Parliament on the contents of the report").
The noble Lord said: In moving Amendment No. 8 I shall be brief as it is pretty self-explanatory. The Bill as it stands says:
"The Chancellor of the Exchequer shall lay copies of every report under this section before Parliament".
That, of course, can mean there may be a debate, if arrangements are made, or there may not. I have added the words,
"and make a statement to Parliament on the contents of the report",
to take this one step forward, so that it is not just a matter of laying the report before Parliament. This could be a very important document, especially if we discover what the mission statement is, and this amendment could give both Houses the opportunity to discuss serious issues relating to the Bank. However, the problem, as I see it, is that laying copies before Parliament does not necessarily mean that there will be any kind of question and answer or debate, which is why I put in the words I have proposed. I shall be interested to hear what the Minister has to say. I beg to move.
Lord McIntosh of Haringey: I hope we can do better than that. The Chancellor said on 20th May last year that he would arrange for a debate in the Commons on the Bank's annual report. If I may speak to myself as a "usual channel", I shall encourage myself to see that a comparable debate is arranged in this House. The noble Lord will agree that a debate would be much better than a statement. A statement is a very limited thing which provides only for questions from principal Opposition spokesmen and then 20 minutes of Back-Bench contributions. We would much prefer to have a full debate and that is the intention.
Lord Mackay of Ardbrecknish: I am delighted to hear that. I thought, when I was preparing this this morning, that I had asked for the wrong thing; I should

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have asked for a debate. But I am delighted to hear that the Chancellor has given that indication to the other place, and that the Minister appreciates that this House would also like that opportunity. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [Cash ratio deposits]:
The Earl of Home The Earl of Home moved Amendment No. 9:
Page 3, line 25, after ("with") insert (", and the payment of fees in lieu of such deposits to.").
The noble Earl said: As we are now moving on to the financial arrangements and the payment of fees, perhaps it is appropriate that I should again declare an interest in that I am a director of a merchant bank, Morgan Grenfell. It is a British registered merchant bank and ultimately owned by the German Deutsche Bank.
Amendment No. 9 is prompted by a remark made by the Chief Secretary for the Treasury in Committee in another place, when he said:
"We considered all the options—fees and charges—and came to the view that the cash ratio deposit system had worked quite well in the past and we are now putting it on a statutory basis".
That may well be, but the Bill more than halves the reasons for having them at all. The new look Bank will be so different from its former self that I seriously wonder whether CRDs are as appropriate as they were previously.
I wonder, therefore, whether the Minister can tell us why the Chief Secretary discarded fees and charges as an option, particularly at a time when there is a plethora of financial and other institutions which will escape paying anything towards the work of the Bank. Fees and charges seem to me to be becoming ever more appropriate as CRDs become less appropriate, just at a time when CRDs are being put on the statute book for the first time.
I also believe that fees would give the Bank and the relevant institution much greater flexibility. There are institutions, for instance, which have a very small deposit base but a very large asset management business. The imposition of this scheme may put considerable strain on the banking book of an institution such as the one I describe, whereas the asset management side of the business could absorb equivalent costs comparatively easily. Indeed, there are all sorts of other types of institution which could be affected by the Bill.
I apologise to noble Lords, as I should have said at the beginning that I was also speaking to Amendment No. 14. Some of the institutions which could justifiably be involved are spelled out in Amendment No. 14. Other institutions may specialise in mergers, securitisation, insurance or leasing. There are many types. To carry out some of these specialisations, for prudential reasons the institutions will keep an appropriate level of capital, reserves and liquidity. From this, noble Lords will see that there are potential wide divergencies in the type of the eligible liability base of different institutions.
Paragraph 2 of Schedule 2 is misleading as it now reads. It refers to the aggregate of sterling and foreign currency liabilities. However paragraph 19 of the consultation paper on cash ratio deposits tells us that foreign currency liabilities are only foreign currency liabilities which back sterling assets. Not everything is quite as simple as it seems, and this is only one example of how very different the banks and financial institutions' balance sheets may turn out to be and how very different their eligible base may be.
The amendment is designed to give the Government and the Bank more flexibility in the way the Bank is funded, and as such I hope that the Government will take it seriously. To discard fees as an option, at least at this stage, would be extremely restrictive. I beg to move.
Lord Stewartby: May I add a word in support of my noble friend Lord Home? I repeat the declaration of interest as a director of a bank and a building society which I made on Second Reading. I am also a director of one or two other companies which might be required to pay if these amendments were agreed.
The point I want to make is that when cash ratio deposits were introduced, a very substantial part of the work of the Bank of England was in the supervision of deposit-taking institutions. Therefore, the requirement for such institutions to provide the bulk of the funding of the Bank was evident. However, now that the supervision is due to be transferred away from the Bank of England, the residual functions of the Bank of England which will remain are not nearly so closely focused in aggregate on the deposit-taking institutions as they were before, and there is a case for looking at spreading this charge more widely.
My only concern about this is how it could be defined in detail and made workable. You would have to have a de minimis exemption; otherwise under the wording of Amendment No. 14, for example, which states,
"any institution authorised for the purposes of the Financial Services Act 1986".
it could cover a large number of bodies and it might not be practicable. Certainly, within the City of London there are many institutions which gain from the work of the Bank of England in the international market place in relation to sterling and other international matters. They will receive the services of the Bank for nothing, and the deposit-taking sector will be paying separately to the Financial Services Authority, but will also be left carrying the whole weight of the Bank of England in its revised form.
I believe there is merit behind the amendment of my noble friend Lord Home, although its actual implementation may require some further refinement.
Lord McIntosh of Haringey: The noble Earl, Lord Home, in moving the amendment asks the Government to take it seriously. I can assure him that we do. Let me set out the basis on which we have approached this problem and the rationale for our views on currency ratio deposits.
The CRD scheme is important because it puts this source of funding for the Bank on a statutory basis for the first time, and makes the income secure. The current

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voluntary scheme applies only to banks authorised in the UK, and UK branches of European authorised institutions. The proposed statutory scheme will apply also to building societies, which have acquired many of the characteristics of banks in recent years. What distinguishes banks and building societies from other groups of financial institutions is that they typically borrow short and lend long—their balance sheets contain loans and other assets of long maturity and deposit liabilities, many of which can be called on at short (or no) notice. Other financial institutions, including securities firms and insurance companies, typically match the maturity of their assets and liabilities much more closely.
The amendment would widen the population of institutions that fund the Bank to include all institutions that are authorised under the Financial Services Act of 1986 and also insurance companies. Those are the ones which I described as matching the maturity of their assets and liabilities more closely.
It is appropriate for hanks and building societies to place CRDs to provide income to the Bank, because they clearly benefit from the Bank's function as a provider of liquidity to the financial system. Only a few banks have accounts at the Bank of England to settle obligations with each other. But the other deposit-taking institutions manage their liquidity through deposits and credit facilities with the settlement banks, which in turn ultimately depend on their access to liquidity from the central bank. This in effect ensures deposit-taking institutions against the risk they run from having liabilities at call but assets that are less liquid.
Therefore there is a clear dividing line between deposit-taking institutions which depend on access to central hank liquidity and other financial institutions which do not. When the noble Earl recommends a system of fees and charges which would widen the base, he forgets the fact that it is a very common central banking arrangement in many countries that cash-ratio deposits or their equivalent should be used as a way of approximating the benefit of liquidity. For those reasons we cannot support this amendment.
Lord Peston: Before my noble friend sits down, he raises an interesting piece of technical financial economics. Can my noble friend tell us whether there have been any studies done in the Bank which relate the benefits of the lender of last resort function and the availability of liquidity, to the loss of interest via cash-ratio deposits? If there have been any such studies I have never seen them published. I have always assumed that the Bank has an extraordinarily good deal in terms of cash-ratio deposits, and I would always advise, if asked, "Do not to go down the path of fees or anything like that: you will end up a good deal poorer than you are". I wonder whether he has additional information? In saying that, I support exactly what my noble friend said.
Lord McIntosh of Haringey: No, not off the cuff; but if there is anything of any value I shall write to my noble friend.
The Earl of Home: I thank the Minister for that response and should like to make just a couple of comments. Indeed, I have read much of what he said in his remarks in the consultation document issued last November, but the fact is that the Bank of England, which we still cannot call the Bank of the United Kingdom, whilst a provider of liquidity to part of the system, is certainly not a member of last resort to any member of the banking system. The bank is under no obligation, legal or otherwise, to bail out any hank which might happen to have a temporary financial liquidity problem.
I have some sympathy for the comment of the noble Lord, Lord Peston, on this, and perhaps we can have it more appropriately answered under Amendment No. 10 which we will come on to in a minute. The noble Lord said that he would take this seriously. I am not saying here that I am substituting a fee and charging basis for cash ratio deposits; I am merely suggesting that the Government should add this as an extra element of flexibility. However, in the hope that the Government will look at that side, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Schedule 2 [Cash ratio deposits]:
The Earl of Home The Earl of Home moved Amendment No. 10:
Page 20, line 2, at end insert—
("Preliminary
. The powers conferred by this Schedule shall be exercised only after the Government has explored other ways of financing the operations of the Bank.").
The noble Earl said: This amendment carries on from the other and is particularly designed to ask the Government—who obviously do not like the use of fees and charges—to consider whether they have really explored all other options open for funding the operations of the Bank.
As we were saying, with the departure of the supervisory function, the relevance of the Bank to banks and building societies in particular has dropped dramatically. The main extra (albeit probably temporary) activity of the Bank—that of setting interest rates—could in a perverse way work against the interests of banks. That is because banks, especially those with large treasury departments, have more opportunities to make money at a time of high volatility in interest rates than they do during periods of stability.
We heard a great deal during the passage of this Bill about the requirement that the Monetary Policy Committee should attach high priority to monetary and price stability. If, therefore, it does its job properly, the effect would act against the interests of those institutions. Paradoxically, it may be a good reason for putting the CRDs on to a statutory basis, as building societies and banks may not now be such enthusiastic payers, perhaps, as they were.
I said also in relation to the last amendment that the Bank does not have to be a lender of last resort, which I believe to be another reason why the banks will now be less interested and reaction to the Bank somewhat

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less relevant to the banking system than before. Can the noble Lord tell the Committee whether the Government really did explore the other ways and suggestions for funding this part of the Bank's exposure? Those were, I gather, put forward as a result of the consultation paper. One suggestion was based on turnover; other criteria for companies such as insurance companies or fund managers could be related to funds under management. For market makers and brokers, numbers of transactions might possibly be relevant criteria.
The Government seem to have rejected those and I would be grateful if the noble Lord could tell us whether they really did consider them and why they were rejected? I beg to move.
5.45 p.m.
Lord McIntosh of Haringey: The short answer to the question of the noble Earl is that we did. We explored other sources. He read the consultation documents. As usual, it is difficult to publish the responses to consultation documents because one is never sure whether or not the people who make them wish their comments to be published. However, if there is any way in which we can make more information available to him as a result of the consultation process, I shall certainly undertake to do so.
My answer to the previous amendment, which I would have preferred to have grouped with this one, indicates the careful consideration which has been given to alternative methods of funding, such as fees and charges. I should, however, remind the Committee that cash ratio deposits have been part of the framework for financing the Bank for a long time. The banks have accepted it on a voluntary basis and there is no indication that they are resisting the idea of continuing it on a statutory basis.
Let me also make clear that the Bank already has many other sources of income. That is not the only way in which the Bank is financed. It receives money from the Government for issuing banknotes, for managing the foreign exchange reserve and for providing gilt registration services. That is about £75 million in 1997–98. It receives money from private clients for banking and settlement services and income from its own reserves.
We should therefore put cash ratio deposits into context. The noble Earl is entitled to ask for as much as we can give him about the consideration which has been given to this issue, but my conclusion must be that we have explored others and that this seems to be the best solution. I would urge him to withdraw the amendment.
The Earl of Home: I am grateful to the Minister for saying that he will make such responses available to me as he can within the confines of confidentiality in the responses given to him. I hope that throughout the early years of the experience of the Bank funding under this new provision, the Bank, in conjunction with the Treasury, will continue to look very hard to see whether this really is the most appropriate way to fund part of
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the Bank's operations. We shall keep an open mind as to whether there are other systems which should be reconsidered or revisited as a possibility.
With those reassurances from the Minister that he has indeed looked at other options, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Home The Earl of Home moved Amendment No. 11:
Page 20, line 11, at end insert ("and
(d) an institution authorised to accept deposits under any other Act.").
The noble Earl said: Having previously spoken about cash ratio deposits, or the theory of them, it now seems that they are here to stay and will indeed be enshrined in the law. It seems to me to be only fair that we should explore whether paragraph I of Schedule 2 covers the right group of institutions. Paragraph 1 specifically categorises three types while paragraph 2 says that the Treasury may add anyone else it feels like. It seems to me that the first is too restrictive and the second is rather too wide.
If we look at those covered by paragraph 1 of Schedule 2, I do not believe that it is right to say that just because a hank or a building society takes a lot of deposits it will necessarily benefit from the actions of the Bank as envisaged, any more than any other institution. Any company will use the money markets if it has excess cash, and obviously anybody with liquid capital will make more money if rates are high. However, this does not apply exclusively to banks and building societies. They are certainly not unique in that they alone benefit from the Bank's provision of liquidity. Banks indeed must keep liquidity for other reasons, not least of which are prudential management reasons.
Another reason that I say that paragraph 1 is too restrictive is that through the increasing use of credit cards and other incentives, an increasing number of companies are offering credit and will often offer discounts on goods purchased if there is a credit balance on the customer's account. This credit is returnable if the customer closes his account. It is quite possible, if this proves popular, that it could become quite big business. Let us take supermarket chains as an example. In effect, they would be embarking on a type of banking service that would not necessarily come under the Banking Act 1987. While it may be necessary to regularise their activities by statute, it may not be desirable at that time to amend the Banking Act. A short new Bill may be a better way to achieve the objective.
That is just one example, but I am sure that other noble Lords can think of many others. Indeed, the Bill anticipates that there may be others by including sub-paragraph (2).
Returning to that clause, that itself may go too far the other way. If anyone accepts a deposit which is, in effect, an earnest of a good intent by a potential purchaser, in the way this Bill is drafted, that could then be caught up within sub-paragraph (1).
Taking that to an extreme, someone like a property developer could be caught in it if he accepts a deposit from a potential house owner but then has to return it, indeed plus interest. That is an extreme example and noble Lords may say it is going too far. But again, it is an example that it could go too far the other way.
It seems to me that an appropriate halfway house between these two extremes would be, if Parliament agreed that a deposit-taking activity should be regulated, that the institutions affected by an Act of Parliament should come under this clause. I beg to move.
Lord McIntosh of Haringey: I must confess that I am slightly puzzled by Amendment No. 11. I do not really know to which other Act of Parliament the noble Earl is referring, nor to what other institutions he is referring. With those difficulties, I find it difficult to respond.
I refer the noble Earl back to my quite lengthy answer to Amendment No. 9, in which I set out in some detail the reasons why we believe it is appropriate that institutions which benefit from the provision of liquidity from the central bank—and that is fundamentally banks and building societies—should be those who contribute to the financing of the Bank. I have not heard an answer to that case which I put forward in such a way that encourages me to give any support to the amendments that the noble Earl is now proposing.
The noble Earl's second amendment would remove the Treasury's power by order to amend the definition of eligible institutions. Let me make it clear that although, on the face of it, this is a Henry VIII power, we do not envisage using it at the moment. However, it is sensible to have this degree of flexibility in order to respond to possible future changes in market and institutional structure. Since any such orders would have to be approved by both Houses, there are sufficient safeguards in place on the exercise of this power. The Delegated Powers and Deregulation Committee has not raised any objection to the power proposed here.
On that basis, the initial designation of institutions is a matter of deliberate policy, and has been carried out after a full exploration of alternatives. The Bill provides in paragraph 1(2) of Schedule 2 for flexibility in relation to any future changes. I hope the noble Earl will withdraw his amendment.
Lord Stewartby: Before my noble friend rises, may I ask whether this would be by affirmative resolution, when the noble Lord, the Minister, says that this would have to be approved by both Houses?
Lord McIntosh of Haringey: I am grateful to be told that it is by affirmative resolution.
The Earl of Home: The Minister said he could not envisage what sort of institutions I was thinking of. Surely, the fact that sub-paragraph (2) refers to people or institutions, or institutions unknown at this moment, answers his own question. He is anticipating that there may be other institutions which, at some time in the future, it may be appropriate to regulate. I took a stab at a couple, one of which I thought was too restrictive, and the other which I thought was too wide, and gave two,
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albeit highly theoretical examples. Surely, if it is envisaged, as it is under Schedule 2, paragraph 1(2), that there may be other institutions which could appropriately be brought into this clause, then surely we should be able to define rather more precisely which institutions they might be.
Lord McIntosh of Haringey: I am grateful to the noble Earl for giving way. Yes, I should have responded to his specific examples, but I believe he will agree, on reflection, that what he was talking about were loans rather than deposits. There is no maturity transformation problem with just granting loans. Maturity transformation can he a problem if you borrow to lend, which is what banks and building societies are doing, and that is what CRDs attempt to evaluate.
The Earl of Home: I hear what the noble Lord has to say on this topic. I will now read his response carefully in Hansard. We may wish to return to this point at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
6 p.m.
The Earl of Home The Earl of Home moved Amendment No. 13:
Page 20, line 45, at end insert—
("() The total burden of cash ratio deposits levied under this Schedule shall not exceed that part of the Bank's expenditure which deals with public goods.").
The noble Earl said: The purpose of Amendment No. 13 is to explore the current position as far as quantifying the costs of the Bank which will be funded through the cash ratio deposit scheme. The consultation paper, to which we have already referred, quotes from the Bank's 1997 annual report which gives pre-tax profits of £121 million and costs of resources of £210 million. It further states that the cost of banking supervision is roughly £50 million, including an overhead allowance. If this figure is deducted from the total costs, it would leave some £160 million to be funded. As the Minister was saying earlier, this comes from various sources: agency services, payments for direct banking services, its own capital and reserves apart from CRDs.
It is, however, difficult to extract precise figures from the way that the Bank's annual report is drafted, and perhaps in the spirit of transparency the Government could clarify these figures for us. Figures produced by the British Bankers' Association put the cost of public goods functions at £75.6 million, or 36 per cent., while the cost of supervision is estimated at £31.5 million, or 15 per cent. What of course we do not know at present is what the on-going cost of the Monetary Policy Committee, which we have spent some time debating today, and the infrastructural back-up related to that committee is going to be, and therefore whether this will have any effect on the percentages that I have quoted.
However, what does seem to be equitable is that the cash ratio deposit system should not have to fund any part of the banking or market services, or indeed

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banknote printing or registration services. Nor does it seem equitable that the profits of the Bank should come from this source either, given, as I have already said, that many other institutions will benefit from not having to make deposits of this nature.
The current rate of eligible deposits is 0.35 per cent., which is at least three times that required to cover the £75.6 million costs anticipated by the BBA. Given the anticipated increase in eligible liabilities anyway, further augmented by the advent of the building societies into the scheme, this rate could be reduced at least threefold, possibly down to 0.1 per cent. I would be grateful if the Minister could confirm that these figures are indeed approximately correct in their outcome, and it is the Government's intention to confine this scheme to the finance of the public group function. I beg to move.
Lord Peston: We are looking at Amendment No. 13 in which the expression "public goods" appears. I once wrote a book called Public Goods in the Public Sector. I wonder whether the noble Earl means the expression public goods to correspond to the technical definition of this as it appears in economics. If he does, am I to understand it is possible in the case of the Bank of England to quantify the extent to which it creates value in a public goods sense? He quoted some figures, but he was speaking so rapidly I could not keep up with him. I would be amazed if one could produce figures of that sort. I have no doubt that the Bank of England creates what we in economics call the public good, but I am somewhat taken aback that the noble Earl seemed to be saying that we could estimate that and therefore relate it to the Bank's income.
I would certainly like to know how the estimate takes place. I would like to know the provenance of that estimate, and I would like to be in a position to check it myself. If I ask what public good the Bank creates, I would wave my hands in the air and say, "A lot"—and certainly my guess would be a lot more than the Bank of England costs us. I was a bit taken aback by that expression, but it may well be that the noble Earl is using the words "public goods" in a completely different sense from that in which we use it in academic economics.
The Earl of Home: Perhaps I may clarify that point. I am quoting from the British Bankers' Association response to the consultative paper. Talking about the public good functions of the Bank as a percentage of resources, it refers to monetary analysis/policy at 6 per cent., monetary statistics 2 per cent., monetary operations 5 per cent., financial stability/structure 4 per cent., Centre for Central Banking 1 per cent., central overhead costs, including personnel, finance, audit and secretaries' department, 18 per cent. This adds up to a total of 36 per cent., which in turn equates to £75.6 million.
Lord Peston: If the noble Earl will forgive me, as I am as anxious as anybody to get a move on, I am still not clear of what that 36 per cent. is a percentage. The numbers just astonish me in terms of the relevant body's ability to do them, but I suppose the answer is that, with
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any luck, if they read in our Hansard our small debate here, they might send me their documentation so that I can persuade myself that it was meaningful. I have no idea what my noble friend is about to say, but my strong advice is not to fall into the trap of assuming that those figures have any weight at this moment.
Lord McIntosh of HaringeyI take my noble friend's warnings very seriously. In so far as the figures quoted come from the Bank of England annual report. I can confirm them. In so far as they come from calculations by the British Bankers' Association in its response, I will be considerably more cautious and leave it to my noble friend and the noble Earl to puzzle over.
I can be a little less negative to the noble Earl than I was on previous amendments. The starting point must be that the Government have decided that deposit-taking institutions should continue to contribute to financing the Bank because of the benefits they get from access to central bank liquidity. But government are also mindful of the need to minimise the burden on these institutions. That is why we said explicitly that taking into account also the charges that the FSA intends to levy for banking supervision, it intends that.
"the total burden on credit institutions in aggregate should be no greater than it is today, and preferably lower".
As to whether the burden from CRD should be limited to certain of the Bank's functions, we take that point seriously too, again with the warnings that my noble friend Lord Peston has given. We have received a number of representations asking for a clear link between the CRD rate and the Bank's expenditure on its monetary policy and financial stability functions. The Government are still considering the responses to the consultation process, but we are looking sympathetically at this approach and see advantages in terms of transparency and accountability, and we hope to announce our conclusions on the CRD consultation soon.
Also, since the order setting the CRD bands and ratios will be subject to affirmative resolution by both Houses, your Lordships will have an opportunity of reviewing the Government's proposals in detail.
As to the issue of what the CRD scheme will raise, in a response to the consultation the Treasury will set out fully the rationale for the level set and the transparency of the Bank's costs.
In the light of those assurances, I hope that the noble Earl, Lord Home, will feel it possible to withdraw his amendment.
The Earl of Home: I am most grateful to the Minister for his assurances. Perhaps the Government can be as transparent and produce all the figures from the Bank of England in words of one syllable that I can understand: possibly the noble Lord, Lord Peston, will be able to understand them if they are in words of two syllables. I should certainly welcome clarification, as I am sure would the various associations which have been struggling with these figures.
Perhaps I may make one last point in relation to that. I am grateful that these figures will be published and I urge that they be made clear as soon as possible. We

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always face the possibility of institutions looking to invest in Europe with London being one of the centres. We do not want, through uncertainty, to put off any potential foreign investors. The quicker that clarity can be achieved, the better. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved].
Schedule 2 agreed to.
Clause 7 [Accounts]:
The Earl of Home The Earl of Home moved Amendment No. 15:
Page 3, line 35, after ("may") insert (", with the permission of the Treasury,").
The noble Earl said: This is a small point, but it is quite an important one on timing.
As currently drafted, the Bank has the ability to refuse to put something into its accounts which auditors might require of it. I have no particular quarrel with that in that the Bank might well feel that it is in the national interest not to disclose something, and it may well be right.
However, potentially it leaves the Bank's auditors in an invidious position. The auditors may not be in a position to judge whether or not the Bank is right, but at present they have no way of checking that. All they can do is refuse to either sign the accounts or qualify their opinion. All noble Lords will agree that neither of those options is satisfactory. If, however, the auditors knew that the Bank had received Treasury permission not to include something, that would give them a lot of assurance and they could then sign off the accounts with a clear conscience.
The possibility of the Bank being incorrect in refusing to publish some information is potentially anticipated by Clause 7(7). Under that subsection, the Treasury may require the Bank to publish the information that it excluded. Members of the Committee will note that the wording is "has excluded" and not "proposing to exclude". That subsection may be intended to cover the eventuality when it is inappropriate for the Bank to disclose information immediately but its publication may be desirable later. I believe that that subsection could be read either way.
The main point of the amendment is for the benefit of the auditors, of which I hasten to add I am not one. On that basis, I beg to move.
Lord Stewartby: Perhaps I may add a word of support to my noble friend Lord Home. This is quite an important point, though it is described by him as a small one. A unilateral decision by the Bank to disregard a Companies Act requirement is not something which the Bank—either alone without its auditors or without any other party in the public sector—ought to undertake. I do not know whether it is intended, but if the Bank disregards a requirement, it has to say that it is disregarding the Bank's requirement, just as public companies have to say whether they are disregarding elements of the Cadbury rules, for example, which are not imposed by statute but by Stock Exchange requirements.
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As my noble friend Lord Home pointed out, if the Treasury requires the Bank to produce such information, or comment on it at a later stage, it would be more embarrassing for the process to happen in that order. It would be better for it to have been thought through in discussions between the two before it reached that point. I hope the Minister will be receptive to that fact.
Lord McIntosh of Haringey: I am certainly receptive to the idea that, as far as possible, the Bank should keep to Companies Act requirements. That is the objective of Clause 7 and is expressed clearly. It is, however, not always possible. It is really a matter of timing, which is what this amendment comes down to.
Under the Bill as drafted the Bank can, in subsection (4), disregard a requirement to which it is subject under subsection (3). Under subsection (7), as the noble Earl rightly pointed out, the Treasury can require it to provide information which has been excluded. The requirement, therefore, comes after the exclusion, whereas the amendment of the noble Earl would require that the permission of the Treasury should be obtained before the requirement is disregarded.
The point about this is a matter of timing. Although the Bank tries to keep to the Companies Act, it cannot give full disclosure because of the continuing need to keep certain support operations secret, if only for a short period of time. We must therefore have the let-out that it can exclude certain material but we provide, in subsection (7), the provision that it can ultimately be released in accordance with the Companies Act.
The noble Earl raised the question of whether this was a problem for the auditors, to which the answer is, "No, it is not-. It is essentially what the Bank does at the moment. Note 1 to the Bank account spells out departures from the Companies Act requirements and the auditors currently sign off the accounts on that basis.
And on that basis, I invite the noble Earl to withdraw his amendment.
6.15 p.m.
Lord Stewartby: Before my noble friend withdraws his amendment, if that is what he is going to do, I should like to refer to the point about timing. It may not have quite the weight given to it by the noble Lord, Lord McIntosh. The account will be in retrospect for an elapsed period and companies regularly have to have discussions with auditors about the disclosures in their accounts. Although there are certain matters in principle, such as those operations described by the noble Lord which it is perfectly proper that they should not spell out, that will be something already known because it will relate to a past period.
My view remains that, although the Bank should have the ability to disregard the requirement, under appropriate circumstances—I do not question that point at all—it remains somewhat doubtful whether there is this great constraint of timing. When I was in the Treasury, important decisions could be made quickly when necessary. It would surely be possible in such a case.
Lord McIntosh of Haringey: I have already responded to the point about auditors, which appeared

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to be the main concern of the noble Earl. However, if the noble Lord, Lord Stewartby, is concerned with support operations, I have to advise him that some could be sensitive for a number of years. The Bank does disclose them when they cease to be sensitive, which may be later rather than sooner. It is not a question of how quickly the Treasury can respond, but rather of when it is appropriate to do so.
Lord Stewartby: I understand that totally and do not wish to prolong this debate unduly. The amendment says,
"with the permission of the Treasury".
If support operations are, for example, a category where that is appropriate, it is quite reasonable for the Treasury to have discussed it with the Bank and agreed that that area need not be disclosed. Clause (7)(5) clearly could go very wide. It could raise issues, unlike support operations, which are not routine—or not relatively routine—and which therefore it would be better to resolve at the time rather than in retrospect.
Lord McIntosh of Haringey: I do not think so. The wide drafting of subsection (7) is deliberate because it is concerned with other matters than those which are referred to in subsection (4).
The Earl of Home: While it is certainly true to say that the main thrust of my concern was in relation to the auditing point, I hope that the Bank will bear in mind that it could actually be abusing potential powers if it refused to publish something that in the normal course of events would be required either in the public interest or by auditors.
For the time being, we have been round this course enough and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clauses 8 to 10 agreed to.
Clause 11 [Objectives]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 16:
Page 5, line 15, leave out ("subject to that,").
The noble Lord said: We now move on to Part II of the Bill which is the part relating to the Monetary Policy Committee, about which I believe we shall have some interesting debates. When I first looked at Clause 11 I was minded to put down an amendment to delete subsection (b). But then I thought I would be accused of wanting an independent central bank and all sorts of suspicions might then have come to the surface about whether I agreed with my party's policy on the euro or whatever. Therefore I decided that that was not the way to explore exactly how the clause hangs together. I am glad that I did not because I am flattered to see that the noble Lords, Lord Peston and Lord Barnett, have added their names.
I then decided to try to explore what the clause actually means by removing the words "subject to that". There was some discussion in the other place about "subject to that- and there will be some discussion here
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because, as I shall explain, I do not believe that the Committee stage in the other place finished with everybody entirely convinced about exactly what "subject to that" meant. I believe I know what it means: it means this.
The Monetary Policy Committee can support the economic policy of Her Majesty's Government, including their objectives for growth and employment, so long as that support does not conflict with maintaining price stability. That is what I interpret "subject to that" to mean in this category.
Whatever the consequences for the Government's economic policy, for growth, for employment or the exchange rate—and we will come to that later—it does not matter. The main objective of the Bank is to maintain price stability. If, as is now happening in Scotland, unemployment starts to rise as a result of increasing interest rates, as far as the Monetary Policy Committee is concerned, so be it. That is an unfortunate consequence, but the principal objective, if I may call it that, is to maintain price stability. And if growth begins to fall away and even cease altogether. again as long as price stability has been maintained that lack of growth will just have to be an unfortunate consequence.
At Second Reading, I quoted from Mr. Robert Chote's writings in a Social Market Foundation pamphlet. He said:
"One danger is that the economy will suffer if the Bank uses its interest rate policy to pursue low inflation while the Government uses budgetary policy to pursue employment, growth and votes. This is a recipe for high interest rate, excessive Government borrowing and an over-valued pound".
I suppose I might be told that excessive government borrowing does not happen at the moment, but one could argue that we have high interest rates and we certainly have a high, if not overvalued, exchange rate. So there is a potential for conflict, which nobody denied at Second Reading, between subsection (a)—maintaining price stability—and subsection (b)—supporting the Government's economic policy, including their objectives for growth and employment.
I drew attention to the fact that one of the members of the other place, Diane Abbott. made the point very strongly, I believe, when she said that the Government were handing over one of the most important levers of economic power to an unelected quango. That is certainly true. There is no doubt about that. I equally pointed out—and this was in advance of the unemployment figures in Scotland showing the first upward turn for many months—that Mr John McAllion, in a comment he made, pointed to the Bank of England raising interest rates five times since the Government gave it control over monetary policy. He said:
"There is a macro-economic policy being pursued by the Government and the Bank of England which seeks to slow down the economy and that is the problem.
He was discussing it in relation to unemployed young people and about welfare-to-work. It was suggesting that a possible slow-down in the economy and economic growth may mean that the Government's New Deal for the young unemployed will not in fact come about because of policies being pursued by the Bank in order to maintain price stability.
I have a suspicion—I hope the Minister will put me right on this because I hate to be suspicious—that subsection (b) is in here subject to that, and that is the qualification, as a bit of a sop to the Government's own supporters, not only in the House of Commons hut perhaps in your Lordships' House, and certainly in the country. If the Government's case is that an independent central bank, pursuing objectives of price stability, is likely to have a better record than governments have had pursuing that policy, then why do we have subsection (b) in at all, subject to that or not subject to that?
The noble Lord will probably point to Germany, where the central hank indeed has a good record of success, but there is a chicken-and-egg situation in Germany. The German experience of hyper-inflation has led them to fear inflation much more than do most people in this country. Indeed, one of the more disturbing things is to meet intelligent people who say that a little hit of inflation would do us some good. It seems to me that economic history suggests that that is a pretty fallacious argument.
One wonders about Germany, for example, if it is the Bundesbank and the independence of the central bank which has caused the low inflation, or if in fact they have been able to ride piggy-back, so to speak, on the deep dislike of inflation which has been burned into the German soul because of the experience they have had. It seems to me that all these problems come together in looking at this clause. If the Monetary Policy Committee looks at subsection (b), and at growth and employment, and says, "My goodness me, we are not actually fulfilling the Government's objectives"—I presume the Government's objectives (every government's objective) is to reduce unemployment, get more employment and to get growth, though some succeed better than others at times—"We had better do something about it", to what extent can it do something about it? If it conflicts with subsection (a) "to maintain price stability", my reading of this is that it cannot do anything about it at all.
Indeed, I believe I quoted the noble Lord, Lord Eatwell, because the monetary policy of the Bank will have a number of economists on it. One could reasonably say they are all economists currently on the Monetary Policy Committee of the Bank. As the noble Lord, Lord Eatwell, said in his evidence to the Treasury Select Committee:
"One group of theorists believe that there is no particular medium-term relationship between the level of unemployment and the rate of inflation. Another group believes that the key relationship runs from the level of unemployment to the rate of inflation, and from this group monetary policy is a means of controlling the level of output and so controlling inflation".
I am not an economist and I am looking forward to some of the other contributions, but with some division in the world of economists as to which of these things gives rise to the other, I am a little worried about the "subject to that" being in there. If it means what I think it means, I am pretty clear that maintaining price stability will be the principal objective of the Bank. On Second Reading of the Bill in the other place on 11th November there was an interesting exchange on this very subject
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between Mr. Alistair Darling, the Chief Secretary and Mr. Wigley, the Member for Caernarfon, who intervened and said:
"The Bill gives overriding priority to maintaining price stability. Growth and employment are subject to that. That differs from the approach in the United States, where the Federal Reserve has inflation, growth and employment targets of equal importance. The Government should not make employment subsidiary to the control of inflation, which appears to be the god on all occasions".
The Chief Secretary replied:
"The right hon. Gentleman is mistaken. Clause 11 shows that the Government's objectives are high levels of growth and employment".
Mr. Wigley said:
"The Bill says, 'subject to that"'.
The Chief Secretary replied:
"The right hon. Gentleman is reading it the wrong way round".—[Official Report, Commons. 11/11/97; col. 712.]
The question is, and this is really what I have come to, whether he is reading it the wrong way round. If he is reading it the wrong way round, then it should be written the other way round. It should say, "The objectives of the Bank of England shall be to support the economic policy of Her Majesty's Government, including their objectives for growth and employment, and, subject to that, to maintain price stability".
I am confused. When that was raised in Committee, I have to say that Mrs. Liddell did not do any better than Mr. Darling at explaining what it is. If these two good Scots could not explain it simply enough for me to understand, I am conceited enough to think there is something of a problem. I know how I read that. I read that to mean that if I were a member of the Monetary Policy Committee, my top line and bottom line objectives would be to maintain price stability. The other two objectives, and any others, would be secondary. I am sure that the noble Lords, Lord Peston and Lord Barnett, will try to tease out similar points, perhaps in a more economic-minded way than I have done.
I should just like some kind of explanation from the Minister, to clarify what I think was the confusion left, at least in my mind, and also in the minds of many Members of the other place, on the subject of what exactly Clause 11 means and how I should read it if I were a member of the Monetary Policy Committee. I beg to move.
6.30 p.m.
Lord Barnett: Unlike the noble Lord, Lord Mackay, I do not want to tease my noble friend. I know the noble Lord loves to do that, but I am not that bothered. He said he was flattered that my noble friend Lord Peston and I had added our names to his amendment. I should tell the noble Lord that I do not know who thought about it first, but he got there first. For similar, although not entirely the same, reasons, we reached the conclusion that the deletion of those words from the Bill would make some sense. The noble Lord said that he did not want to delete the whole thing, because it might conflict with his party's policy. I should make it clear at the Outset that I very much want to conflict with the policy of the noble Lord's party, and that of some of his noble

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friends and right honourable and honourable friends in another place. I am sure I speak also for my noble friend when I say that.
I will say something about the European Central Bank in a moment, but I am sorry that the noble Lord did not want to upset some of his friends. I am sure he would like to but, for some reason, he does not want to put it on record that he disagrees with them. I cannot imagine why, because it will be a long time before he will have any opportunity to get back into government. He could have expressed some conflict with his Front Bench in another place, and I am sorry he did not.
Let us come to the amendment. The amendment makes a great deal of sense, which is why my noble friend and I put our names to the amendment, although the noble Lord got there first. We would have put the amendment down ourselves if we had been as swift of foot as he was. However, we do not have a huge volume of support to enable us to read the Bill and decide what kind of amendments to put down.
The noble Lord says he is not an economist, and I understand that. In his words he does not want to be in conflict with his own party. He assumed that under the Bill as it stood, and he is quite right in my view, price stability—that is, inflation—takes priority. It is quite clear to me, and I believe I referred to it in the House the other day.
Clause 11(b) states that,
"subject to that".
that is, price stability, the objectives shall be,
"to support the economic policy of Her Majesty's Government".
If it is subject to that, unless my noble friend can give me some better interpretation, I do not mind agreeing with the noble Lord, Lord Mackay. He is right about that. What else can it mean? If you are instructing the Bank and the Monetary Policy Committee to support only the Government's economic policy, subject to maintaining price stability, that is what it means. I do not know what those words mean if they do not mean that. If they do not mean that, then I assume that my noble friend can accept the amendment without any problem.
It seems such a simple little amendment hut it is rather important. I am delighted that the Official Opposition have tabled such an amendment. I do not know whether the noble Lord took advice from some of his right honourable friends in another place. I assume he did, because he would not do anything to be in conflict with them. Therefore, they agree with this amendment and the attainment of Her Majesty's Government's objectives for growth and employment. That takes us to a later amendment. I assume that the noble Lord and his Shadow Cabinet, long may it so remain, agree with this amendment. I believe my noble friend and I were rather surprised at that. When we went into the Public Bill Office, we did not expect that the noble Lord would already have put down such an amendment. However, he has, and I was delighted.
In my view the Bank would take account of the government's economic policy with or without this amendment. I should tell the Committee that when
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I took my Select Committee to Frankfurt last week, we met and were entertained very well indeed by the President of the Bundesbank. Professor Tietmeyer—a charming man, if I may say so. I listened with great interest to what the noble Lord. Lord Mackay, said about the reasons that lie behind the German need, as they saw it, for this kind of policy, because of their fear of past inflation. They therefore put inflation above anything else, including government's economic policy.
This is on the record so I can tell the Committee that Professor Tietmeyer told us that i f he happened to be President of the European Central Bank—and I gather he has neither that wish nor expectation—he would take account of the policy of ECOFIN, the European finance ministers, and their economic policy when pursuing a price stability target. However, as the Bill stands, the price stability target would clearly take priority, as the noble Lord rightly said, over the Bank's consideration of the government's economic policy. That concerns me, and I know it concerns my noble friend.
Given that the noble Lord, Lord Mackay of Ardbrecknish, felt obliged constantly to reiterate the five increases in interest rates, if they had still been in government by some miracle, I assume that they would not have increased interest rates at all because that was entirely in the hands of the Chancellor of the Exchequer. Presumably, they do not believe that increases in interest rates necessarily control the rate of inflation.
Speaking for myself, and I believe I speak for my noble friend as well. I certainly would not have increased rates to the degree that they have been increased. I certainly would not increase them any more. I am delighted to hear that the Opposition agree with that. The noble Lord, Lord Mackay, must have consulted them because he never wants to be in conflict with Conservative Party policy, whether it he on Europe or anything else. He is smiling in agreement with something; I am not quite sure what it is. He did not nod or shake his head; I would like that put on the record so we know where we stand. He does not agree with the interest rate increases that we have had so far, and therefore he and his party do not believe that increases in interest rates necessarily control price stability. That appears to be what he is saying, so in that sense he agrees with my noble friend.
However, this amendment is clearly one of the most important that has been tabled. Without this amendment, the Bank could ignore the Government's economic policy even if unemployment was rising because of the Bank's policy. If it was rising substantially, it would not matter; the Bank's primary consideration under the terms of the Bill has to be the control of price stability.
We have discussed how directors can be appointed and how they can be dismissed and not he dismissed. I know the present Governor of the Bank and I am pleased that he has been reappointed for another five years; and I know some members of the Monetary Policy Committee and some of the present directors of the Bank of England. I would hope, like Professor Tietmeyer, that in the case of the European Central Bank they would take account of the Government's economic policy. I would be very disappointed if they did not.

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If the Government want to see them take account of their own economic policy, then why oppose this amendment? It is a simple amendment. All they have to say is that the Bank has to maintain price stability under Clause 11(a), and
"support the economic policy of Her Majesty's Government, including its objectives for growth and employment".
I would have thought that my noble friend could certainly go along with that. Just as the noble Lord, Lord Mackay of Ardbrecknish, speaks for his Front Bench, I am sure my noble friend would speak for ours. He has a great deal of flexibility in his ability to respond to this amendment, and I know he would be happy to see the Bank of England and its Monetary Police Committee maintain price stability and support the economic policy of Her Majesty's Government. Why not? Why should they not do both?
It is a short and very simple amendment, but a very important one. The Bank of England and its Monetary Policy Committee should not do anything that would damage the Government's own economic objectives. It is not asking much of the Bank of England or the Government to do something that would ensure that their own economic policy is supported. I hope my noble friend will be able to accept the arguments about the need to control both inflation and the Government's own policy. In that sense, I strongly support the amendment itself, if not every positive and detailed word of the noble Lord, Lord Mackay of Ardbrecknish.
6.45 p.m.
Lord Newby: If the noble Lord, Lord Barnett, complains of lack of swiftness of foot, he is a veritable hare to the tortoises of the Liberal Democrats in respect of this amendment! We did not even get around to putting our name to it at all. Perhaps I should claim even more meagre resources, but we certainly support the amendment.
In the currently drafted form of the clause, the phrase "subject to that" does, first, suggest that subsection (b) is a sop. Secondly, it encourages the Monetary Policy Committee, in our view, to ignore any objective other than price stability and, as a result, it opens the prospect of it acting in a slightly more macho way in respect of interest rates. The case might be different if the committee had to explain how it had taken into account both (a) and (b), when reaching its decisions.
We have heard eloquent arguments in favour of deleting the words "subject to that", to which I will not add, except to say that we too believe this to be an important and straightforward decision, which the Government could now make to give greater balance to the thought processes of the Monetary Policy Committee.
Lord Stewartby: I find myself, surprisingly, not 100 per cent. satisfied by the arguments so far deployed. If you were a member of the Monetary Policy Committee, you would not know what to do if these words were removed. If you have two objectives, one hopes that they may, most of the time, be consistent with each other. There could, however, well be times when the Bank or the Monetary Policy Committee, or
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the Treasury, or the Government, or Parliament, considered that they were not consistent. Under those circumstances, I am not sure how the members of the Monetary Policy Committee could conduct their responsibilities.
I had understood my noble friend Lord Mackay to be probing for clarity on the apparent confusion which has been created by Mr. Darling and Mrs. Liddell in another place. It is interesting to have a debate on the balance of these two considerations. I am sure that the Monetary Policy Committee ought always to take account of the economic policy of the government of the day, including their objectives for growth and employment. However, it could certainly arise that there was at least a perceived conflict. Under those circumstances, I do not see how the Monetary Policy Committee could function. I am, therefore, somewhat sceptical about this otherwise highly popular amendment.
Lord Peston: I shall start with some preliminary remarks. I have no difficulty with finding my name on the same amendment as the noble Lord, Lord Mackay of Ardbrecknish. Equally, I share his puzzlement over the statements of my honourable and right honourable friends in another place. Indeed, one reason for supporting this amendment is that what they said, taken literally—though I begin to think we are all naive to read anything literally—was simply impossible. My noble friend the Minister will tell us about that, but I certainly could not make sense of what they were saying.
My third preliminary remark is that I am sorry that this amendment has not been grouped with the next three. Some of my comments, as do those of any other noble Lord, arise with regard to all those amendments. If I stray, I can only promise to say less when we come to those amendments. Let me explain the reasons for that immediately.
In order for Clause 11 to make any sense, we must know what we mean by price stability. So far, the noble Lords who have spoken assume they know the meaning. However, we require Clause 12 for that, because it contains the statement that the Treasury will tell us what price stability is to consist of. That brings in the word "may", on which we shall have a deeply philosophical argument about grammar and semantics in due course.
I can only say that I read price stability as meaning that the average level of prices is constant and therefore that the rate of inflation is zero, but until I discover what it means from my noble friend I may be wasting my time completely because the Treasury may define price stability not to mean that the rate of inflation is zero.
Lord Barnett: I know that my noble friend is a distinguished economist, and he will not mind my saying so. Zero is not what most people in government or banks think of as price stability. I hate to quote Professor Tietmeyer again and Herr Duisenberg, the head of the European Monetary Institute. They both feel

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it is anywhere between zero and 2 per cent. That is their view. And one of them may be an economist, I am not sure.
Lord Peston: I wonder whether my noble friend has ever heard the expression "weasel words". I have been lecturing on this subject now for 40 years and I can tell him that price stability means a zero rate of inflation. I am perfectly well aware that a great many people, not least politicians and hankers, are terrified of actually facing up to what they themselves are saying. Therefore they interpret price stability to mean a low rate of inflation. I can only say that that is a contradiction in terms. Price stability means a zero rate of inflation and I believe the Treasury is about to tell us exactly what my noble friend has said: that it means by price stability a low rate of inflation.
We then run into a quite serious difficulty: why that number and no other number? That is again a subject on which I have been lecturing for a great period of time. We cannot talk about how (a) and (b) relate to each other unless we know what price stability means. There is quite a lot of stuff written on this, and one possibility is to follow the noble Lord, Lord Mackay of Ardbrecknish, and say that (a) could not be incompatible with (b). Many economists will say that if we have no inflation, then the economy works perfectly: we get the optimum rate of growth of the economy and we get full employment. Quite a few economic textbooks contain that.
I happen to think that that is complete balderdash and that such an optimistic, rosy view of the way the economy works is not persuasive theoretically and it certainly is not confirmed by experience. Therefore we cannot take that optimistic view.
One may then say that perhaps we mean that some low rate of inflation is compatible, and so on. Our difficulty with that is, which low rate of inflation is compatible and which is not'? We are not told anything about that, and until we get an answer in practice, we do not know. My view is that any serious interpretation of an inflation objective must have—to use the word used by the noble Lord, Lord Mackay of Arbrecknish—the potential for conflicting with the Government's economic policy. If that is the case, we have to ask what would happen then: what does the clause then mean?
Again, my reading of the clause as it stands—and this is our difficulty, and my noble friend Lord Barnett is aware of it—is that if there is possibility of conflict, the conflict is resolved by the Monetary Policy Committee, which may take notice, in the sense that it is aware of the Government's objectives for growth and employment. but it then has to say "I'm sorry, but the objective is price stability; we have noted that they are in conflict, but price stability is what we have to go for".
Let me say en passant that I hope noble Lords have noticed the use of the word "including". Since it says,
"including its objectives for growth and employment".
I should like to know what other objectives the Government might have in mind. It does not say "growth and employment"; it says "including". What else might we have to think about?
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I believe that putting the amendment down is important, and it is particularly important to ask about the conflict resolution. Another possibility is that it is the Government who will adjust: that the Monetary Policy Committee goes for the inflation objective and then the Government adjust their objective for growth and employment to fit that. I read nothing in the debates in the other place to say that the Government accepted that worrying view.
I have one other remark to make before concluding, and that is to ask my noble friend whether the word "maintain" has any meaning. By that I mean that it does not say "to achieve price stability"; it says "to maintain price stability". Presumably in order to maintain it, sticking to the correct use of English, we have to achieve it in the first place and then maintain it. We must, therefore, ask the question, have we achieved it at the moment? In other words, when the Bill becomes law, as it will fairly soon, does it then follow that we have achieved price stability, which I believe is 2.5 per cent. as the mean, plus or minus ½ per cent. or some such thing. Whatever it is, if that is defined as price stability and we have achieved it, we then have to maintain it.
My difficulty with this is, what will the Treasury be doing in the future? For example, is the Treasury capable of announcing in a couple of years, "We now define price stability as meaning a mean of 4 per cent. plus or minus 1"? I do not know if that is possible. It is certainly possible if price stability does not mean what it should correctly mean, namely zero, but any number that anybody comes up with. One can therefore see that the whole thing is rather blurred.
It happens that I have one other difficulty. My firm belief in economic policy is that it is not a bad thing to keep certain things blurred. The noble Lord, Lord Mackay of Ardbrecknish, has had the privilege, which I have not had, of being a Treasury Minister, and he must know that a certain blurring around the edges helps to make policy rather better. I have difficulty in constructing a theoretical model that demonstrates that, but all my experience and intuition tell me that. Therefore, in pressing my noble friend Lord McIntosh for some answers, in another way I would rather not have all of them, because once they are written out it means that we cannot wriggle out of them ourselves when the time comes.
To summarise, I would like to argue that the objective of the Government is the maintenance of full employment; subject to that, the maintenance of maximum growth; and, thirdly, if it is compatible, having as low a rate of inflation as possible. If I were writing this, I would still be repeating the economics of the 1950s, which I have been teaching non-stop for 40-odd years, and I never find any reason to change that, because nothing has happened to convince me of anything being erroneous. I entirely agree with my noble friend Lord McIntosh on Keynes's comment that one changes one's mind when evidence or theory tells one to. Equally, I take the view that, when evidence and theory do not tell us to but convenience tells us to, then do not do it.

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I hope my noble friend will at least reflect on some of these remarks and ask himself whether what is here is what the Government really want to be on the face of the Bill. That is why my noble friend and I have intervened as to whether this is what the Government want, and I look forward to hearing his answer on that.
Lord McIntosh of Haringey: This has been a nice discursive debate and I am grateful to all noble Lords who have taken part. Let me first of all deal with one false impression which may be gained. I admit that we have tried to group these amendments rather aggressively, hut they have now been ungrouped rather aggressively to such an extent that the debate, for example, on the funding of the Bank of England was ruined by aggressive ungrouping and could not be taken seriously. Now, this debate has become ruined. The fact that the noble Lord, Lord Mackay, has his name on the same amendment as my noble friends Lord Peston and Lord Barnett does not mean that they agree. It is simply that we are dealing with one part of the argument, rather than with the argument as a whole. The noble Lord, Lord Mackay, made it quite clear that his objective in leaving out the words "subject to that" would be to leave out the reference to high levels of growth and employment altogether, whereas my noble friends would prefer to have growth and employment put in as having equal status with price stability.
Lord Mackay of Ardbrecknish: I do not think I said that. I said that when I considered how to have a discussion on the relationship between subsections (a) and (b) I wondered whether it would be easiest to knock out (b) and then just ask the Minister why he wanted (b), and explore the matter in that way. However, I decided that that would be construed as a move in the direction I intended, and therefore I proposed the deletion of "subject to that". If you take out the other things, it would be like saying that the people who run your monetary policy are trying to do that like a golfer with only one club.
7 p.m.
Lord McIntosh of Haringey: The noble Lord distances himself from the implications of his own argument, if I may put it that way, even if he did not say what I accused him of.
Let me set out as clearly as I can what we mean by Clauses 11 and 12. As the Bill says, the monetary policy objective of the Government is to maintain price stability and, subject to that, to support the Government's objectives for growth in employment. But in turn high levels of growth in employment will also create the conditions for price stability on a sustainable basis. There really is no other way of promoting and maintaining high levels of growth and employment other than in circumstances of sustained price stability.
In the long run there is no conflict. Price stability is a necessary condition to ensure sustainable growth and high employment. There is evidence to suggest that high and variable inflation can actually damage growth and productivity. The framework is designed to ensure that price stability is the long-term objective of monetary policy.
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At Second Reading I quoted Alan Greenspan in his Humphrey-Hawkins testimony last year. That sets out the position very clearly. He said:
"Our objective has never been to contain inflation as an end in itself, but rather as a precondition for the highest possible long-run growth of output and income—the ultimate goal of macroeconomic policy".
The Bundesbank has very similar requirements, although they are expressed in rather different terms. The Bundesbank is required to
"regulate the quantity of money in circulation and of credit supplied to the economy, with the aim of safeguarding the currency".
That is comparable to price stability. It is also required by law to
"support the general economic policy of the Federal Government, but only insofar as it can do so without prejudice to the performance of its own function, safeguarding the currency".
That is in the Bundesbank Act 1957.
Price stability and high employment go hand in hand. Achieving price stability will help to achieve high employment, and achieving high employment will help to achieve price stability.
If I may anticipate my noble friend's question, I am sure he will then ask me, as he did, quite reasonably, why we do not give them equal status. Why do we not say "price stability and the Government's economic objectives"? I think we do so, and I am surprised to be able to call in aid the noble Lord, Lord Stewartby, but he is right. If we are to give targets to the Bank of England, we have to give it targets which are explicit and which do not involve internal contradictions, otherwise they will simply be warm words. Somebody used the term "weasel words". If we started to bring in all sorts of other targets—a later amendment is a target on exchange rates—this would be a target on growth and employment. The members of the Monetary Policy Committee would scratch their heads and say, "We have a choice. We can either protect one or the other. Which should we do? The Government have not told us which we should do". What we are saying here is that, for the reasons I have given, we give priority to price stability and we recognise that, subject to that, there should be support for the Government's other economic objectives.
Lord Peston: I hope my noble friend will forgive me for interrupting, because I know how irritating it is when you are in full flow. If what he says is to make sense, then it seems to me that he would be just as happy with a wording of the Bill which said:
"The objectives of the Bank of England shall be … to support the economic policy of Her Majesty's Government, including its objectives for growth and employment, and subject to that, to maintain price stability".
In other words, if the two are simply always compatible and price stability is a means to an end, it could be done the other way around. I take it that it is this way round for a reason.
My noble friend was more or less saying that price stability has priority when there is any conflict. Clearly I will read my noble friend's words in great detail, hut I do not think, listening to them at this moment, that

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they stand up. If they were to stand up then reversing the clause would work just as well, and I am certain that he will not accept reversing the clause.
Lord McIntosh of Haringey: I am certain they are not, because then we would find the Monetary Policy Committee scratching its head even more. If they say, "Our first priority is to encourage and support high levels of growth and employment", then how do we do it? The means available to the Monetary Policy Committee are the setting of short-term interest rates. It is the setting of short-term interest rates which has the most direct connection with price stability, and the other objectives of government economic policy, according to this model, follow from that. But we do not go out to the ultimate objectives—what I recognise as being the ultimate objectives and what Alan Greenspan calls the ultimate objectives—and then come hack to the means by which they are achieved.
Lord Mackay of Ardbrecknish: I am sorry to interrupt the noble Lord again, but I thought I was quite clear in what I was saying. I did not take the interpretation as the noble Lord, Lord Peston, took it. I took it to mean quite clearly what I think it means, but I am still puzzled because that is at variance with what Mr. Darling said when he said it was being read the wrong way round. Subsection (b) seems to me to be subsidiary to subsection (a), but Mr. Darling said that it was being read the wrong way round. The Minister said what I believe "subject to that" means, which is that price stability is the principal objective. That is okay, and then you can worry about the other things. That is maybe too simple, but I think that is what he is saying.
Lord McIntosh of Haringey: That is right, because that is most closely within the power of the body which has the control of short-term interest rates. I have to take the Bill as I find it. I have not read the quotes from the Chief Secretary, but I base my arguments on the way in which the Bill has been framed.
Lord Barnett: I am not concerned about what the Chief Secretary says. I took down the words my noble friend used, "Price stability is necessary to support the objectives for growth and unemployment. They go hand-in-hand". If that is the case we do not need the words there. We can have it as the amendment suggests. Either one takes priority over another or they go hand-in-hand. Which is it? Is he saying that they go hand-in-hand or is he saying that one takes priority over the other?
Lord McIntosh of Haringey: We are in danger of becoming theological in this argument, quite honestly. When I say that they go hand-in-hand, I mean that achieving price stability helps to achieve high employment, and high employment helps to achieve price stability. But in terms of what the Bank of England Monetary Policy Committee has to do, we have to pick on something and that is price stability, because that is the measure that is most closely related to the powers of the Bank of England. Short-term interest rates are the responsibility given to the Bank of England by the
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Treasury, and they are given the power to set short-term interest rates with the direct responsibility set by the Government of maintaining price stability.
I do not doubt that in the economic lectures of my noble friend Lord Peston it is impossible to interpret price stability as being a low level of inflation, but I am sure that he is correct in terms of economic theory that price stability means stability: in other words, zero inflation. We are not using the words in that sense. In the Bill we are saying the Government take responsibility for setting the inflation target which they think is appropriate and consistent with price stability. We have set that inflation target at 2½ per cent., and we said that in the first instance the Bank has to explain when the inflation target varies from 2½ per cent, by 1 per cent. either way. There is an open-letter system whereby if it varies more than 1 per cent. either way, it has to go much further and explain itself and say what it is going to do to get itself back into line.
I return to the difference between setting high levels of growth and employment as a target and setting price stability as a target. Price stability is deliberately set in terms of short-term interest rates. It is in the long term that the two go hand in hand.
Lord Peston: Perhaps I might just interrupt my noble friend once more. I promise him that it is the last time on this amendment. I understand fully what he says. He is having no difficulty in arguing his point, but I wonder if he appreciates the consequences. Taking a specific example: it may well be that the Monetary Policy Committee this week interpreting price stability in the way it does will raise interest rates. The result, many of us would predict, will be dampening down in aggregate demand in the economy. a slow-down in the rate of increase of gross domestic product and possibly a rise in unemployment. My noble friend Lord McIntosh of Haringey would say that that is all short term. All I am asking him to appreciate is that presumably that is short term. At least in the short term, since the Government cannot possibly want an increase in unemployment, we are saying that what we mean by compatibility is that in the long term those people will he hack to work.
I will not go back to the old cliché again that in the long term we are all dead, but in the short term, I remind my noble friend Lord Mackay, that those people are actually unemployed. Whatever one says about the long term, they are the ones that hear the cost. As long as noble Lords appreciate what this means, then we have done our job and clarified what the policy-making involved here will do.
I have an ulterior motive. What this applies to will apply to the European Central Bank under EMU, where I am much more frightened of what might happen with this kind of approach, much as I am a strong supporter of EMU. My point in intervening was to make sure that my noble friend understands what it is he is committing himself to when he says, as he is about to, that he rejects this amendment.
Lord McIntosh of Haringey: I am not committing myself to anything other than to what the Bill clearly states. There is no difficulty about understanding it.

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We are setting the proximate target and we are providing the Bank of England Monetary Policy Committee with the means—the control—of short-term interest rates in order to achieve that target, it is accepted.
Price stability is the most important contribution which monetary policy can make to sustaining high and stable levels of growth and employment. Other policies may make other contributions, but it is monetary policy which is the subject of the Bill and with which we are concerned today. Our legislation ensures that price stability is the primary objective, but subject to this goal the Bank must also support the Government's other economic objectives. That is the basis on which this has been framed, and that is why the words "subject to that" are necessary in the Bill.
Lord Mackay of Ardbrecknish: I think we have had an interesting debate. I hope the Minister has not minded the teasing out of this. It is complex and it is absolutely central to what the duties of the Monetary Policy Committee are going to be. The Minister has clearly said that my interpretation of the clause appears to be the correct one. I will therefore ignore what the Chief Secretary said in the other place and listen to the noble Lord, Lord McIntosh of Haringey. If you are on track for (a), yes, you can worry about (b) and see what you can do about that, hut you must be on track for (a). I was interested in the quote—and I will read it in detail—from the Bundesbank, because it seemed that the Bundesbank was doing exactly the same thing but the other way around. It was, however, still making monetary policy its principal objective.
So I am a little wiser and even better informed after this debate. If I may say so to the noble Lord, Lord Barnett, my colleagues down the corridor, interestingly, had this debate around replacing the word "support" with "pursuing"—"to pursue the economic policy of Her Majesty's Government", which was quite an interesting nuance on what we have just discussed. For the moment, we will all read rather carefully in Hansard what the Minister has said and we may well return to it. I rather suspect, however, that I am more cheered by listening to him than are his noble friends. With that, I withdraw the amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 17:
Page 5, line 16, at end insert ("and a stable and competitive exchange rate over the medium term.").
The noble Lord said: I accept that I responded to aggressive "bunching" with aggressive "debunching", if that is the best way to describe it. On the other hand, this is slightly separate from the important point we were discussing as to what took primacy. I want to add, at the end of objectives for growth and employment,
"a stable and competitive exchange rate over the medium term".
I have taken these words from those of the Chancellor himself to the Treasury Select Committee, when he said,
"We want a stable, competitive pound over the medium term".
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I thought that a good place to look for some sensible words that the Minister might not disagree with! I am telling him where I took them from, in case he does disagree with them!
I am, of course, adding another objective, which I am doing because the exchange rate is extremely important. British manufacturing industry at the moment would perhaps say it is one of the most important things for them. They are probably more concerned about that than about the interest rate rises themselves or their consequences. I know that the pound was rising while I was still a Minister. My recollection is that I twice had to respond to my noble friend Lord Paul who drew this to my attention as something which was damaging British industry. He asked what was the policy of the then Government on exchange rates.
Indeed, the noble Lord, Lord Ezra, for the Liberal Democrats, was on to this particular subject on a number of occasions. I could go on and point out a quote from the Birmingham Post about manufacturing industry in that part of the world being concerned about exchange rates. Looking slightly further ahead, although it is not down here, it does say "including" and I presume it must include exchange rates.
What happens as we get nearer to EMU, which I feel pretty certain we will be joining, as I said before? I make no observation about the policy, simply that if we are to join it, is the pound to float right up to the point of joining? Will we be shadowing? Will we be in the ERM? Will that influence the Bank? Will it have to take that into account when looking at its primary objective of price stability?
I know the Minister may well not wish to specify too many things here and I remember these arguments on a number of occasions. The danger is that if you specify too much, it is assumed that anything not specified was not meant to be included. There is always that danger, which I appreciate. However, the Government have specified growth and employment. I am wondering why they have not decided to specify exchange rate, which is very dependent on the decision made by the Bank on price stability. I beg to move.
Lord Peston: My judgment is that this is an important amendment and, although I was acerbic earlier, I am sorry that we did not discuss it under the general rubric of the objectives of the Government. I am particularly concerned about it because there is an interesting article in the Financial Times today pointing out precisely the consequences of using interest rates, I assume, to maintain price stability. This is what the Monetary Policy Committee is about. It appears that simultaneously in the economy, the economy at large is booming, in the sense that there is too much demand, which is the whole point of the restrictive interest rate policy. On the other hand, the manufacturing sector is well into recession, at least according to this article, and we have a most peculiar state of the economy which simply derives from the nexus between the interest rate and the exchange rate. I add again that in my view, in so far as monetary policy affects price inflation. it certainly does not do it directly. The original monetarist's view seems to me to be theoretically

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preposterous and totally refuted by the available data. It does it either via the exchange rate or by damping down aggregate demand in any event.
Going back to the earlier debate, although I do not wish to go into it in full detail, this is as good an example of the conflict as one could possibly imagine. Let us assume that the Monetary Policy Committee claims it can see some signs that the inflation rate may well be going up and beyond the band. Therefore, it feels that it has to tighten interest rates. Someone present then puts up his hand and says. "What about the objectives for growth and employment?", to which reference is made in Clause 11(b), and that would be true if the Bill were already law. He says, "Ah, but the words 'subject to that' appear. Therefore we have looked at it but the 'subject to that' provision says that we must give priority to price stability. Therefore, if that means destroying another hit of UK manufacturing industry, so what?", My noble friend Lord McIntosh believes that, in the long run, manufacturing industry somehow revives itself, but all the evidence is that it does not. It is damaged once and for all. That is precisely why what we have been debating is so important.
Clearly, the noble Lord, Lord Mackay of Ardbrecknish, does not want this on the face of the Bill; at least that is how I interpret it. He wants to air this as an example of the kind of problem that arises here. I am glad he does that but the point of it is so that my noble friend the Minister and his honourable and right honourable friends can reflect further on what this means. When we come onto the monetary consequences of fiscal policies, we shall be making similar points.
Lord McIntosh of Haringey: I am afraid my answer will he very similar to that which I have already given for the reason that the amendments should have been grouped together. The fundamental answer is that the more objectives are set for the Monetary Policy Committee, the more prospect there is of conflict and the more you are saying to it, "Make up your own mind as between these two and the inter-relationships between them". That may be a proper subject for academic debate in the Monetary Policy Committee hut it has something different to do: it has to set short-term interest rates.
There is an additional reason why it would be unsuitable to put this onto the face of the Bill. Of course, the noble Lord, Lord Mackay, is right because he is quoting from an entirely reliable source. We all want a stable and competitive exchange rate over the medium term. Unfortunately, however, the exchange rate does not just depend on UK monetary policy. It depends also on the economic monetary policy of other countries and other factors that are not within the direct control of the Government or the Bank.
In the longer term, the exchange rate depends on the underlying productivity of the economy relative to others. Of course, as recent experience shows, the exchange rate can move in the short term for reasons unrelated either to monetary policy or economic fundamentals. So if that is set as an objective, it is very
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hard to see how the monetary policy could give effect to that objective. I hope the noble Lord will withdraw his amendment.
Lord Mackay of Ardbrecknish: I am not entirely sure the amendment would have been better grouped with Amendment No. 16, because this amendment deals with the question of what do you define as being included in the word "including". I am not entirely sure whether or not the Minister has signalled, in a sort of Pepper v. Hart way that, yes, the Monetary Policy Committee can have a look at other issues, and one of those other issues may be the rate of exchange. He has explained to me quite rightly that the rate of exchange can be quite detached from our own economic policy.
Lord McIntosh of Haringey: I hope there is no question of Pepper v. Hart because I am trying very hard not to say anything new. The wording of the Bill states:
"Subject to that, to support the economic policy of Her Majesty's Government, including its objectives for growth and employment".
Clearly, therefore, the economic policy of Her Majesty's Government can change from time to time other than in growth and employment, and stable and competitive exchange rates are not of themselves excluded from that further consideration.
Lord Mackay of Ardbrecknish: They are not excluded. I take the caveat that it may be something quite unrelated to what is going on in this country that causes the exchange rate to move up or down. At the moment it is a combination of events.
Lord Barnett: It is something that the noble Lord may not like. but, subject to our being outside of EMU, is a factor in what is happening to the exchange rate, not just interest rates.
Lord Mackay of Ardbrecknish: I accept that. As I have said, there are those outside events and undoubtedly our decision on EMU seems to make our currency more attractive at the moment to some people. Whether that means that our decision not to be in is the right one or not, I do not know. Well, I do know: it is the right one. But whether that is the reason that it is the right one is another matter.
The noble Lord wants to ask his noble friend a question. I had better let him because I am about to withdraw the amendment.
Lord Barnett: I just wanted to ask my noble friend whether I am correct in taking what he said as meaning that the reason the Bill is drafted as it is is to give the Monetary Policy Committee a simple objective, namely price stability, and for it not to be troubled about the Government's economic policy, exchange or anything else. My noble friend may correct himself, but he told us that he does not want to confuse the Monetary Policy Committee; he wants to give it a simple objective, namely price stability. Nothing else.

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I should tell him, incidentally, when we are talking about the Bundesbank, that Tietmeyer does not want a price target; he just wants a monetary target. However, that is an aside.
Lord McIntosh of Haringey: I do not want anything that the Bill does not want. I do not want price stability by itself. The Bill says:
"To maintain price stability, and subject to that, to support the economic policy of Her Majesty's Government, including its objectives for growth and employment".
That is what the Government think and that is what I believe should be the objectives of the Bank in relation to monetary policy.
Lord Mackay of Ardbrecknish: The Minister has tried to be helpful and I am sure we shall all have an interesting read. He has been clearer than his right honourable and honourable friends in the other place. I hope that will not do him damage at the Ministers' meeting tomorrow. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Clause 12 [Specification of matters relevant to objectives]:
Lord Peston Lord Peston moved Amendment No. 18:
Page 5, line 17, leave out ("may") and insert ("must").
The noble Lord said: In introducing the amendment, let me say to my noble friend that he is being a little modest, which is uncharacteristic of him. Whether it is anything new or not, as far as I am concerned, as a student of these matters, he has thrown an enormous amount of light on a Bill with which I was having great difficulty. I do not want to commit him to any Pepper v. Hart interpretation, but I now understand quite a lot of the Bill that I did not understand before and certainly could not get from the debates in the other place. It is up to him whether he regards that as flattery on my part or, as the noble Lord, Lord Mackay, said, undermining his future career. I am sure that the former is the correct interpretation, again on Pepper v. Hart terms.
Here is an amendment which I hope my noble friend will accept. He has already referred earlier to the "may"/"must" problem, let alone the "shall" problem. In the nearly dozen years that I spent on the Opposition Front Bench—rather less than my noble friend did—this sort of thing used to drive me completely potty. Someone once said to me, "You are a legislator, you ought to understand these things". I replied, "I am not a legislator, I am an economist". However, it appears that I am a legislator simply by agreeing to come to this place.
If I am a legislator, I believe that words ought to mean what they say, and I interpret "may" to mean "may not", I cannot think of the English language if "may" does not imply that the other possibility is "may not". That is why the word "must" is introduced into the language, to
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differ from "may". And yet when I raised it before—and although I do not believe I have raised it with the noble Lord, Lord Mackay, I have certainly raised it with one or two of his noble ministerial friends—they kept saying, "That shows what an idiot you are. 'May' does not mean `may', it means 'must', and then I would say, "Why then does it not say `must'?", and then I would get some argument that I never understood.
My view—and this follows very much from what my noble friend has already said—is that the Monetary Policy Committee cannot operate unless the Treasury gives it the answers to the questions in Clause 12. Therefore "may" has to mean "must". Can you imagine the Monetary Policy Committee saying, "Oh dear, Treasury, what does price stability consist of?". "We are not going to tell you. If you don't know we will not tell you", which is the way one sometimes treats one's children. Therefore, the Treasury must, by notice in writing, do these things. It then makes sense that the word "shall" appears a few lines later.
It may well be that the genius of a parliamentary draftsman yet again has written something for my noble friend which he will read out, and we will all nod sagely and pretend we understand it. I can only say that I understand it, within the limits of the language on which this country has based its history, and I think the word should be "must". I beg to move.
Lord Mackay of Ardbrecknish: I shall be brief. I fully accept that I may have erred on this issue before, and it drove me to despair as a Minister. Clarity is everything. I have always thought I knew what "may" meant, and I do not think it means "must". Interestingly enough, subsection (3) reads,
"Where the Treasury give notice".
Now that implies that there may be circumstances where it does not give notice. I am with the noble Lord, Lord Peston, on this one, and I do not wish my previous convictions to be taken into account.
Lord McIntosh of Haringey: This is one of those occasions where I think I understand it, and if I understand it, then it seems to me anybody can understand it. Now it is a question of whether I can explain it. It does indeed say "may" in Clause 12(1), but Clause 12(2) requires,
"The Treasury shall specify … both of the matters",
at least once a year,
"before the end of the period of 7 days beginning with the day on which this Act comes into force, and at least once in every period of 12 months";
thereafter, in effect. So there is a requirement on the Treasury to do that once a year. There is a power in Clause 12(1) for the Treasury to do it more often if it wants to, and that is why the Bill says "may". The objective of my noble friend in putting down this amendment is achieved by Clause 12(2).
Lord Peston: I must congratulate my noble friend. That is masterly! I have to tell him I have always thought of myself as a Smart Alec, but it never occurred

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to me that Clause 12(1) meant several times, and Clause 12(2) then said at least once a year. If that is what it is meant to mean. I could write a clause which said that in those terms and did not require the genius of my noble friend to explain it.
Before withdrawing the amendment, could I ask my noble friend whether that is a Pepper v. Hart intervention?
Lord Barnett: Could I ask my noble friend the Minister—and I entirely take his point—in that case, why can he not accept the amendment?
Lord McIntosh of Haringey: Because it is unnecessary, and because it achieves something which would not necessarily be achieved by "must".
Lord Barnett: Would it do any harm?
Lord McIntosh of Haringey: Yes. Unnecessary amendments do harm.
Lord Peston: I am sorry to pursue this, but on my noble friend's interpretation it is not an unnecessary amendment, assuming he accepts that he has now placed in the proceedings of your Lordships' House the definitive interpretation of this clause. I ask him again, in terms, whether the definitive interpretation of this clause is that "may" means several times and "shall" means at least once.
Lord McIntosh of Haringey: No. "May" does not mean several times; it opens up the possibility of more than once, but it does not mean several times.
Lord Peston: "May" means the possibility of several times, and "shall" means at least once. Can I ask for confirmation of that and then I shall sit down?
Lord McIntosh of Haringey: Clause 12(2) means once a year and it is quite explicit. As to "other occasions", that possibility is opened up by Clause 12(1).
Lord Mackay of Ardbrecknish: Perhaps I may intervene. I absolutely accept that, but it would be a great deal easier if subsection (2) were first. That is the normal procedure: once a year, this has to be done, and then subsections (1) and (3) which is "and other times". It is just a drafting point, but I understand how the draftsmen work.
Lord McIntosh of Haringey: I am happy to seek the draftsmen's opinion on that point.
Lord Peston: I am truly indebted to my noble friend Lord McIntosh of Haringey for those answers which makes the whole day's proceedings seem so worthwhile. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Ardbrecknish moved Amendment No. 19:
Page 5, line 21, at end insert ("or
(c) what the monetary consequences of its fiscal policies are likely to be.").
The noble Lord said: It is clear what I am asking here. When the Treasury gives its notice in writing, of what is price stability to be taken to consist and what is taken to be the economic policy of Her Majesty's Government? I would add a third paragraph, if there are to be three paragraphs: what are the monetary consequences of the Government's fiscal policy likely to be? That would be an indication to the Bank and to the Monetary Policy Committee how they ought to look at their conduct of monetary policy. I could go on a hit longer, but that is sufficient for the Minister to give me an indication of this additional point in the letter that the Treasury will send to the Bank. I beg to move.
Lord McIntosh of Haringey: What a pity! I was prepared to make a very long speech in response to this extremely important and complicated amendment, but now I shall not be able to do so.
Monetary and fiscal policy together affect the level and distribution of demand. The separation of monetary policy from fiscal policy is a discipline against excessive expansion. It is the discipline which Government impose on themselves against excessive expansion and against rising interest and exchange rates. The important point to be recognised is that neither the Governor, nor the Bank, is responsible for setting goals for both monetary and fiscal policy: monetary policy through the specification of the inflation targets, and fiscal policy through its own normal actions. There is no intention of making the two inconsistent.
The Government intend to pursue both a prudent fiscal policy and the goal of price stability in order to achieve the goal of overall stability in the economy. The Government are not intending to do the Bank's job, which would be the implication of the amendment of the noble Lord, Lord Mackay of Ardbrecknish.
Lord Mackay of Ardbrecknish: I should not like to leave the Monetary Policy Committee unemployed. What the noble Lord, Lord McIntosh of Haringey, has said as regards Clause 12(1)(b), is that the economic policy of the Government will be consistent with the target they set the Bank for price stability. On that basis, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Haskel: I think this may be a convenient moment for the Committee to adjourn until tomorrow at 3.30 p.m.
The Committee adjourned at twenty-two minutes before eight o'clock until the following day.

  Voting Systems
  Lord Hunt of Kings Heath
  asked Her Majesty's Government:

  Whether the results of the study commissioned in respect of electors' views on voting systems will be made available. [HL898]

  The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn)
  My right honourable friend has arranged for a copy of the results to be placed in the Library.

  Guardsmen Fisher and Wright
  Lord Boyd-Carpenter
  asked Her Majesty's Government:

  Whether consideration has now been given to the appeals of two Scots Guardsmen, Fisher and Wright, and whether it is now intended to release them; and whether they will give reasons for their detention. [HL687]

  The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs)
  The current appeals by Guardsmen Fisher and Wright take the form of a judicial review of the Secretary of State's decision of 27 October 1997 that the cases of the Guardsmen should be referred back to the Life Sentence Review Board in October 1998. Leave was granted for the judicial review on Monday 26 January. No date has yet been set for the hearing.

  There are currently no plans to release Fisher and Wright. As to reasons for their detention I would refer the noble Lord to the Answer given by my honourable friend, Adam Ingram, the Minister responsible for life sentence prisoners in Northern Ireland, in another place, in reply to a Question from my honourable friend the Member for Linlithgow on 12 January 1998 (Official Report, cols. 82 and 83).

  Deer Farming in Scotland: Support
  Lord Hogg of Cumbernauld
  asked Her Majesty's Government:

  What are their policies to support deer farming in Scotland. [HL761]

  The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel)
  The Government recognise that any support for deer farming in Scotland must be within the framework of existing UK and EC legislation. The industry is being encouraged to pursue possible grant assistance through the Marketing Development Scheme to assist in the marketing of venison as a healthy alternative to other meats. Financial WA 154
  assistance has also recently been provided to support the newly opened Deer Farming Training Centre at Barony College, near Dumfries, the first such centre to be opened in the UK.

  Armed Forces: Protection against Biological and Chemical Agents
  Lord Craig of Radley
  asked Her Majesty's Government:

  What policy they have adopted to protect members of the Armed Forces who might become involved in any new conflict with Iraq from the dangers of exposure to biological or chemical agents. [HL576]

  The Minister of State, Ministry of Defence (Lord Gilbert)
  The measures being taken at any given time to protect UK forces against chemical and biological weapons are based upon the prevailing operational circumstances and the latest threat assessment. In the light of Iraq's failure to account properly for its acknowledged programmes to acquire weapons of mass destruction, a range of equipment—chemical and biological agent detectors, warning and reporting systems, individual and collective protection, decontamination equipment, and medical countermeasures—has already been sent to the Gulf theatre for use by UK forces if necessary.

  In order that MoD has access to the best possible medical and scientific advice, we have established an independent Advisory Group on Medical Countermeasures, chaired by Professor Peter Blain of Newcastle University and made up of leading outside medical experts. Having sought and received advice from the new group on the current situation, we have decided that UK service personnel and MoD civilians in the Gulf region should be strongly recommended to accept immunisation against anthrax. The vaccination programme will commence later this week and involve personnel receiving three injections over the next six weeks and a fourth injection after a further six months, using the UK manufactured and licensed anthrax vaccine. No other vaccine will be co-administered with the anthrax vaccine and special arrangements have been made to ensure that the medical records of all those involved are properly annotated to register whether they receive the vaccine.

  The US and Canadian Governments are providing vaccination for their forces in the region in the same timescale, and are making similar announcements.

  My right honourable friend the Secretary of State for Defence has written to those Service personnel and civilians who are being advised to accept anthrax immunisation explaining the background to this decision. A copy of the text of his letter and the accompanying information leaflet are being placed in the Library of the House.

  Beef on the Bone: Review of SEAC Advice
  Lord Willoughby de Broke
  asked Her Majesty's Government:

  When they expect to subject to peer review the conclusions of the Spongiform Encephalopathy Advisory Committee relating to the advice to Ministers on bone-in beef; and [HL693]

  When they expect to publish the data on which the conclusions and advice of the Spongiform Encephalopathy Advisory Committee to Ministers on bone-in beef were based. [HL694]

  The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue)
  The Spongiform Encephalopathy Advisory Committee decided their advice to Ministers in the light of further findings of a continuing experiment to examine the spread of infectivity and the occurrence of pathological changes in cattle exposed orally to infection with bovine spongiform encephalopathy and of an independently conducted risk assessment. The experimental results were subject to peer review and preliminary observations were published in the Veterinary Record on 31 January 1998 (G.A.H. Wells et al, p103–106). Final observations await completion of the experiment. The risk assessment was commissioned by the Ministry of Agriculture, Fisheries and Food on behalf of the committee and was published by the technical consultancy company which did the work, Det Norske Veritas Limited. A copy of their report is available on the Internet at http://www.dnv.com.

  BSE: Phillips Inquiry
  Lord Luke
  asked Her Majesty's Government:

  Whether the terms of reference for the Phillips Inquiry on BSE include a requirement that current and former officials of the Ministry of Agriculture, Fisheries and Food shall be called to give evidence to the inquiry. [HL787]

  Lord Donoughue
  No. The inquiry has no statutory powers to require people to help or to attend. However, my right honourable friend the Minister has called for all concerned to co-operate fully with the inquiry and has confirmed that serving and retired officials would be expected to do so.

  Lord Luke
  asked Her Majesty's Government:

  In the event that officials of the Ministry of Agriculture, Fisheries and Food are not required to give evidence to the Phillips Inquiry on BSE but wish to do so on a voluntary basis, what is the procedure they should follow. [HL788]

  Lord Donoughue
  The Permanent Secretary has already informed all members of the department that they should feel entirely free to make representations direct to the inquiry. He has also publicised the inquiry's address and telephone number.

  Ivermectin
  Lord Moran
  asked Her Majesty's Government:

  Whether they are aware of the findings about the toxicity of ivermectin to marine life reported in The Times on 23 February; and, if so, whether they intend to ban it or restrict its use in the marine environment. [HL790]

  Lord Donoughue
  The Government are aware of this report, although our understanding is that it has yet to be formally published. However, there is currently no veterinary medicinal product authorised for use in the marine environment which contains ivermectin. If any application for authorisation of such a veterinary medicinal product were submitted, then this report would be considered along with all of the other data relevant to that application.

  Hospital and Community Health Services: Resource Allocations
  Lord Rea
  asked Her Majesty's Government:

  What factors are taken into account and what mathematical formula is currently used to calculate the allocation of resources to health authorities for hospital and community health services; how many times and in what way this formula has changed from that originally recommended by the Resource Allocation Working Party (RAWP); and whether further change in the formula is contemplated to take into account evidence that uptake of some services by relatively deprived groups does not fully reflect their increased morbidity. [HL727]

  The Minister of State, Department of Health (Baroness Jay of Paddington)
  I have written to the noble Lord today on this issue.

  A.40: Speed Limit Reduction
  Lord Burnham
  asked Her Majesty's Government:

  Why the speed limit on the six-lane A.40 has been cut to 40 mph from Greenford to Park Royal. [HL775]

  The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)
  I have asked the Chief Executive of the Highways Agency to write to the noble Lord.

  Letter to Lord Burnham from the Chief Executive of the Highways Agency, Mr. L. Haynes, dated 3 March 1998.

  The Secretary of State for the Environment, Transport and the Regions has asked me to reply to your recent question about the reasons for the new 40 mph speed limit on the A.40 between Greenford and Park Royal.

  The Highways Agency undertook a review of speed limits on the A.40 which looked at accidents between

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  the Hanger Lane Underpass and Target Roundabout. In at least 40 per cent. of cases, speed was a contributory factor. Therefore the reduction in speed limits has been implemented to help prevent accidents and injuries.

  French Transport Strike: Compensation Payments
  The Earl of Haddington
  asked Her Majesty's Government:

  On what date they anticipate all claims to be settled by the French Government in respect of payments promised to British transport companies who were caught up in the French transport strike; and whether they expect interest on outstanding debts to be recovered. [HL847]

  Baroness Hayman
  We know that the French authorities are now working to expedite the consideration of claims and to decide them as quickly as possible. Our officials are continuing to work closely with the authorities to ensure that valid claims are dealt with fairly and within the framework of French law, which we understand does not provide for the payment of interest.

  Landlord and Tenant Act 1954: Law Commission Recommendations
  Baroness Miller of Hendon
  asked Her Majesty's Government:

  Whether they have any plans to implement the recommendation of the Law Commission made in its report dated 4 November 1992 to modify the strict time limits set out in Section 29 of the Landlord and Tenant Act 1954 in order to save unnecessary expenditure of time of both lawyers and the courts, as well as costs. [HL765]

  Baroness Hayman
  The Government are looking closely at the recommendations in this report, many of which are obviously sensible. We will announce our conclusions in due course. Implementation would require primary legislation.

  Gypsy Families and Council Housing
  Lord Avebury
  asked Her Majesty's Government:

  Whether they will ask local authorities in England and Wales to keep records of gypsy families moving into, and out of, council housing. [HL730]

  Baroness Hayman
  We have no plans to do so. Gypsy families have exactly the same rights of access to council housing as anyone else, and we see no need to ask local authorities to keep such records.

  Second Homes
  Lord Monkswell
  asked Her Majesty's Government:

  How many United Kingdom households have two or more homes. [HL776]

  Baroness Hayman
  The information available is for households living in Great Britain, an estimated 250,000 of whom owned or rented a second home in Great Britain in 1996–97. This figure excludes second homes owned or rented in Great Britain by people living abroad or in Northern Ireland. The information is from the Survey of English Housing and the ONS Omnibus Survey.

  Household Statistics: Bedrooms
  Lord Monkswell
  asked Her Majesty's Government:

  How many United Kingdom households have homes with three or more bedrooms; and [HL777]

  How many United Kingdom households with two or more children live in homes with fewer than three bedrooms. [HL778]

  Lord McIntosh of Haringey
  The information requested falls within the responsibility of the Chief Executive of the Office for National Statistics, who has been asked to arrange for a reply to be given.

  Letter to Lord Monkswell from the Director of the Office for National Statistics, Dr. T. Holt, dated 3 March 1998.

  As Director of the Office for National Statistics (ONS), I have been asked to reply to your recent questions on United Kingdom households with three or more bedrooms and with two or more children living in homes with less than three bedrooms.

  During 1996–97, 61 per cent. of households in Great Britain lived in accommodation which had three or more bedrooms. For this same year, among families in Great Britain with two or more dependent children, 13 per cent. of these families lived in accommodation with fewer than three bedrooms.

  These statistics are taken from the 1996 General Household Survey for Great Britain. Equivalent data are not compiled for the United Kingdom.

  Duty-free Shopping in the EU
  Lord Morris of Manchester
  asked Her Majesty's Government:

  Whether they will review the impending abolition of duty free shopping by travellers between Member States of the European Union as previously agreed by their finance Ministers. [HL714]

  Lord McIntosh of Haringey
  The decision to end duty-free shopping within the European Union on 30 June 1999 was taken by the Council of Finance Ministers in 1991. Any review of that decision has to be for the Council as a whole. The Government have
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  previously said that they will not stand in the way of any proposal for a Commission study into the impact of abolition, particularly if this were also to examine the nature of any successor regime to duty free.

  Mis-sold Personal Pensions: Compensation
  Baroness Castle of Blackburn
  asked Her Majesty's Government:

  In view of the latest figures published by the Treasury on 12 February on the compensation paid to the 600,000 people who were mis-sold personal pensions and the warning by the Economic Secretary that in some cases they still leave much to be desired, what further progress has been made in this matter. [HL670]

  Lord McIntosh of Haringey
  The Government's objective is to see that all those investors who were mis-sold a personal pension receive prompt redress. To this end, the Government have since June 1997 collected and published each month figures from the firms with most cases to review, showing the progress each has made. The latest figures, covering the period to the end of January 1998, were published on 12 February.WA 160
  These show that progress continues to be made, with 60 per cent. of their cases requiring review resolved. Most of the firms concerned have now resolved over half the cases identified for priority review.

  However, there is no room for complacency, many cases remain unresolved, and we fully support the regulators in their ongoing efforts to ensure that all firms deal with their caseloads quickly and fairly.

  VAT Zero-rating: Exclusion of Architects' and Surveyors' Services
  The Earl of Harrowby
  asked Her Majesty's Government:

  Why the services of an architect or surveyor are excluded from VAT zero rating in Schedule 8, Group 6 (Protected Buildings), Item 2 of the Value Added Tax Act 1994. [HL734]

  Lord McIntosh of Haringey
  Only services performed in the course of the construction of a building are zero-rated. The services of architects and surveyors are not regarded as being directly connected to the actual construction of a building and are therefore excluded from zero-rating.