Sitting of 4 March 1998

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

Channel Tunnel Rail Link
Motion made, and Question proposed, That this House do now adjourn.—[Jane Kennedy.]
Madam Speaker: Before I call the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick), I remind hon. Members that I have a lot of applications to speak in the debate. In the best interests of all concerned, it would be appropriate to have short speeches.
9.34 am
Mr. Jim Fitzpatrick: I am pleased to have secured time to debate this important issue. I can confidently say that the channel tunnel rail link is a national issue. I hope to reinforce the well-argued and, I believe, accepted view that the CTRL is critical to the United Kingdom economy. The Government must continue to do all that they can to support the project and ensure its speedy completion. I know that many hon. Members are keen to contribute to the debate, so I intend to limit my speech to around 15 minutes—or at least that is what I have timed it at without interventions.
I shall refer to three basic points: first, the history of the project and how we got to the current dreadful situation; secondly, why the CTRL is a national, not just a regional issue; and thirdly, the importance of the CTRL to east London in particular and how it fits in with the transport infrastructure already being built or developed there.
I almost hesitate to point an accusing finger at the previous Government on the project's history, because I assume that most of the Conservative Members present this morning support the link. However, it is impossible not to make some comment. I hope that they will forgive me for saying that their former colleagues in the previous Government failed spectacularly when they told the House that they had reached a sensible business deal with London and Continental Railways.
Criticisms of the business plan, particularly those about the passenger projections, have now been shown to have been well founded. Even at the time, it was recognised that we were 10 years behind our European partners in building a fast link. Our standing in Europe has suffered as a consequence of that indecision and will continue to suffer if we do not rectify the position.
However, that criticism is history. As well as accusing and apportioning blame, I should also applaud and commend vision. I am happy to appreciate the number of former Ministers who recognise the importance of the CTRL to the UK economy in general—and east London in particular—and those who fought for the project in
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the Cabinet. I am even happier to commend my right hon. Friends in the present Cabinet who are fighting for the project.
The launch in Birmingham on Friday 20 February of the campaign known as Faster—Fast Tracks to Europe—demonstrates the national significance of the rail link. The campaign brings together local authorities from Glasgow, Manchester, York, Birmingham, London and the south-east, as well as business and industry from those areas, including the London chamber of commerce and industry. They jointly articulated the importance of national fast-track access to Europe for our regions. For the European Union to have the support of the people of this country, they need to have access to Europe.
We are joined to Europe by the channel tunnel. The rail link on our side must be as fast and convenient as that on the continent. Had the link been built by now, as it should have been, life would be a lot easier for West Ham United football supporters to travel to away games next season, when we qualify for Europe.
On a more serious note, it would be wrong not to take this opportunity to refer to my concerns about safety and Eurotunnel's continued resistance to separating passengers from their vehicles on Le Shuttle. The fire on the latticed freight transporter demonstrated the dangers of a fire in the tunnel. I firmly believe that the decision not to separate passengers from their vehicles was taken on flawed commercial grounds. Safety has been at best compromised and at worst disregarded by Eurotunnel—but I digress.
The United Kingdom as a whole needs the fast link. I know that the Government recognise that fact, and I dearly hope that they ensure that it goes ahead. My main comments are about the impact of the CTRL on east London. I can confidently leave others to address the issues that affect the rest of the United Kingdom, the Thames gateway and the rest of London, and the south-east. I know that others may refer to blight, which has adversely affected homes and businesses across the south-east and had—and continues to have—a negative impact on the lives of our people. I have heard particularly my hon. Friends the Members for Barking (Ms Hodge) and for Thurrock (Mr. Mackinlay) refer to that issue in other debates. Uncertainty, misery, unemployment, redundancy and negative equity are a few of the effects that their constituencies have had to endure. They need the matter resolved as soon as possible. This is certainly a serious issue.
Ms Margaret Hodge: I congratulate my hon. Friend on securing this debate. Does he agree that the most important forgotten victims of the whole fiasco are the hundreds of families whose homes have been blighted, through no fault of their own, by the mess that has been made of introducing the scheme? Does he accept that if there is further delay, we should ask the Government to introduce as swiftly as they can a more generous compensation scheme, so that residents who are unable to sell their homes have the opportunity to move and do not have their lives destroyed by something that has been brought about through no fault of their own?
Mr. Fitzpatrick: As one of my hon. Friend's constituents, I know that she has campaigned long and hard on the issue. I readily accept her points. I am sure that the Government will take note.

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Many people believe that London is Westminster and the corridors of power, the BBC and Fleet street. Perhaps it is if one is from outside the capital. But the real London, my London, is Poplar and Canning Town, an area of high unemployment—14.2 per cent.—of poverty, deprivation, overcrowding and homelessness, which puts Tower Hamlets and Newham among the 10 most deprived local authorities in the UK. But that is changing.
The Government's social exclusion strategy has been written for constituencies such as mine. Education standards are being raised, communities and long-forgotten estates are being rebuilt and partnerships between new business communities and local people are being engendered in east London. To ensure success, and in order to deliver, we need the transport infrastructure.
Already, we have had some new roads, and we have London Underground's District and Central lines, and Stansted airport. New developments are under way on the docklands light railway, and the City airport is looking to expand. Improved bus routes are taking shape and the Jubilee line extension to Stratford opens in 12 months. Improvements are planned for the A13, and there is a real prospect that the Thames will be crossed at three new separate points in the years immediately ahead.
The final piece of the integrated transport jigsaw is rail. Even now, rail is playing its part, but the channel tunnel rail link, with the international station at Stratford, makes it all make sense. The project is about the next millennium, planning for the future. This is the stuff of boldness, of vision, of government.
In economic terms, east London has for too long been the poor relation of the family that is our great city of London. Historically, the east end has been a starting point for waves of immigration—Protestant, Catholic, Jewish, black and Asian communities. In common with most other eastern quarters of cities in the United Kingdom, east London has been our industrial centre. With prevailing westerly winds, it was convenient for our Victorian ancestors to locate certain industries in our part of town, where the sensibilities of others would not be offended by the smell, which would be directed away from the City. Consequently, gas and sewerage works linked with business that was dependent on the docks, to create a potent cocktail. But times have changed.
We still have some important traditional industries, but, following the closure of the docks, regeneration of the area was addressed, and the industrial focus moved to a commercial one. In the past 20 years, thousands of jobs and many businesses and organisations have moved to east London. The benefits are yet to penetrate the poverty that many local communities still suffer, but that will happen. I repeat the suggestion that I made in the debate on the Greater London authority, that docklands would be a wholly appropriate home for the new mayor and the elected assembly.
As I said, there is high unemployment, overcrowding and homelessness in my constituency—all the indices of poverty. The Government's new deal programme and welfare reform, as part of their social exclusion strategy, are critical. That is where we can make a difference. East London is the gateway to Europe. For Britain to be successful, London must thrive. For London to prosper, we need continuously to renew. The symbolism of
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docklands, Canary wharf, the millennium dome and, yes, even baby dome, is our beacon. It says to Europe and the rest of the world, "This is our capital; This is our country; This is our future." If the channel tunnel rail link is not built now, it will delay our renewal by a generation—although not prevent it. When we look back at the Tories' 10 years of indecision, we say that they were weak and frightened, and that they failed. This Government must not fail.
The London borough of Camden and its advisers have calculated that not to proceed with the CTRL would cost £850 million. Additionally, the Thameslink 2000 project, which was part of the Channel Tunnel Rail Link Bill, would be compromised by any decision either not to proceed or to phase the project. Waterloo is not a real option because it does not have the capacity, particularly if the hope to move more freight by rail rather than road is to be realised.
Mrs. Jacqui Lait: I assure the hon. Gentleman that my constituents in Beckenham and throughout Bromley will be supporting his and his colleagues' plans to ensure that the channel tunnel rail link goes east of London because, at the moment, they are suffering from the noise and disruption caused by Eurostar.
Mr. Fitzpatrick: I am grateful for the hon. Lady's support.
It is calculated that, as a regeneration engine, the CTRL could create between 80,000 and 120,000 new jobs. When in opposition, Labour endorsed the project and flagged up what were seen as flaws in the business plan, to try to ensure its success. We need to support the project now that Labour is in power because the reasons why we supported it then are as valid now, if not more so—even if that means more public resources and financing.
Mrs. Gwyneth Dunwoody: I am a bit worried by that. Is my hon. Friend really saying that we should commit a great deal more public money without getting something in return? I am sure that that is not quite what he means. We all want the project to go ahead, but I hope that the Government will look very closely at what the taxpayer will get in return.
Mr. Fitzpatrick: I am sure that my hon. Friend is correct in encouraging the Government to look very closely at the prospect of allocating additional resources. However, I believe that the benefits that will accrue to the UK in general warrant consideration of additional resources. If London and Continental Railways is unable to deliver a new financial package, the Government may want to look to such an option.
It is encouraging that my right hon. Friend the Deputy Prime Minister has afforded LCR extra time, because it seems to be making progress. I am aware from contacts with various businesses over the past 48 hours that at least three other international consortiums are queuing up in case LCR fails. Although I hope that extra public finance is not necessary, I do not think that the Government should disregard the option. The prize at stake is too great.
This issue is not an east London, a London or even a south-east one. It concerns the whole of the UK. I congratulate my right hon. Friend the Deputy Prime

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Minister and his colleagues on the attention that they have given the matter so far and on their determination to make it work. I am sure that the whole House will join me in wishing them every success.
9.48 am
Mr. Damian Green: I welcome the chance to speak in this debate while delicate negotiations are going on. I congratulate the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) on suggesting the debate. I am glad that he steered away quickly from turning the issue into a party political one. At this stage particularly, that would be completely inappropriate.
Broadly, I endorse the thrust of much of what the hon. Gentleman said about the importance not only of the link being built but of the whole link being built, so that the full benefits can be obtained. The people of Kent, including those in my constituency and all along the route of the line, have suffered blight and uncertainty for many years because of both the prospect of the line and the many delays in building it.
What those people deserve is that when the link is eventually built it will be a great national project bringing regeneration. The benefits that the people of Kent deserve come into two categories. The first would be better commuter links for themselves, not only on the line itself but through the release of capacity on other rail lines that have become increasingly crowded as the Kent economy has improved over the past few years.
Secondly, the people of Kent deserve the knowledge that the project is an essential link in a national project—indeed, an international project—involving not only the urban regeneration that the hon. Gentleman described but the general upgrading of rail services throughout Britain and into Europe.
I want to talk about what seems to be happening, and the likely effects. I warn the Minister that if the Government cannot find the subsidy to build the whole link at once—I dare say that that is the most likely eventuality—warm words about building future phases, after a first phase stopping at Southfleet, will not be enough. The people who live along the route, and channel tunnel rail link enthusiasts throughout the country, will want to see a firm timetable for building the entire line, with penalty clauses written in so that the timetable can be enforced.
Almost the worst eventuality would be for part of the link to be built, with all the disruption that that would cause, followed by vague words about how the rest of it would be built in phases over the years to come, but for the years to tick by with phases 2 and 3 delayed. In my more pessimistic moments, that seems to me to be the most likely outcome. I hope that the Minister can give us an assurance that it is not.
Mr. Stephen Timms: I agree with the hon. Gentleman. I wonder whether he has noticed that some newspapers, including the Financial Times, are suggesting that it would be a good thing if only the first section of the link were built. Does he agree that that would be a disaster, and that the Government must ensure that when an announcement is made about taking the project forward there is full confidence that the whole link will be completed?
Mr. Green: The hon. Gentleman makes a good point, and I reinforce it from my constituency point of view.
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Because people have had to put up with blight and uncertainty for so long, they will be angry if they feel that, after all the inconvenience and damage to housing and to businesses along the route, the only result is 10 minutes off the journey. That would not seem like a sensible equation of advantage and disadvantage.
Mr. Andrew Mackinlay: As I am now being allowed to intervene, I shall not endeavour to catch your eye later, Madam Speaker, because of the number of other hon. Members who want to speak.
The hon. Member for Ashford (Mr. Green) and I have collaborated closely on the matter, especially concerning our mutual problems with business blight and the distressing circumstances of small and medium-sized businesses.
I have every confidence that everything that the hon. Gentleman is saying is what I would have uttered if I had caught your eye, Madam Speaker, so I want to associate myself with it, and acknowledge the way in which the hon. Gentleman and I have collaborated in making representations to the Minister about our local businesses.
I reinforce the idea not only that the link must be built in its entirety but that any slippage would be an abuse of Parliament, because the long title of the Channel Tunnel Rail Link Act 1996 makes it abundantly clear that Parliament's intention was for the whole link to be built with the maximum expedition.
Mr. Green: I am grateful to the hon. Gentleman not only for those remarks, with which I agree, but for his share in the work that we have done together on behalf of small businesses in both our constituencies, which are often in severe difficulty because of the various delays to the link.
I ask the Minister to give me some assurances and to answer some detailed questions about the propositions now before the Government. It is about 12 hours since I was last in the Chamber, and at that point the Minister was sitting there replying to a debate—so may I congratulate her on both her stamina and her versatility?
The Minister for Transport in London (Ms Glenda Jackson): I was standing, not sitting.
Mr. Green: Yes, she was standing. One wonders whether she ever gets away from that place.
I should like to receive three assurances from the Minister. The first is that whichever new project comes forward and whatever consortium is building it, there will be no relaxation of the environmental standards imposed in the original Bill that went through both Houses of Parliament and was fought over in detail by many people in this House and in another place, as well as in local communities along the route.
Along the route there is much fear and cynicism to the effect that one of the ways in which money might be saved when a new project emerges would be to relax the environmental standards. The Minister could reassure many people by giving an assurance this morning. In that context, I take it as read that when a new project comes forward there can be no change to the route currently before Parliament.
The second assurance for which I should be grateful is that the delays will soon come to an end. One understands that we are talking about complex commercial

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negotiations, to which the Government are only one party, so perhaps it was over-optimistic to expect them to be wrapped up in the 30 days that the Deputy Prime Minister originally suggested.
None the less, I must tell the Minister that businesses along the route, including those referred to by the hon. Member for Thurrock (Mr. Mackinlay), are especially damaged by the lengthening uncertainty, and I urge her to move as fast as possible to a conclusion of the negotiations.
The third assurance that I seek is that no secrecy should surround the deal eventually struck. Railtrack is at times an inherently secretive organisation. For example, last year an accident—not serious, fortunately—happened in my constituency. When I wrote to Railtrack some months later asking for details of its inquiry, and what remedial measures it proposed to take, I was shocked at its reply that the information was not available to the public and it was up to the Health and Safety Executive to say whether it should be released. The HSE wrote back to me saying that it was not its responsibility but Railtrack's—and compounded the insult by accompanying the letter with a pamphlet on open government.
Mr. Michael Howard: Does my hon. Friend agree that one of the greatest assurances that the people of Kent could have would be one from the Minister today that Kent county council will be fully consulted and involved in the decision-making process? We hope that the decision will be completed as soon as possible, but we should like the county council to be fully involved.
Mr. Green: My right hon. and learned Friend is right. Kent county council has played, and is playing, an active and constructive role in bringing the project forward, and it is important that its ability to represent the people of Kent is recognised by full consultation during the negotiations.
The Minister will recognise the importance of avoiding secrecy, because, speaking in the House about the deal with London and Continental, she said:
"I understand that no one in the House is privileged to see the contracts in any detail or to discuss them, on grounds of commercial confidentiality. It is a curious commercial enterprise that is clouded in mystery in one direction."—[Official Report, 25 April 1996; Vol. 276, c. 629.]
I am sure that the hon. Lady will endorse her own words and will not wish such secrecy to surround the project in future. Will she assure the House that full details of any agreement will be put in the Library for the perusal of Members?
As well as asking for those three assurances, I shall ask the Minister three questions. First, what type of freight does the Department think will be carried? We hear a lot about the freight benefits of the link. I assure the Minister that this is a genuine search for truth. Many, perhaps most, of the questions asked in the House are questions to which the questioner thinks he or she already knows the answer, but in this case, I genuinely have no idea of the answer, and no one connected to the project has ever satisfactorily explained it. We all agree that the line as planned will not be able to take any kind of heavy freight, but there is
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vague talk of "high-value freight" being carried. I am not sure whether that means any more than parcel freight, and I should be grateful if the Minister would give some guidance.
My second question is whether it is feasible or practical for Eurostar to share the lines between Southfleet and London with the existing commuter traffic if we go for a phased project, with the first part of the line built to Southfleet and the rest built in stages afterwards. I have been assured by reasonably well-qualified railway engineers that the amount of commuter traffic using the lines from Canterbury and the Medway towns to London will mean that either we will have to cut the commuter traffic in the rush hour or Eurostar will not be able to run in the rush hour. If that is true, it suggests that the phasing of the project would be simply impractical.
My third question is whether the benefits of upgrading the existing track are being considered while the Government are looking at all the options available to them. Engineers say that, effectively, we could save 15 minutes from the journey for £1 billion. We are, broadly speaking, talking about spending £7 billion or £8 billion to save 35 minutes, and it seems that that proposal deserves full consideration.
We recognise that the channel tunnel is a great national achievement, but it is only half an achievement. Linking the tunnel to the rail network of this country is the other half. London and Continental has had many failings, not just the central failing of its passenger projections which has led to the current financial plight. More particularly, it has been determined to keep secret the fact that it is more convenient for the whole of the south-east of England to drive to Ashford and travel from there than to struggle in to Waterloo. Despite the best efforts of the excellent management and staff at the Ashford international passenger station, the marketing of the station by London and Continental has been inadequate. Perhaps that is a symbol of its lack of commercial acumen.
Many people—not just my constituents, but all the people of Kent and the rest of the country—hope that the consortium put together by the Government shows more sensitivity to the needs of people who live, work and run their businesses along the route. We hope that it will be able to complete the project so that the whole country can gain the advantages that will be available from it.
10.2 am
Mr. Peter Snape: It is perhaps appropriate that I follow the hon. Member for Ashford (Mr. Green) because I shared the job of co-chairman of the all-party channel tunnel group with his predecessor, Sir Keith Speed, for many years.
I wish to make two declarations of interest. First, as a former railwayman, I am still a member of the National Union of Rail, Maritime and Transport Workers—one of the reasons behind my interest in this great project. I am also the chairman of Travel West Midlands, a bus company based in Birmingham which is a subsidiary of National Express—itself a member of the London and Continental consortium. I ask the House to appreciate that I am not speaking on behalf of National Express. I have never had anything to do with the railway side of its operation, but I feel that such a connection should be on the record before I speak in the debate.

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I congratulate my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on bringing this important subject to the attention of the House. In an able speech, he talked about the history of the project. However, he did not go back far enough. Those of us who have the doubtful benefit of old age can remember this project in the 1970s when, I must say, neither of our main parties came out with any great credit. The Channel Tunnel Bill was cancelled by the Labour Government shortly they were elected in 1974.
I say to my hon. Friend and other colleagues who feel that public money should be put into the project that one of the reasons given for the cancellation was that there were other priorities for public money. At that time, many of my hon. Friends were in favour of the cancellation of the project because they wanted public money spent on schools, hospitals and other matters with which the Government were directly involved. I must tell my hon. Friend that I would not hold my breath too long if he thinks that the Treasury is likely to come to the rescue of London and Continental, or anyone else.
I was more amused than angered by the intervention of the former Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who is no longer in his place. I do not know how any member of the previous Cabinet could jump up and defend his constituents against the effect of this project on their lives, given the enormous mess that the Conservatives made of it from beginning to end. I admire his cheek, if not the basis on which he made his intervention.
The hon. Member for Ashford and all of us are anxious that the link is built as quickly as possible. I attended the meeting in Birmingham last Friday to which my hon. Friend the Member for Poplar and Canning Town referred. The Fast Tracks to Europe group is unrealistic when it says that the project must not be phased. Whatever happens, it seems unlikely that the work will start at each end of the route and will meet in the middle. Some phasing is inevitable. It looks as if the southern section will be built first, because—let us be realistic—it is likely to be a lot cheaper.
I have seen the figures produced by Fast Tracks to Europe, which suggest that such an approach will cost money because of the loss of benefits, but I have yet to hear a real alternative. If no Government money is involved, and if the projections for Eurostar travel—receipts from which will go towards the building of the project—are accurate, some degree of phasing, unpalatable though it might be to us all, is inevitable.
Around 1991, the right hon. Member for Henley (Mr. Heseltine)—that great social engineer of the previous Government—decided to change the route. I know that that decision suited some of my hon. Friends, and I congratulate them on the effectiveness of their campaign. When the right hon. Gentleman changed the route, companies such as Blue Circle found themselves to be sitting on valuable real estate in the Ebbsfleet area. Coincidentally, the public relations company involved with Blue Circle at that time had as one of its representatives the former vice-chairman of the Conservative party, Dame Angela Rumbold.
I wonder whether companies that made money out of the project have volunteered to put any of their extra profits into the cost of building the rail link—particularly that part of it north of their land which is more expensive
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because of the need to tunnel under London. Cynic that I am, I would be surprised if any volunteer had come forward.
All of us want the project to benefit the rest of the country. Those of us who represent constituencies in the west midlands are no less anxious to see that happy event come about. What we have at present is the worst of both worlds. We have all the uncertainty about the future of the link, and we have no through trains to Europe. Indeed, the connecting trains to Waterloo have been removed by London and Continental, although many remain on the timetable. Last week, the Birmingham Evening Mail and the BBC highlighted the absurdity of a local train being held for eight minutes at Birmingham international station to allow for one of the Eurostars that do not exist as far as the west midlands is concerned.
I understand some of the difficulties in getting a safety case for the trains north of London. As far as I understand, they still only run between Manchester and somewhere like Bletchley. I should be grateful to the Minister if she would tell us what progress is being made to introduce those trains north of London, and whether the newspaper rumours about the trains being leased to Virgin or any other train operator for incorporation into their service are valid. No one north of London, and few people in London, have benefited from the project so far.
As the hon. Member for Ashford said, the link is a great engineering project, and all hon. Members attending this debate want to ensure that the original intentions of the Committee dealing with the channel tunnel are carried out. I am sorry if this sounds like a plea for medals for a rather undistinguished career, but I served on the first channel tunnel Committee in the 1970s—I remember, to my amusement, that there were only about 60 objectors then. When I served on the subsequent Committee in the mid-1980s, there were 12,000 objectors.
The hon. Member for Beckenham (Mrs. Lait), who is no longer in the Chamber, illustrated the dilemma that arises from the channel tunnel rail link and the expansion of the railway system—all of us are in favour of expanding the network, until the trains run through our constituencies or past the bottom of our gardens. According to the hon. Lady, the prospect of an hourly train of 18 coaches going to Paris or Brussels makes life intolerable for her constituents. I think that she exaggerates. People who buy houses next to railway lines and then complain about the noise from trains do not endear themselves to me as a former railwayman, although some of my hon. Friends may take a different view. We want the benefits of the link to be brought to the rest of the country, as was intended, so I hope that my hon. Friend the Minister can answer some of the points that have been made.
I think that my hon. Friend the Member for Poplar and Canning Town is as realistic as I am about subsidy—he knows that Treasury involvement is unlikely. The fact that, across the country, road bridges are being strengthened to take 44 tonne lorries—that is a direct subsidy to the road haulage industry by the taxpayer—yet both the previous and current Governments said that public money cannot be found for the great project that is the channel tunnel rail link is an illustration of how we treat different forms of transport.
I add, as an amusing aside, that when Lord Parkinson stood at the Dispatch Box as Secretary of State for Transport, he used to say, "There must be no public

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money for the channel tunnel or the rail link." Nevertheless, he popped up later as chairman of one of the consortiums asking for £1 billion of public money for that very rail link. That illustrates the awesome warning to all hon. Members—never say never. We should never say never about this great project.
10.12 am
Mr. Tom Brake: I welcome the opportunity to speak in the debate. I start by running through some of the history of the project—not the whole history, hon. Members will be pleased to hear. The first reference to a high-speed link that the Library could identify came in a speech by Sir Bob Reid on 9 May 1988. He said that a high-speed link would be built if it brought
"the right level of profit".
Hon. Members may be interested to know what was happening in France at that time. Construction of the train grande vitesse north line began after the end of September 1989.
Nearly 10 years on, and many miles of new roads later, the House is debating a future high-speed rail link, while Eurostar ambles through south London—Brixton, Beckenham and Orpington—at an embarrassingly relaxed and leisurely pace. What progress has been made in France? As hon. Members may know, its high-speed link was opened in September 1993—four and a half years ago—at a cost of £2 billion. That is a sad indictment of the previous Government's obsessive love affair with roads and their indifference to the railways.
The White Paper to be published soon will confirm whether the new Government have a more balanced approach to infrastructure provision and whether they believe that there should be a level playing field for roads and rail. In the meantime, they have to contend with the thorny issue of the channel tunnel rail link.
Over the past few weeks, I am sure that the Deputy Prime Minister has been considering the pros and cons of allowing the project to sink or swim. I give three good reasons why the high-speed link should be built. First, it will make it easier to shift freight off the roads and on to rail by releasing network capacity for freight trains. Secondly, it will cut CO2 emissions, as many short-haul passengers who currently fly will choose to travel by rail. Thirdly, as hon. Members have said, it will help to regenerate some of the poorest parts of east London, developing the recycled sites that the Deputy Prime Minister has prioritised.
There is also a good reason why the link should be built along the current route. We are already five years behind the French, so surely our national pride will not let us slip behind a further five years while new legislation is drafted to provide for a new route.
If the Deputy Prime Minister accepts that argument, he has the choice of four partners—London and Continental Railways, Railtrack, Bechtel and Eurorail—some or all of which could take the project forward. If he seeks a deal with LCR, he should not reward it for its past bad management and judgment. If he seeks a deal with Railtrack, he should offer no sweeteners—he should not allow it to impose higher access charges for all other rail
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users. If he fails to secure a deal with LCR, Railtrack or any of the other players, and chooses not to back the project, I would ask him a simple question—what is Government for?
Mr. Snape: You lot would not know.
Mr. Brake: We shall find out shortly.
Liberal Democrats believe that Government should protect people on some of the lowest incomes—such as people with disabilities or lone parents—provide free education and take the lead. Even if the Government do not agree on the first two points, I hope that they can agree on the third. If no commercial operator produces an acceptable package, the Government—through a public interest company, bond issue or other measures—must step in. The need for Government involvement in such a strategic project was recognised even by the previous Administration, who committed £1.4 billion to the rail link.
The country needs the high-speed rail link, and it needs it to be built in its entirety—a 17-minute reduction in journey time for the first phase is not a sufficient benefit. I understand that Department of Trade and Industry lawyers advised the Government that if they intended to build not the full length but only stage one, a new Act would be required, with all the delays that that would entail. The Government must, therefore, be committed to building the full link.
The channel tunnel rail link is the first real test of the Government's commitment to an integrated transport policy, to moving freight from road to rail and to meeting their own CO2 reduction targets. It is now up to the Deputy Prime Minister to show us whether he can rise to that challenge, or whether, like his Conservative predecessors, he will falter and stumble.
10.17 am
Mr. Paul Clark: I add my congratulations to my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on securing the debate at such an opportune time. Hon. Members from all parties recognise the difficulties that face both London and Continental Railways and the Government in saving and developing something from this project—although we should not save just any old thing. As my hon. Friend the Member for Poplar and Canning Town said, the project is not a local or regional issue; it is a vital national and transcontinental one.
The rail link will draw in business to the channel tunnel from the east and, via the west coast main line, from the midlands, the north-west and the west of Scotland. Businesses and individuals will be able to capitalise on the opportunities that the link provides. Other hon. Members may be able to point up the significance of the rail link on a national level.
The link will open up the Government-identified Thames gateway region, which extends from east London through Dartford and down the north Kent coast, and includes my constituency and the western boundaries of Sittingbourne and Sheppey. The area contains about 2.5 million people, 17 local authorities, 10,000 acres of business and industrial land, and three training and enterprise councils.

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The Thames gateway is the largest European regeneration area. The Government's regional strategy identifies north Kent as a growth point for major development. Significantly, much of that development, in business and new homes, would be on an abundant source of brown-field sites, which is clearly in line with Government policy.
The development of the Thames gateway will unlock major locations that face directly the main European markets. To succeed, we need the infrastructure: the rail link must be developed in its entirety. A link that stops short of the new international station at Ebbsfleet and transfers to existing lines will not deliver the regeneration, unlock the brown-field sites and help the people of north Kent.
It is anticipated that the development of Ebbsfleet will bring up to 50,000 new jobs and allow 30,000 new homes to be built. For the approximately 300,000 people living in the Medway towns, it will be a catalyst for new opportunities, with direct rail links to jobs along the north Kent line.
In addition to the development, a new commercial zone will be created adjoining Ebbsfleet station. There will be sustainable journey-to-work patterns by public transport, rather than by car, which, again, is in line with our integrated transport strategy.
The full scheme, including the new stations at Ebbsfleet and Stratford, will afford the people of north Kent greater job opportunities, as they will have access to new areas such as Stratford and St. Pancras. Those jobs will be linked to far faster and more reliable rail services: Gillingham will be only 30 minutes from St. Pancras if the link is built in its entirety.
The link is essential for the regeneration and redevelopment policies of the Government and of Kent county council. Failure to complete it will send out the wrong signals. The private sector has already made huge commitments to north Kent. Failure to honour the promises that elicited those commitments will destroy confidence not only in the immediate area but, I fear, in other developments that are proposed along the entire route of the integrated link, including east London, Birmingham and the west midlands, and the north-west.
We should record our appreciation of the fact that the House has been kept quickly and reliably informed through the offices of my right hon. Friend the Deputy Prime Minister, in both a statement and a written answer. Our resolve to build the link, which will eventually connect the east, the west, the south and the north of our country to the European capitals of commerce must not weaken. Failure could mean that we end up as a branch line to Brussels.
We must remain true to the original agreements. The Deputy Prime Minister's statement last month informed us that there was no intention to consider an alternative alignment to that approved in the Channel Tunnel Rail Link Act 1996. That is more than welcome. Any deviation would be the death knell of a realistically timed completion of the link.
Hon. Members who are far more au fait than I am with developments over the past 20 years—at least—said that various alternative routes had been canvassed. I whole-heartedly agree with what the hon. Member for Ashford (Mr. Green) said about blight and uncertainty, because those alternative routes caused much anxiety
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and concern among home owners and businesses; my hon. Friend the Member for Thurrock (Mr. Mackinlay) also mentioned the business side. It is essential that competition should not reopen for the design, construction and operation of the link, as that would open a Pandora's box of alternatives and variations.
One benefit of the link will be to open up existing lines for other uses, increasing both passenger and freight capacity. I shall be interested in the Minister's response about freight, as there seem to be some differences of opinion. I understand that there will be increased capacity for freight on some existing lines, as well as along the link. That will have an important environmental impact in helping us to reduce traffic congestion.
The environmental impact of the link itself must be minimised. Debates in both Houses over two years have developed negotiations that have led to high standards and considerable sophistication in the plan, which incorporates measures embodied in the environmental minimum requirements and undertakings given by the previous Government and LCR. It is essential to adhere to that.
We must grasp the opportunities before us if we are to be a key player in the issues of integrated transport, commerce and the European Union. The development of the link gives us the opportunity to create the right balance and to implement the Government's sound objectives on issues such as the fight against poverty, social inclusion, the environment, integrated transport, the regions, and Europe.
This is not a local issue, as can be seen by the range of hon. Members who signed early-day motion 770 and by the membership of Fast Tracks to Europe, as mentioned by my hon. Friend the Member for Poplar and Canning Town, which includes many private sector organisations and the leaders of many local authorities throughout the country.
The message, specifically from the Medway towns, is that we must build the link in its entirety as quickly as possible, so that we can have the transport links that are needed for the 21st century.
10.28 am
Mr. David Amess: I congratulate the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) on securing this debate. He has done the House a great service. It is a little sad that the bipartisan approach slipped somewhat. It is up to the current Government to decide how to proceed on the matters that face them, but it would be churlish of hon. Members not to note that the channel tunnel itself was built during the 18 years of Conservative government. I am proud to defend the record of the Conservative Government, which was democratically elected on four occasions.
Mr. Snape: There were also a few hot summers during the period of office of the previous Conservative Government. Is the hon. Gentleman going to claim credit for those as well? On the insistence of the then Prime Minister, not a penny of public money went into the channel tunnel.
Mr. Amess: That is exactly the point and it is something which has been learnt from the Conservative Government. I shall leave claiming the credit for hot summers to the Liberal party and new Labour.

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I must also pay tribute to the noble Lords Parkinson and Channon, who did a great deal during their terms of office to drive the project forward. Our former colleague Michael Portillo, as Minister of State at the Department of Transport, also did a great deal to make the channel tunnel project the success that it obviously is. Finally, without the noble Baroness Thatcher none of it would have been possible.
My roots run deep and I suspect that I am the only person in the Chamber who was born in the east end of London—in Stratford. In the previous Parliament, it was my great joy to work with, among others, the hon. Members for East Ham (Mr. Timms) and for West Ham (Mr. Banks)—now the Minister for Sport—and Mr. Nigel Spearing, who has now retired. We worked together in a bipartisan fashion and a great deal has been achieved as regards our particular concerns in Newham.
I still have family living in Newham; indeed, that is where the tiny vote for the Conservative party comes from these days. Although I was less than satisfied for a long time with what went on there—I call those the barmy days of Labour—a number of projects are a great joy, particularly those in Stratford. I protested about the pyramid 20 years ago, saying that it was a waste of time building it and I note that last week it was blown up—my hon. Friend the Member for Ashford (Mr. Green) will have enjoyed that—so I was right in my protestations all those years ago.
The channel tunnel rail link is important not merely for Newham but for both our Essex constituencies, Mr. Deputy Speaker. It is essential that the project is completed. For docklands and Stratford in particular the link is essential—it is the most important rail link.
I wish that I had time to touch on the excellent advice that I have been given by the London borough of Newham regeneration and partnerships division, which has done some great work on the subject. I must emphasise its point that:
"Without the CTRL being built in its entirety … to central London, there will not be the possibility of moving commuter trains from Kent from congested existing lines onto it between international trains and 'freeing up' capacity for more freight movement through Kent to the Channel Tunnel. Indeed given the growth figures already referred to, the Integrated Transport Strategy, on which so many hopes are built, especially that freight will be moved from road to rail, could face an immediate crisis of insufficient capacity. Phasing solely to Southfleet or Ebbsfleet could deliver the worst scenario of all—no possibility of increasing either the number of international trains an hour (from the current 3) and no extra capacity for freight trains unless the number of commuter services is reduced. It is already clear that the different train operators recognise the looming problem. However, with Railtrack—the track provider—set to be a major player in the CTRL rescue … they are reticent in voicing concerns when they may shortly be competing with other train operators for an insufficiency of train paths."
I realise that this is a difficult moment for the new Government—how best to approach the challenges facing them—but I hope that we will not be churlish and that we will rejoice in this great engineering feat. I hope in particular that the House will be minded to support the efforts of Newham council and Stratford in particular.
10.33 am
Mr. Jonathan Shaw: I join other hon. Members in congratulating my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on securing this important Adjournment debate. He has distinguished himself as a first-class chairman of the all-party Thames gateway group. He and my parliamentary neighbour, my hon. Friend the Member for Gillingham (Mr. Clark,) make a formidable team in leading our group, which represents constituencies in London and the south-east. The success of the Thames gateway is fundamental to our opportunities to secure economic regeneration, as many of those opportunities stem from the building of the channel tunnel rail link.
Dr. Howard Stoate: Is my hon. Friend aware that the opportunities for regeneration are immense in my constituency? As Opposition Members and my hon. Friends have already said, up to 50,000 new jobs could be created as a result of the creation of Ebbsfleet international station. Also, 90 per cent. of the 30,000 new houses proposed for the area would be built on recycled land, in line with Government policy, thus protecting the green belt for the area.
Mr. Shaw: That is an excellent point, and just the sort of example I was looking for, so I thank my hon. Friend for his intervention.
I will not discuss the route in its entirety, but I associate myself with all the other comments about that. I must focus briefly on an issue that affects constituents who live in and around the Medway towns—the M2 widening and the construction of the channel tunnel rail link, both of which were authorised in legislation. During the parliamentary process, the three authorities that represent my constituency—Rochester city council, Tonbridge and Malling district council and Kent county council—stressed the importance of the co-ordination of those projects. We argued that the construction of the bridges across the Medway valley had to take place at the same time. My constituents and the infrastructure in the Medway towns would suffer considerably anyway as a result of the construction and we recognised that, but to start one project across the valley, finish it and then start another would be a nightmare scenario. The estimated time scale for the channel tunnel rail link over the Medway valley is likely to be about three years and for the M2, three and a half years, which could mean six and a half years of disruption and chaos for my constituents. However, put the two projects together and we could reduce the time to four and a half years, which would be not only less destructive but more cost effective.
Understandably, we were pleased when the Government accepted that the two projects should be co-ordinated. Last year, the new Labour Government fulfilled the pledge to hold an early review of the road building programme. The M2 widening was contained within that programme and at the time we made representations to press the point about the delay and the effect that it could have on co-ordinating the concurrent construction that we had fought so hard to win. The matter was resolved and my right hon. Friend the Secretary of State for the Environment, Transport

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and the Regions announced that the M2 widening would go ahead. He rightly pointed out that the project was part of a strategic transport infrastructure, in that the M2 would link up with the CTRL station in the constituency of my hon. Friend the Member for Dartford. Now, we face similar doubts about the other project.
The timing of those two nationally important transport schemes is vital to my area to limit disruption, keep down costs and to apply the principle of sustainable development. The CTRL has caused misery and blight in Kent—
Mr. Mackinlay: And in Essex.
Mr. Shaw: Indeed. There have been hard-fought battles for environmental safeguards, but I support the project and have always done so. We must build the link in its entirety, but I look forward to hearing some answers from my hon. Friend the Minister to my questions about concurrent construction.
10.38 am
Mr. Alan Clark: I congratulate the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick). His presentation of the argument, with which I disagree except for his strictures on the channel tunnel, was admirable and beautifully structured. However, this debate has seen the House at its most facile. It has consisted almost entirely of a series of clichés and trite remarks about the strategic plan, the need to send messages and so forth and national pride. I was interested to hear a Liberal Democrat Member, the hon. Member for Carshalton and Wallington (Mr. Brake), talking about national pride. All those points were synthesised in a series of mini soundbites which hon. Members uttered for the benefit of their local newspaper before they sharply and shortly left the Chamber.
The House has not been at its best during the debate. The most interesting contribution came from the hon. Member for West Bromwich, East (Mr. Snape), who reminded us of the situation in 1983 when the channel tunnel project started, and of the colossal underestimation of building costs. Fortunately, because of the views of the then Prime Minister, the project did not attract public money and, therefore, it was the banks that took a terrific bath, which everyone enjoyed.
Now, we are faced with precisely the same situation: the contractor grossly overestimated traffic, and got the contract by one means or another, but almost immediately got into difficulties and has to be bailed out. It is perfectly clear that the private sector will not bail the contractor out, and the Deputy Prime Minister implied in his late-night statement that, if necessary, the taxpayer would foot the bill.
I caution the House against blithely accepting that. The sum involved is £8 billion—at the moment. We all know that figure could easily double. The House should consider this: on one hand, we have a colossal and environmentally damaging project, the real benefits of which no hon. Member has quantified; on the other, we have the putative expenditure of £8 billion of public money, which will probably increase to £16 billion. Hon. Members should ask themselves whether it would be better spent elsewhere, not on the usual clichés such
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as schools and hospitals, but on the transport system, and the rail network in particular. We should also ask what we would get for £16 billion, as an alternative to this ludicrous and megalomaniac project to drive a new rail link.
The trains run perfectly well at the moment. Because this is an unprogressive, slightly reactionary argument, hon. Members on both sides of the House regard it with mirth, but it is practical. I do not have time to develop my argument, but I say this: the money has been notionally ring fenced, so we should consider what other ways there may be of putting into the transport system.
10.41 am
Mr. Richard Ottaway: We are always pleased to hear from my right hon. Friend the Member for Kensington and Chelsea (Mr. Clark), who has put the alternative view on these matters.
The channel tunnel rail link was announced in February 1996, and there was enthusiasm for and commitment to a project that would be fundamental to the economic enhancement of the south-east of England and the nation as a whole. Conservative Members still believe in the project, retain the same enthusiasm for it and think that it will bring benefits. We share that enthusiasm with the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick), and I congratulate him on securing the debate and on the balanced way in which he made his arguments.
We support the Government's attempt to find a solution to this problem. The project was never going to be easy to complete, and we wish them well. Many people have been embarrassed to travel through France at high speed, only to trundle across Kent at a gentlemanly speed. However, no contrast is more marked than that between north-western France and south-eastern England. The Picardie region of France is flat and empty, and the construction of the railway was not a technical or a financial challenge. In contrast, the route through Kent traverses some of England's most beautiful countryside and passes close to a substantial number of communities. They, and affected London communities, commented vociferously on the project during the passage of the legislation through the House.
Scrutiny of the Bill was intense, with a Select Committee considering thousands of petitions. The agreed route had the support of the vast majority and provided a much-needed framework for the economic regeneration of east London. There is to be a station at Stratford, and a special link to King's Cross and St. Pancras to provide a direct twin-track connection between the CTRL and the west coast main line.
The consortium that won the competition to construct the CTRL was London and Continental Railways, a partnership of six of the nation's leading companies: Ove Arup and Partners, Bechtel Ltd., Sir William Halcrow and Partners, the National Express Group, the Virgin Group and SG Warburg and Co. The key criteria for the evaluation of bids were the size and timing of the Government's financial contribution and the risk that each bidder was prepared to accept. The LCR bid was successful: it needed millions of pounds less in subsidy than the bid of its rival, Eurorail.

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Some people say that the project was given too little public subsidy. The then Labour Opposition made it clear that they considered the public subsidy to be too high, yet at the same time they believed that there should have been a public-private partnership with most of the assets given to LCR remaining in public hands. That ignores the fact that, under any public-private partnership, Government subsidy would have been inevitable and would have entailed an even greater public subsidy we are likely to end up with.
Faced with the harsh realities of office, the Deputy Prime Minister's initial reaction was to resist the further use of public funds, no doubt with encouragement from the Treasury. With the benefit of hindsight, we know that the main factor behind the current impasse was the passenger forecast of London and Continental Railways. When the bid was made, the annual passenger projection was 9 million; today, it is only 6 million. The forecasts were put forward by the best experts in the country, but no one could be certain about future passenger numbers and all estimates are subject to a degree of error.
Although LCR clearly overestimated the number of passengers, it is probable that the channel tunnel fire had something to do with that inaccuracy: a six-month delay and a reduced service cannot have helped in marketing the project. The good news is that passenger numbers continue to increase. We should retain our optimism that targets will be hit, albeit late: not even a revised scheme will work if they are not.
LCR is not in a position to proceed, because it cannot raise the necessary funds. We share the view of many people that the proposed route should not be altered. To alter it would require the reopening of the whole inquiry and would cause further unacceptable delays. There is every possibility that a two-phase solution may be found, with Railtrack, in a joint venture with LCR, constructing phase 1 from Cheriton to Ebbsfleet station by 2002, and phase 2 from Ebbsfleet to St. Pancras by 2005.
Despite the opposition of the Local Government Association and others, we give that solution a cautious welcome if it is to be the only basis for a successful outcome. I say to the hon. Member for East Ham (Mr. Timms)—and, indeed, to my hon. Friend the Member for Southend, West (Mr. Amess), who ably represented Newham council—that there may be a gulf between what he wants and what is achievable. He will have to face up to the realities.
We understand that phase 1 could cost about £2 billion, with Railtrack playing a major role. Such a tremendous achievement by Railtrack would confirm the previous Government's decision to privatise the company, leaving it as a strong, well-financed company which can pick up such projects at relatively short notice and make something of them. The whole House will agree that that is a tribute to the previous Government's privatisation policy.
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The question of running Eurostar remains to be solved. Although the Deputy Prime Minister, egged on by Labour Members, was excited by the thought of taking the trains back into public ownership, the change in culture brought about by the previous Government will lead him to conclude that a private solution remains the best bet.
One of the more stupid suggested alternatives is the resurrection of the Central Railway scheme which was decisively rejected by the House in July 1996. The proposal was to drive a railway line from the tunnel through the heart of London, causing massive disruption as it went. I urge the Government, if they need urging, not to reintroduce that proposal.
Notwithstanding the deep complexities that remain and the need to find a solution to Eurostar's loss making, the main aim must be for all options to be explored to allow the project to go ahead. The failure of the project would be a great blow, not only to the rail link, which is an important integrated transport project, but to the much-needed regeneration of east London. We offer the Government our support.
10.49 am
The Minister for Transport in London (Ms Glenda Jackson): I thank the hon. Member for Croydon, South (Mr. Ottaway) for his support, and congratulate my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on obtaining the debate. As others have said, we are grateful to him for giving us this opportunity. The channel tunnel rail link has probably not had such a high public profile since the idea was launched, and it is a pity that such a level of interest has been generated for all the wrong reasons.
No one would dispute the fact that all the speeches this morning—with, perhaps, the exception of the somewhat curious contribution of the right hon. Member for Kensington and Chelsea (Mr. Clark)—[Interruption.] As my hon. Friend the Member for Thurrock (Mr. Mackinlay) points out from a sedentary position, the right hon. Gentleman has just left the Chamber—presumably to publish his soundbite press release, an action for which he criticised other hon. Members in his speech.
In the main, the speeches have been both serious and informed. The importance of the CTRL, not just as a high-speed link with Europe but for its regeneration potential, was stressed by hon. Members on both sides of the House. It may assist hon. Members, however, if I summarise the events of the past six weeks, and explain how matters now stand.
London and Continental Railways formally notified my right hon. Friend the Deputy Prime Minister on 28 January that it would be unable to meet the terms of its development agreement with the Government without the injection of some £1.2 billion of public subsidy over the next 10 years. That £1.2 billion was on top of the £1.8 billion of taxpayers' money that had already been committed. It did not include the public assets that were also part of the development agreement, which have been estimated to be in the region of £5 billion.

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My right hon. Friend the Deputy Prime Minister rejected the proposal. He has left no one in any doubt that he wants the development of high-speed connections to Europe, but not at any price. I trust that that would reassure my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), who, regrettably, is not present. At a time when fiscal prudence is needed, it would be irresponsible—almost unthinkable—to commit such large additional sums of taxpayers' money, no matter how strong the wish for improved links.
LCR asked for more money because it vastly overestimated the number of passengers who would be travelling on Eurostar by now. The development agreement made those Eurostar projections a cornerstone of LCR's plans for raising project finance. The then Government and LCR should have realised that the forecasts were overblown and unrealistic, but they did not. That was a serious misjudgment, and the present Government should not and will not simply bail LCR out.
My right hon. Friend the Deputy Prime Minister came to the House with all speed, having heard LCR admit that it could not meet its obligations under the development agreement. As he explained in his statement on 28 January, the development agreement with LCR allowed for a 30-day period during which LCR could present revised financing proposals. LCR's shareholders subsequently constructed a framework of proposals, which they put to my right hon. Friend last week. The shareholders envisaged a role for Railtrack. After careful consideration, my right hon. Friend agreed to grant a further extension of the cure period to allow LCR more time in which to flesh out its ideas. The revised deadline is 31 March.
As my right hon. Friend intimated on 28 January, we would like LCR to come up with a solution allowing it to meet its obligations under the development agreement. Against the contingency that no satisfactory solution will materialise, we are still working to provide for an orderly transfer of Eurostar UK Ltd. to the public sector, as is required if the development agreement is terminated. Let me assure the hon. Member for Croydon, South that that would obtain whichever party was in power. It is part of the development agreement that was worked out and signed by the Conservative Government.
I am afraid that I cannot say much more about the point that LCR has reached. Its proposals simply are not developed enough. However, there has been considerable speculation in the press, and I want to put some of what has been reported in context.
There has been much talk of white knights galloping to the rescue. Given the size of the project, it is not surprising that organisations wish to become involved, but the formal position is that the Government have a contract with LCR and no one else. If LCR chooses to bring in other partners, that may happen, but only with the Government's approval. As I have said, it appears that LCR sees a role for Railtrack in the new structure that it is drawing up, but that is its business.
Much has also been written about the notion of phasing the construction of the link. It is important to remember that Parliament authorised a railway between Cheriton and St. Pancras which follows a very carefully defined alignment. Our contract with LCR requires the construction of the entire railway approved by Parliament. The Channel Tunnel Rail Link Act 1997 envisages
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a whole line from St. Pancras to the channel tunnel, so there must be an intention to build all of it when the powers are used. In case there is any doubt, let me stress that the environmental standards that have been set for the link will not be compromised. I trust that that reassures hon. Members who have expressed concerns this morning.
Ms Rosie Winterton: Does my hon. Friend agree that the benefits that would be derived from making the link go all the way to St. Pancras would greatly help to regenerate areas such as South Yorkshire, which have suffered incredible manufacturing and industrial decline over the past few years?
Ms Jackson: I thank my hon. Friend for her intervention. The issue of regeneration inherent in the building of the line has been mentioned by all hon. Members this morning.
The excitement in the media has prompted an interesting and widespread public debate about the rail link. That reminds us just how many parties have an interest in the CTRL—partly because, as many hon. Members pointed out this morning, it is not simply a transport project. The key reason for routing it via the Thames gateway—also known as the east Thames corridor—was that stations along it could act as focal points for regeneration. The theme of regeneration has run through all the speeches this morning. In fact, the £1.8 billion of public subsidy promised in the development agreement with LCR was justified in part by the regeneration benefits.
Concern has been expressed that regeneration may be forgotten in decisions on the rail link. I assure hon. Members that it will not. In the last few weeks, the problems of the rail link have elicited views from those interested in each of the stations, and also from those concerned with access to the regions—such as my hon. Friends the Members for Poplar and Canning Town, for Gillingham (Mr. Clark) and for East Ham (Mr. Timms), and the hon. Member for Ashford (Mr. Green).
Later this month, I shall be chairing a meeting of all local authorities affected in order to discuss their concerns. They will include Kent county council, which I trust will reassure the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). I strongly agree with the view expressed by my hon. Friend the Member for West Bromwich, East (Mr. Snape) about that intervention by a member of the Cabinet when the agreement was signed by the last Government.
I am aware that there is considerable concern that delays to the CTRL may jeopardise regeneration in London and Kent. As hon. Members will know, the CTRL has been seen as the vehicle for a number of regeneration initiatives, all of which have been mentioned this morning. Ebbsfleet station is the main node for regeneration of the eastern part of the Thames gateway. Substantial development is already taking place, but the rail link station is regarded as key to the redevelopment of some 2,200 acres of land, which has nearly all been used previously.
Stratford is the main node at the other end of the Thames gateway. Here the concept is of development on derelict or under-used land that can be of sufficient scale to act as a catalyst for other redevelopment on smaller

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sites in the general area. Stratford is also complementary to regional interests because it is proposed that trains can call there before running through to the west coast main line, without incurring the time penalty of having to stop at St. Pancras and reverse out again.
There is also the regeneration created by the rail link and Thameslink 2000 at St. Pancras. Seventy acres are available for redevelopment in one of the last potential areas on the fringes of central London.
As I am rapidly running out of time, may I say that I shall write to hon. Members on the issues to which they drew my attention. The hon. Member for Ashford and my hon. Friends the Members for Barking (Ms Hodge), for Thurrock (Mr. Mackinlay), for Gillingham and for Chatham and Aylesford (Mr. Shaw) have mentioned blight issues. The hon. Member for Ashford also mentioned freight and commercial confidentiality.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. We must now move on to the debate on the benefit integrity project.

Benefit Integrity Project
11 am
Mrs. Margaret Ewing: Many hon. Members have approached me to say that they want to participate in the debate so, despite the fact that I have briefings from organisations and individuals with which I could detain the House all day, I shall try to condense my remarks. This is a matter that interests all of us as constituency Members of Parliament and which we would wish to debate constructively.
The benefit integrity project was established after a survey of 1,135 people claiming disability living allowance, the report of which was published in January 1997. Forty interviewers carried out about 30 home visits each of adult or child recipients of disability living allowance. That project was undertaken when people were giving voice to fears about social security fraud. I, too, detected an undercurrent of feeling on the subject. However, snapshot assessments were made of individuals and little expertise was involved in the adjudication.
There was no follow-up of the 1.5 per cent. of cases that were designated confirmed fraud in the 1997 report. No prosecutions were made and no benefits were stopped. That suggested that people who were receiving disability living allowance were doing so because of their needs and that they were not doing so fraudulently, as the then Government feared.
Indeed, on 13 January 1998, when Baroness Hollis of Heigham, the Under-Secretary of State for Social Security, first reported on the BIP findings, she said in another place:
"I am happy to confirm that the benefit integrity project has revealed no cases of confirmed fraud."—[Official Report, House of Lords, 13 January 1998; Vol. 584, c. 936.]
That finding was based on the receipt of about 30,000 replies from disabled people.
I therefore believe that at this stage we should be considering not the fraud issue, but the needs issue—the needs of the people involved.
More than 40,000 people have since been interviewed. According to a parliamentary reply that I have received, the chief executive of the Benefits Agency estimates that, in the financial year 1997–98, savings of £15.8 million may be made. Subsequently, 311 appeals have been received; as yet there are no figures on success rates.
As part of the benefit integrity project, another 400,000 people are to be interviewed in the next four years. My deepest concern is that fear and distrust have emerged in the community as a result of the project. Individual cases have been highlighted on television and in newspapers. I shall not rehearse all those cases, but every case that is highlighted sends a tremor of fear through other individuals who may be in similar circumstances and there is genuine anxiety that the project is Treasury led, not needs led.
Mr. Simon Burns: Yes.
Mrs. Ewing: Although I hear Conservative Members saying yes, I remind them that the Conservative Government established the benefit integrity project.

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All this is set against the background of an overall review of the social security system, but people who are in receipt of disability living allowance feel that they have now been singled out for a specific review.
I remind the House that many other important benefits—such as housing benefit and income support—hinge on disability living allowance. If at any time DLA is discontinued, those other benefits are discontinued and although, after a review or an appeal, the disability living allowance may be backdated, those other items of support to families are not backdated, so a great deal of distress results.
There can be a sudden drop in household income—and we must all budget according to our household income. This is a very difficult situation for many disabled people to be in. The review and appeal procedures are long and complex. Every hon. Member must have been involved in many such cases. We hope that our intervention will speed things up for the person involved, but I often wonder about the people who do not approach their Member of Parliament.
Other people are worried that, for them, reassessment may mean a return to residential care. We have all worked hard to try to ensure that care in the community works. Many people who, after being institutionalised for years, have emerged and rely on care in the community, are being reassessed. They fear that they may have to return to permanent residential care.
My excellent local citizens advice bureau in Moray experienced a threefold increase in inquiries about disability between 1996–97 and 1997–98. I am sure that that increase is mirrored elsewhere. It is a sign of the anxiety that exists. I worry about what is happening in places where there are no welfare rights workers, citizens advice bureaux, or people to whom people can turn.
The basic aim of disability living allowance was to give dignity and decency to people who suffer from disability, which comes in many different forms. I want, in a constructive speech, to make some proposals to the Government. First, I want to comment on the important issue of the assessment mechanisms.
In reply to a parliamentary question asked by my hon. Friend the Member for North Tayside (Mr. Swinney), the Secretary of State for Social Security said of decisions resulting in reduction or removal of entitlement to DLA:
"there will always be additional evidence to support the decision"—[Official Report, 9 February 1998; Vol. 305, c. 76.]
Interestingly, I found in my mail today a letter, dated 2 March, from the Secretary of State, in which some of these issues are raised. Immodestly, I should like to think that the prospect of the debate may have stimulated the writing of that letter, but I hope that this important letter has been circulated, not only to all hon. Members, but to representatives of voluntary organisations who are deeply involved in this crisis.
Having had only about 15 minutes to look through the letter, I ask the Under-Secretary of State for Social Security, the hon. Member for Southampton, Itchen (Mr. Denham), who is to reply to the debate, to ensure that we have a detailed expansion of that letter. I also ask him to confirm that there will definitely be guarantees for those who want to ensure that medical evidence is submitted when decisions are taken that may result in reduction or removal of entitlement, because many of the
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issues pertaining to DLA are cocooned by the issue of medical entitlement. Assessment seems to take little account of day-to-day changes in the condition of many disabled people. In response to a letter from my hon. Friend the Member for North Tayside, Peter Mathison of the Benefits Agency stated:
"The additional information may be factual medical evidence from a GP, hospital or other health care professional, a full medical examination by a qualified medical practitioner or information from a carer. The most appropriate source of additional evidence will be used in light of the individual circumstances of the case."
That does not guarantee a full medical assessment, which is what I seek.
Claimants do not always receive clear advice on issues pertaining to the project, such as the information that they may have advisers present. They may be advised that someone may be present but a claimant could take along a next door neighbour, a family member or a friend and not necessarily someone with the knowledge to advise them on how to respond to questions and state exactly what is being sought. It is not made clear that people can have access to previous claim forms against which they can compare their present circumstances to see whether there has been any change. In most cases, there is a deterioration. People also have a right to delay an interview until a more suitable time.
Information should be clearer for people who are being reassessed, whether it is provided in forms or by agency representatives who visit them. There are many public service advertisements on television; perhaps the Government could examine the clarity of the advertising on this subject. The training for visiting officers could be improved. We should aim for best standards and best training. Some people receive only half a day's training while others are trained for up to four days. In a letter to me, the chief executive of the Benefits Agency stated that there was no requirement for visiting officers to have medical knowledge.
Adjudication officers must look beyond the bald statements that sometimes appear on forms and they should always err on the side of the claimant rather than on the side of reducing benefits. It has been suggested that a disability benefits task force could bring together the expertise of voluntary groups. Over the past two days, I have met representatives from no fewer than nine such groups. Their expertise, with that of welfare advisers, could be brought to the heart of the Department of Social Security and to the heart of government. The people in those voluntary groups deal with people's day-to-day problems.
Perhaps the Minister can advise me on exemptions. Many organisations have told me that there is evidence that people who should be exempt from review have been reviewed. I have a list of the exemptions. What criteria can be established to ensure that people on the exempt list are not subjected to further review? Is there a possibility of extending the exempt list? I have received from the Cystic Fibrosis Research Trust a request for its clients to be considered for exemption. I need not go into detail, but all hon. Members will appreciate that people with cystic fibrosis fluctuate between well-being and illness. That is also the pattern of many other illnesses, and I hope that that can be considered. I should like to know how the criteria for exemptions are established and how they can be expanded.

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I intend to be brief because other hon. Members, including my hon. Friend the Member for North Tayside wish to take part in the debate. I have highlighted only a few of the problems that are associated with the benefit integrity project. My final recommendation is, I think, endorsed by the vast majority of the organisations that work with disabled people. It is that the project should be suspended, at least for a time, to allay the fears of those who are most vulnerable and to give us all an opportunity to try to ensure that the disability living allowance is targeted at those who need it most so that no one has to endure the fear that is endured by many of my constituents.
I understand that the representatives of the Disability Benefits Consortium met the Prime Minister on 16 February to discuss that issue and that it was stated that it would be considered. Perhaps in responding to the debate the Minister will say whether the Department is considering the suspension of the project and whether we can expect an early announcement on that.
11.15 am
Mr. Terry Rooney: The debate is long overdue. I am sure that every hon. Member has been inundated with letters and telephone calls. It is important to understand how we reached the present situation. When disability living allowance was introduced in 1992, it was generally regarded as good news for disabled people because it included lower immobility and care components. I pay tribute to the former right hon. Member for Kensington and Chelsea, Sir Nicholas Scott, for his work in that arena. The new arrangements ensured that, in the first year, there were some 700,000 new claimants. Each year since there have been about 300,000 new claimants. That is a tribute to the scope of the benefit, but it constitutes a tremendous work load.
Hon. Members who were here in 1992 to 1994 remember the chaos over disability living allowance. There were massive delays, backlogs and complaints about claims not being processed. Hotlines were set up so that hon. Members could get through to the Benefits Agency, although the public could not. At one stage, about 800 temporary staff were drafted in from social security offices to try to deal with the problems. Care in the community was introduced in 1992; that led to a huge number of people being taken out of institutional care and placed in the community. Because they were no longer in institutional care, they were entitled to disability living allowance.
Because of all those factors, the Benefits Agency was grinding to a halt and somewhere along the line there was a ministerial nod and a wink to the effect that unless claims were patently invalid they should be approved simply to get rid of the backlog. That is part of the reason for the current problems. It cannot be overstated that the problems with disability living allowance relate to management and departmental error and not to disability fraud. The problem has been around for a long time and it has not been addressed either by the former Government or, so far, I am sorry to say, by the present Government.
By the end of last year, there were some 4 million claimants for disability living allowance and attendance allowance compared with 1.7 million under the old
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1991 scheme. In one sense, the system has worked because the benefit has gone to many more people. I hope that it has done some good.
Of course, the previous Government panicked. In 1995, they said that the number claiming invalidity benefit had rocketed and that something had to be done about it. They introduced incapacity benefit as a way of cutting benefits for the sick, but they knew that they could not do the same with disability living allowance because there would be an outcry. They had to look for a way to curb the growing number of claimants without causing an outcry. Using some dubious evidence from the National Audit Office, combined with some reasonable evidence from the Department, they decided that there were significant errors in the system and set up the benefit integrity project to deal with them.
No training was provided for the people who were sent to visit claimants, but claimants were assured that the visiting officers were not the decision makers. That is correct, because decisions are taken by an adjudication officer—but he makes his decision based on the information on the claim form, which is the information extracted from the claimant by the visiting officer. The claimant has no idea how what they have said will be construed. Generally, the claim form is filled in by the visiting officer—the claimant simply signs it—so in fact the visiting officer has a significant input into the final decision. The failure to provide any training for visiting officers was criminal.
DLA is a self-assessment benefit, and some would say rightly so. If one third of the working population have self-assessment for their tax contributions, perhaps it is right for claimants to have some element of self-assessment for what they claim, but the capacity for error is enormous. Very few of us are sufficiently medically skilled to describe how an affliction of disability affects our daily lives. We would be hard put to do that. Many of my hon. Friends have afflictions, but I shall not talk about them today.
There is enormous room for error because people are not necessarily able to determine how their condition has changed over the years—whether for better or for worse. There are clear cases of people who should receive benefit for life, but the very nature of disability means that some people will get worse or better. It is virtually impossible for an individual to judge when he has crossed the line between entitlement and disentitlement.
Where should we go from here? A number of actions are required. I welcome the two announcements made by the Government during the past month. They go a long way, but we need to go much further. The claim and renewal forms need to be redesigned to make them much simpler and clearer so that claimants can more easily determine their entitlements. There is an argument for shorter award periods. One matter of concern is the number of lifetime awards that have been found to be wrong in some respect. A review period of, perhaps, two years might help to prevent many of the problems that have recently been prevalent.
There needs to be significant investment in staff training—and not only for visiting officers. I know that some people dispute the figures, but if they are correct some 50,000 cases have been wrongly assessed. That raises serious questions about not only the management

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of the unit, but the people making the original decisions. The evidence is that the training programme has not been good enough.
It is important to have people in local offices so that they can give advice and liaise with local disability groups. They can talk to claimants and try to get around the problems. That would be far better than the present remote operation at Blackpool, which deals with people only by mail or telephone. The personal touch can sort out many problems.
We need an absolute commitment that the project is not and never has been a cuts-led exercise. The purpose of the exercise should be to ensure that people get their entitlement. I have not heard anyone dispute the qualifying criteria for disability living allowance and I hope that we never change them, but there is a major problem with matching the entitlement to the criteria. The exercise should be about getting that right.
We should recognise that much of the problem lies within the DLA unit, not with claimants. Fraud is not an issue in the payment of DLA. There will always be the odd case of fraud, but fraud is not causing the problems with over or underpayment; the problem is departmental errors—and responsibility lies first with the DLA management unit, but also with us, as parliamentarians, for not getting it right in the first place.
11.25 am
Mrs. Angela Browning: I congratulate the hon. Member for Moray (Mrs. Ewing) on bringing this important and timely debate to the Floor of the House. There is obvious concern, across the parties, about constituency cases.
As a member of the all-party disablement group, during the past few months I have been twice to see the Secretary of State on this issue. I reiterate the request to the Secretary of State, made today by Lord Ashley, the chairman of the group, for a moratorium on the benefit integrity project. Although the Secretary of State has announced some changes during the past few weeks, there is still a great deal of confusion—not only among those who have had their claims assessed, but among those who are literally waiting for the knock at the door. Many people with lifetime benefit are anxious about the future. Although they have the words, "lifetime benefit" written on their benefit books, we have not yet been able to get an assurance from the Secretary of State that the benefit will be for life.
A moratorium is needed to give the Government time fully to revisit the way the project works. When disability groups visited the Department last September, at the Secretary of State's invitation, to discuss the benefit integrity project, they thought that they would have an input into how the policy would be implemented. Instead, they found that the project was already under way. Although they had a great deal of expertise and advice to offer the Government, they were too late to make that vital input into the way the policy would be implemented.
I want to raise a few of the issues that worry people who are subject to scrutiny. It is a fact that people are entitled to see the original documentation that they filled in when they first made their claim. I advise all my constituents to ask for the necessary paperwork either to be sent to them or to be brought to their homes if they are to receive a home visit. To date, among those who have
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written to me expressing concern about the way their cases have been handled, I have yet to find one person who has been offered that documentation.
There should be an obligation on the Benefits Agency to ensure that people are aware of their rights so that they have the opportunity, in advance of an interview, to look at what they wrote when they filled in the original application form many years ago. They are not voluntarily being given that opportunity, and that is wrong.
The Secretary of State has now said that the decision on whether a benefit is to be taken away or reduced will not be made arbitrarily on the basis of information provided by the claimant but that there will need to be some further input. It has been suggested that general practitioners should have an input. I would not disagree with that, but it presents some problems.
People with very long-standing disability—such as those with chronic arthritis who, sadly, usually do not enjoy a significant increase in their mobility for the rest of their lives—may be seen by their general practitioner only occasionally. Very often, an occupational therapist is the person who can best identify the state of their mobility and what, practically, they can or cannot do. I hope that we shall not create an arbitrary system in which a GP who may occasionally see someone in a surgery for five minutes is asked to submit evidence when the most appropriate person to submit evidence is an occupational therapist who has a much closer working relationship with the claimant.
I have asked the Secretary of State—and have now received a written reply from Peter Mathison, the chief executive of the Benefits Agency—about people who, since the project began, have lost the mobility component of their disability living allowance, which was often used to fund their agreement with Motability. To my certain knowledge—in my constituency—three people have had to return their car because they cannot afford to make the payment. According to Mr. Mathison, there will be no retrospective examination of the cases of those who have already been through what has been an absolutely harrowing experience.
Re-examining those cases would be a matter not only of restoring benefits, because some of the people involved have now had to take legal advice—adding to their anxieties—to try to restore their benefit. They will also have the problem of determining how to find a deposit for a car if their benefit is reinstated. I urge the Minister to deal, in his reply, with those very real practical problems.
If the Secretary of State has recognised that there are problems with how the integrity project is being conducted, she must surely accept the need to examine the cases of those who have lost benefit since the scheme began and to determine how they should be compensated, particularly when they have suffered the loss of a vehicle. Even if some of those people receive tomorrow the good news that the benefit is to be restored, it would be a very long time before they could save up a deposit to get another car. Such practical problems lead hon. Members on both sides of the House to ask the Minister yet again, please let us have a moratorium while these issues are sorted out.
The hon. Member for Moray mentioned training, which is critical. If the Secretary of State is now admitting that GPs and others with professional medical advice should have an input into dealing with these cases, surely it

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cannot be right that someone with absolutely no medical training—indeed, with only a few hours training on how to tick the boxes on a form—can go into someone's home and remove a benefit that is critical to their everyday well-being.
I welcome this debate and hope that it will give Ministers another opportunity to reconsider very genuine and reasonable requests from hon. Members on both sides of the House. The all-party disablement group heard at our most recent meeting with the Secretary of State that finalisation of the benefits review and of the benefit integrity project is unlikely for some months, which simply means that the agony will be prolonged for those who are waiting to discover whether they can retain their benefit.
We have asked for a moratorium not because we do not want to eliminate fraud—of course we do—but because the Government have gone helter-skelter down one path with one objective. There must be a balancing of fairness and justice for those who have already suffered great pain and mental anguish about how the project has been conducted and for those who are waiting for their turn.
11.33 am
Mr. Gordon Marsden: There are several reasons why I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to speak in this debate: because my constituency has a higher than average number of disabled and elderly people; because of the concentration of benefit offices in and around my constituency, including the disability living allowance offices at Warbreck house, which have already been mentioned in the debate; and because of the number of complaints that I—like many hon. Members—have received in my surgery about the operation of the benefit integrity project.
I feel as though I have a two-way mirror on the project's operation. Like many hon. Members, I see its impact on recipients, who may have lost benefit or had it reduced, but I also see it also through the eyes of many of my constituents who are employees at the disability living allowance offices. It is important that tribute is paid to their hard work and dedication—often in very difficult circumstances, as hon. Members have said. I would not wish this debate or subsequent debates to turn into a Department of Social Security staff-bashing exercise, but significant aspects of the project's operation give me great concern.
The principles behind the review are unimpeachable. Who could be for fraud or against the incorrect awarding of benefits? I should, however, remind the House—as others have already—that Baroness Hollis said that the benefit integrity project has so far uncovered negligible evidence of fraud in DLA claims, yet benefits have been cut or reduced in between 15 and 18 per cent. of the cases that have been examined, eventually resulting, we are told, in cuts or reductions in 34,000 of the 400,000 cases that will be examined. The figures are startling and it is perfectly reasonable that we should more carefully examine the project's operation.
I do not want to repeat what hon. Members have already said, but the project has training deficiencies, particularly for adjudication officers, who often have
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to make critical decisions based on second-hand information. Moreover, the forms are complex, amount to 30 pages and often pose a significant barrier for the people who fill them out, whether the visitor or the claimant—who may well be elderly and possibly confused. The forms complicate the task of obtaining correct information.
We must also examine the project's mechanisms. I can cite a specific example because my mother—who receives disability benefit because of osteoporosis—was visited by a project member. Although I was not there, I have been told that the visit went smoothly and was conducted courteously. However, as appeals have shown, something goes wrong in a significant minority of cases.
The chief executive of the Benefits Agency has been anxious to reassure hon. Members about problems with the project. On 4 January 1998, in a letter to my hon. Friend the Member for Stafford (Mr. Kidney), he soothingly wrote:
"The onus for providing this evidence"—
on DLA—
"lies with the customer. There has been a move away from the reliance on a medical assessment and more emphasis is placed upon a person's day to day care and mobility needs. The customer is considered best placed to know the practical effects of the disability."—[Official Report, 5 February 1998; Vol. 305, c. 798.]
One might think that that is all very soothing and sensible but the reality is often different.
Many disabled people's—especially older disabled people's—pride sometimes leads them to understate, or at least to give an optimistic assessment of, their condition on a particular day, leading to an understatement of their condition on the forms. The Minister and his team should urgently examine that matter.
All hon. Members can cite specific examples from their constituencies; I should like to give only one. Since 1978, a lady in my constituency has received the higher rate mobility and care components of DLA because of serious problems, including osteoarthritis and a prolapsed disc for which she is receiving treatment at Victoria hospital, Blackpool and which entails a need for virtually full-time care.
After a home visit by the Benefits Agency in November 1997, a decision was made to award a low rate mobility component and a nil care component. That decision was made despite the fact that the lady's condition had worsened since 1994, as demonstrated by installation of a chairlift and a bedlift and by provision, by Lancashire county council social services, of weekly help.
There is an appeals process, but it is often extremely lengthy. Another constituent, who was deprived of disability living allowance, had to wait in the region of 11 months after two postponements of appeal. The appeal itself is something of a lottery and depends on a claimant's access to welfare rights advice. Furthermore, the training and composition of the tribunals is something on which the Government might have cause to reflect.
I welcome the safeguards that the Secretary of State announced to improve the accuracy of any decision on entitlement, although I note that in answer to a written question from the hon. Member for Sutton and Cheam (Mr. Burstow) on 2 March, it was emphasised that it was not to be retrospective.
It is incumbent on us to remind ourselves why the DLA was needed. It was needed because of pressures on community care and cuts to the budget, to which the

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Royal National Institute for the Blind and other groups have referred, and because of the gross underclaiming of benefit in the 1980s. It is important that we do not believe that there is an enormous problem because of gross exaggeration. There may be exaggerations, but, as I said, there is limited evidence of fraud.
Ministers need to be extremely cautious about the progress of this project. Hon. Members should bear in mind the Child Support Agency fiasco. It was set up with the best intentions, but, far from catching the malingerers, it has often snared the innocent and, for that matter, the conscientious in its zeal to meet targets. Our welfare review may not be cuts driven, so it is rather rich of Opposition Members to remind us of the problems involved in this project when they were instrumental in putting it in place, but we should nevertheless have examined a little more carefully the bill of sale that we inherited from the previous Government. Perhaps we should have looked a little more closely at the country of origin before proceeding with the project quite so enthusiastically.
I urge the Government to review the project with the optimum care. I leave it to them to decide whether a moratorium is appropriate, but I warn Ministers that we are engaged in a very complex and delicate assessment of welfare reform. Our cuts may not be Treasury driven, unlike those of the Opposition, but it is extremely important that the wells of welfare reform are not polluted by a project that has been capricious in its operation and questionable in a significant minority of cases.
11.42 am
Mr. Mark Oaten: Like other hon. Members, I welcome the opportunity to debate such an important issue. All of us who hold regular surgeries recognise that there is great concern among disabled people. As my party's spokesman on disability, I have spoken to many people involved with this matter and I know that there is also great concern among the charities working in this sector.
I agree with the hon. Member for Blackpool, South (Mr. Marsden) that we have the beginnings of the type of fiasco that we experienced with the Child Support Agency. As the number of appeals increase, and as the delays in managing those appeals grow, I am beginning to realise that unless the Government do more than simply tweak the issue, we shall have another CSA-type crisis on our hands. Having said that, the debate so far has been constructive, and I will make some suggestions about how the crisis can be solved.
I begin by welcoming the announcements that the Secretary of State has made over the past couple of months to the effect that she has recognised the need for a review. The letter that hon. Members received this week is certainly welcome. The Secretary of State tells us that the benefit integrity project is not
"some sort of fraud drive",
and that clarification is certainly welcome. We are also told that fraud is not rife in disability living allowance claims—something which many of us knew, although it is nice to have it in writing. The letter also states that the Government want to listen to the experiences of claimants. Many in this sector have been concerned that the Government were not listening, so we welcome unreservedly the Secretary of State's announcements in that respect. However, they do not go far enough.
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At the moment, the Government are just tweaking at the edges of the project, but I believe that it needs to be halted. If the project continues as it is, it will end in a mire of inefficiency and injustice. The tragedy is that the BIP is undermining much of the good work that the Government are beginning to do elsewhere in the disability sector. It is creating a sense of mistrust.
I will draw the House's attention to four key areas of concern with the project. The first relates to the title itself. The name "benefit integrity project" implies a lack of integrity among claimants. This is not just window-dressing; there is a genuine concern that the thrust of the title is disrespectful to the people being reviewed. Clearly, disabled people want forms to ensure that there is value for money and that fraud is squeezed, but they are outraged by some of the labelling in the right-wing press which suggests that they are cheats. The very title of the project itself fuels that suspicion.
Secondly, the project is not being handled with the sensitivity that I am sure the Government wish. The level of errors within the project is alarming. I have had evidence of amputees being asked whether their condition has improved, as if the missing limb had grown back but they were keeping quiet about it. As of mid-February, the Department's own figures show that more than 400 severely disabled people, including 30 who are terminally ill, have been asked to take part in the project although they are clearly members of the groups that should never have been approached to do so.
The third concern relates to mobility. As the hon. Member for Tiverton and Honiton (Mrs. Browning) rightly pointed out, people who lose their car if the benefit is cut have major problems replacing it if their appeals are successful. However, it is not only the finding of a deposit that causes difficulties. There are two other factors that the Minister needs to bear in mind. People who are successful on appeal and get a car back have to spend considerable sums on it because they get a new car that needs to be adapted for their disability. In addition, they cannot claim back the costs of being housebound or of having to find other forms of transport while they were without a car.
Fourthly, the complexity of the forms also causes concern. I know that there have been moves to deal with this matter, but the forms are still too complicated. Indeed, the chief executive of RADAR—the Royal Association for Disability and Rehabilitation—told me yesterday that it took him a whole weekend to fill out his own DLA form even though he understands the system and is used to filling out forms.
How can the Government restore confidence? I believe that the Secretary of State wishes to do that, and it is interesting that in her letter to hon. Members this week, she said three times, I think, that she was looking for suggestions about the way forward. We welcome that. I have some suggestions to get the project back on track.
As other hon. Members have suggested, we need to abandon the project as it stands. We then need to put in place a system of consulting disablement groups and disabled people on what they would like in peace of the review. If the Government consulted those organisations, they would find widespread acceptance of the need for some form of review, but disability groups wish to have a say about how it is carried out. As I said, a good starting

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point to rebuild confidence would be a more neutral title. Disabled people have won the right to more respect than the term "benefit integrity project" implies.
One of the problems with the project is that it seeks to do two things at once—to tackle fraud and to review benefits. However, it has failed to do either. Any new system should formally separate measures to combat fraud and error and measures to introduce a review of benefits. It must be possible in a new system to deal with fraud and value-for-money issues via a separate fraud unit or an efficiency drive that does not involve every interview with disabled people being fraud driven. Once we have removed the fraud and value-for-money aspect from the review process, we can set up a separate new system for reviewing benefits with a new and positive aim behind it. It should be an on-going system, not a one-off project that few claimants find easy to accept or understand. It should review benefits constantly and have a new thrust behind it.
Currently, we have a wasted opportunity. Interviews are taking place up and down the country at great cost to the taxpayer, yet they could achieve so much more. It is an opportunity to sit down with disabled people and talk about a range of issues. That is happening now, while other agencies are doing the same. It is crazy for a disabled person to be assessed three or four times for different purposes by different agencies. Streamlining that under a new review system would be a great benefit.
Any new system should ensure that reviews are conducted to ensure that people receive their full entitlement. They should not be focused, as they are currently, on the recipients of higher-level benefits. By focusing on those receiving higher benefits, one invites the assumption that benefits are likely to be adjusted downwards.
The boundary between review and advice should be shifted in the direction of advice. Reviews should be tailored much more closely to individual needs. We know that some conditions—amputations, polio and loss of vision—are not likely to improve, so the people affected do not need such frequent reviews.
Another way in which to restore confidence in the system would be to give claimants a clear date on which their benefit will be reviewed when they are first awarded a benefit entitlement. That would overcome the problem of someone who believes they have a benefit for life finding out later that it is subject to review.
The groups to whom I have spoken in the disability sector have made clear to me and, I believe, to the Prime Minister and the Secretary of State, the grief and anxiety being caused by the current process. I have heard of charities setting up helplines where staff have been talking to many callers who are often in tears. Staff go home at the end of the day shattered by the experience. It need not be like that.
Confidence in the Government's approach to welfare reform is, sadly, at an all-time low and confidence among disabled people in the benefits system is being shattered by this process. I believe that the Government can start to correct the problem today by announcing that they will halt the benefit integrity project. There is still time to do that. The project has years left to run and it is not too late to close a chapter on what was, after all, a failed Tory project in the first place. I urge the Government to
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recreate something positive by consulting disabled people. They should announce today an end to the benefit integrity project.
11.52 am
Mr. Phil Hope: I welcome this timely debate introduced by the hon. Member for Moray (Mrs. Ewing).
Disability living allowance is an important benefit which is needed and valued by millions of disabled people. It provides direct help to individuals to meet their care and mobility needs. We have heard that it is a complicated benefit to assess because it is based on self-assessment, not of medical evidence of disability, but of people's needs for care and mobility. We know that the system is not working well now.
As a member of the Public Accounts Committee, I received a report from the National Audit Office which pointed out that there were incorrect assessments of DLA to the tune of an estimated £499 million. The report also said—this is a little-known figure—that there could be potential underpayments of DLA of £227 million because claimants were understating their needs. We are seeing error on both sides of the argument. That being so, the Benefits Agency is not getting it right first time, on time, every time as it is intended to do. Clearly, there is a problem about the operation of DLA that needs to be addressed.
The benefit integrity project was designed to try to deal with some of those errors. It is a project which we inherited from the previous Administration and, from the outset, as other hon. Members have pointed out, there was no effort to provide the quality training and support necessary for the staff carrying out the assessments.
My consultations with local groups, such as Corby Council for the Disabled and the East-Northamptonshire Council for All Disabilities, have shown that things are not working well either in the original award of the allowance or in the way in which the benefit integrity project is working. It is unhelpful that people who are undergoing an individual process of review and are distressed by that are also picking up a negative feeling about the Government' s review of the welfare state. It is not helpful to taxpayers or claimants who need a welfare state to work effectively and efficiently in everybody's interests.
Although today's debate has been broadly constructive, we have heard from Opposition Members about people living in fear of a knock on the door in the night. That is at best unhelpful and at worst, is scaremongering by Opposition Members when the Government are making genuine efforts to put right the mess created by the same hon. Members.
There have been calls for the benefit integrity project to be suspended or abandoned, or for the setting up of a moratorium. I strongly advise my hon. Friend the Minister not to go down that route. What would we say to the 1,300 people who have had their benefits increased as a result of the project? We would have to say, "Sorry, you cannot have that increase." What would we say to the thousands of people represented by the estimated £227 million of underpayment? We would have to say, "Sorry, but there is no chance of having your benefit upgraded despite the fact that the DLA you have been awarded is wrong."

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To abandon the project now, which was the request of the hon. Member for Winchester (Mr. Oaten), would be to abandon those people who have not received the payments to which they were entitled, and I strongly advise against it.
We have heard a number of constructive proposals about how the project could be improved to ensure that people receive the benefits to which they are entitled and that we have a system that works in the interests of disabled people. I should like to hear some reassurance from the Minister that the conditions of entitlement to disability living allowance have not changed and that the benefit integrity project is not a cuts-led exercise, but is designed to get the right benefit to the right people. I want to know that, in future, disabled people will be treated properly and fairly, that the project will be put on a sound footing and that it will be carried out sensitively, with full and proper concern for each individual affected by it.
I welcome the new safeguards that have been introduced. I hope that we can see some real benefits—excuse the pun—coming through so that there is less error in the project and so that more people get the benefits to which they are entitled.
I should like to hear from the Minister some reassurance that consultation with disability groups is taking place at national as well as local level. Working in partnership with disabled people and with the groups and organisations that represent them is a good way in which to work.
Mr. Burns: I was interested to hear the hon. Gentleman's point about consultation. Does he believe that many of the problems we have seen over the past six months would have been avoided if, in September last year, when the disabled groups were summoned to the Department of Social Security, it had been for a consultation—that is what they thought it would be—rather than simply to be told by the Government what was happening, and what would continue to happen?
Mr. Hope: No. The problems that we have seen over the past six months would have been dealt with if the original project had not been established by a Conservative Administration, without proper training or resources, and without any partnership or involvement with disabled people.
The reassurances from the Minister will be important for hon. Members, for disabled people and for the organisations that represent them. They will show that the Government are putting the project back on track after inheriting such a mess. Disabled people and their organisations want to know that the Government will be true to their pledge of wanting to see justice and equality for disabled people in this country.
11.58 am
Mrs. Theresa May: Like other speakers, I welcome this timely debate and congratulate the hon. Member for Moray (Mrs. Ewing) on having introduced a debate on such an important subject. Its importance is shown by the number of hon. Members who want to speak in recognition of the many complaints about the operation of the benefit integrity project that have been communicated to us via our postbags and constituency surgeries.
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I should correct the hon. Member for Corby (Mr. Hope), who made a disappointing and unfortunate speech. Although the initial sampling exercise in the review of disability living allowance was carried out under the previous Government, and the decision was taken to go ahead with the benefit integrity project as a result of that evidence, the project has been carried out by the current Government and the operation of the project is their responsibility. I am sorry that the hon. Gentleman dismissed the valid point made by my hon. Friend the Member for West Chelmsford (Mr. Burns)—that if the Government had consulted with disability organisations prior to carrying out the project, the results might have been very different.
Disability organisations are as keen as all of us to ensure first, that there is no fraud in the system and secondly, that people are paid the correct amount of benefit. As the hon. Member for Corby pointed out, some people are receiving less benefit than they are entitled to receive. We all accept that people should receive the correct level of benefit, and the disability organisations would be keen to work with the Government to ensure that the methodology used in the benefit integrity project will work properly. Those organisations know best what will work and how the system should operate.
It is important to point out to the hon. Members for Bradford, North (Mr. Rooney) and for Blackpool, South (Mr. Marsden), who commented on whether the current welfare reform was a cuts exercise, that one of the problems with the way in which the benefit integrity project is operating is that people with disabilities are made anxious on two scores. First, as my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) said, they are anxious about the possible knock on the door in connection with the project. Secondly, that feeling occurs against a background of general concern about what is to happen to disability benefits. That is a double whammy which makes people with disabilities feel great concern about their future benefits.
I mentioned the sampling exercise carried out under the previous Government which led to the estimate that incorrect overpayments were being made of slightly less than £500 million. I understand that current evidence indicates that that figure is an overstatement and I should be grateful if the Minister could confirm whether that is true. I should also be grateful if the Minister could respond to several issues that have been raised by hon. Members today and by the all-party disablement group in its two meetings with the Secretary of State for Social Security. I was part of the group's delegation on both occasions.
Our first concern relates to those who have their benefit reduced or removed and who then appeal, and the question of what happens to them while their appeal is in process. Several hon. Members have commented on the fact that the appeal process is lengthy and on the difficulties that people suffer while going through that process. The all-party disablement group requested that the rules should be changed so that claimants can retain their previous benefits until their appeal is heard, thereby preventing the hardship that occasionally results under the current rules. We also raised the question of the operation of the mobility component and the implications for those who have cars under the Motability scheme. I should be grateful if the Minister could respond on those points.

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The Secretary of State indicated a willingness to have exemptions listed on the covering letter, with a box that could be ticked by anyone who fell into one of the exempted categories so that the papers could be returned immediately. I should be grateful if the Minister could confirm that that idea is to be put into practice. The all-party disablement group also raised with the Secretary of State the possibility of what was described as a "health warning" being attached to the covering letter, so that those who are completing the form are fully aware of the implications of doing so. The hon. Member for Blackpool, South referred to the pride that many people with disabilities feel and their desire to overstate their abilities on the form, but they must understand the implications and recognise that doing so may lead to their benefit being cut. The provision of a health warning would enable them to see the matter in an entirely different light.
A number of hon. Members have mentioned fraud, and I hope that we can get an unequivocal statement on that from the Minister today. There is real concern that several statements have given the public the impression, first, that the benefit integrity project is entirely about fraud and, secondly, that vast numbers of people are falsely claiming to be disabled, purely to get disability benefit. I hope that the Minister will give a categorical and unequivocal statement today that that is not the case, and that all the evidence that the Government have shows that the level of fraud is actually extremely low.
In the letter from the Secretary of State dated 2 March, which most of us received shortly before the debate started, she states:
"Of the 40,000 or so cases examined up to the end of last year, around 9,000 people have had their entitlement adjusted."
As I understand it, that covers both upward and downward adjustment. She continues:
"Some cases have been referred to the Benefit Fraud Investigation Service and around 40 are currently being investigated."
That is an extremely small figure. The evidence totally fails to support the impression that has been given in several statements that many people are fraudulently claiming disability living allowance, and it is imperative that a clear statement is made in the House today. We are concerned about the mechanism whereby the benefit integrity project operates, which is leading to cases of real hardship among people with disabilities who have had their benefit reduced or removed. Our concern is not vast fraud within the system, and I hope that the Minister will respond positively to that point today.
When the all-party disablement group met the Secretary of State, we specifically asked her to consider suspending the benefit integrity project. The hon. Member for Corby should realise that it is not a question of preventing those who have so far been underclaiming and underpaid from getting the benefit to which they are entitled. The point is that the way in which the system is operating is causing real anxiety and real hardship, and it is necessary that the project should be suspended for a period so that its operation can be properly assessed. In today's debate, some excellent suggestions have been made about the way in which the project could be reformed to ensure that it operates fairly and justly. Part of that process should consist of consultation with disability organisations; they understand the problems and their input can ensure that the system works at grass-roots level.
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Although the Secretary of State indicated to the all-party group that she would not suspend the project, it has been reported that the Prime Minister told the Disability Benefits Consortium that he would consider suspending it. I should be grateful if the Minister could tell us which of those positions the Government will take. I trust that they will suspend the project for a period so that an independent review can be carried out and the right systems put in place. In that way, we can be sure that people with disabilities will receive the benefits that they genuinely need.
12.8 pm
Mr. Simon Burns: I congratulate the hon. Member for Moray (Mrs. Ewing) on securing this important debate, which has drawn together views, ideas, criticisms and comments from hon. Members on both sides. I hope that the Government will feel that the debate has been useful and helpful, as we try to sort out some of the problems that have emerged with the unit.
Comments from Labour Members, from my hon. Friends the Members for Tiverton and Honiton (Mrs. Browning) and for Maidenhead (Mrs. May), and from hon. Members from other parties have shown that there is considerable concern in many parts of the country about the effects of the project at the sharp end. The Government have not handled it in the best way possible. There is great confusion, fear and consternation among people with disabilities and the pressure groups representing them as a result of increasing uncertainty about the Government's intentions on disability benefits and the actions of the unit. If anything positive is to come from the debate, we should have assurances from the Government that those who rely on those vital benefits will not have them cut because of Treasury-imposed spending targets.
The operation of the benefit integrity project over the past nine months is a prime example of the Government's haphazard and unsatisfactory approach to the issue. Under the previous Government, expenditure on disability and sickness benefits increased dramatically over 10 years from £7 billion a year to £20 billion. In 1992, the categories of people who could claim disability benefits were extended. The measure was accompanied by a successful publicity campaign, which increased people's awareness of the benefits to which they were entitled. Equally importantly, that was part of a process of trying to take away the stigma from claiming benefits—a problem which is particularly prevalent among the elderly and disabled people, who often do not claim the benefits to which they are entitled, out of pride or a feeling that they are begging for help. That is a misguided view. Politicians and others should do everything that they can do to remove that perceived stigma.
The hon. Member for Corby (Mr. Hope) seems to be unaware of the history of the unit. My hon. Friend the Member for Maidenhead dealt with the point, but I should like to put the facts on record, because, as success has many fathers and failure is an orphan, they are being forgotten. The benefit integrity project was proposed by the previous Government, who set up a pilot survey, because it was crucial to ensure that the benefits system for disabled people was monitored and that the right benefits went to the right people. The results of that pilot survey came forward in January last year. The general election intervened before the unit, in its current modus

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operandi, was put into place. That modus operandi was established by the current Government, not the previous one. That should not be forgotten by a Government notorious for spinning whatever line they want to avoid responsibility for their failures.
Under the Labour Government, the benefit integrity project has been turned into a purely cost-cutting vehicle for reducing expenditure on disability living allowance. That becomes clearer after even a limited examination of the project, which is targeted only at those on the highest or middle rate of the care component of DLA and the higher rate of the mobility component. It is clear that, after examination by the project, those on the highest rates of the two components can only have their benefits reduced. There is no way in which they could be increased. Limiting the scope of the BIP to those categories illustrates that it is part of the Government's policy of trying to reduce the benefits bill.
The Government's approach to disability benefits is in keeping with their overall approach to other aspects of welfare reform. It has become increasingly clear in the past few months that the Department of Social Security is working to the agenda of the Treasury and the Chancellor, which is designed to save a war chest for the Government to spend in the run-up to the next general election. The Government pay lip service to the rhetoric of an intellectually based welfare review which will seek to address the long-term problems of an escalating welfare budget. However, all that we have seen over the past nine months is a salami-slicing exercise for benefits picked by the Treasury, which has been implemented by the Department of Social Security on the orders of the Treasury.
Mr. Hope: Will the hon. Gentleman give way?
Mr. Burns: No. I do not have much time.
The benefit integrity project is not the only means that the Government have used to target people with disabilities for savings on the benefit bill. In November, various proposals were leaked to the press, including the taxing, means-testing and time-limiting of certain disability benefits. There was also a proposal that the DLA cash benefit might be exchanged for care services administered by local authorities. We all understand the seriousness of the implications of such policies for disability benefits, particularly the DLA and disability working allowance. The principle behind those benefits is to level the playing field for those with benefits and those without by meeting the additional expenditure caused by the extra needs of people with disabilities. Denying someone those benefits would put them at a disadvantage and would eliminate the level playing field that we should all be seeking to create.
The leaking of such proposals and the floating of such rumours has done nothing but harm. There is still a great deal of uncertainty surrounding the issue, which the Government are doing little to allay. Only last week in the Social Security Select Committee, the Secretary of State and the Minister for Welfare Reform were unable to confirm or deny stories about the means-testing of DLA. I hope that the Minister will take the opportunity of this debate to confirm whether the Government plan to means-test DLA.
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The operation of the unit under the current Government has been geared towards saving money. That has been carried out in several ways. We are grateful for the Secretary of State's announcement on 9 February of changes to the existing system. We also appreciate the letter dated 2 March, which we got yesterday afternoon, which also recognises that there have been serious problems with the administration of the system. In an appendix, it lists extra ways in which the Government hope to safeguard the operation and the work of the existing unit. No doubt the Minister will elaborate further on the contents of the letter and the Government's proposals.
As many hon. Members have said, the problem is too confused and difficult for the Government to be able to carry on with a piecemeal approach, tacking proposals on at the edges of a system that they recognise is failing. We should suspend the activities of the unit until all the piecemeal proposals and changes have been announced, and a fundamental review of the system and the aims and aspirations of the unit can be thrashed out properly. We can then start again with a system that does not spread fear, confusion and anxiety, but is targeted at the realistic and right aim of ensuring that the process is being monitored and that those who are entitled to benefits get the right amounts of the right benefits. Even if the Minister is not able to give an answer during the debate, I urge him to give serious consideration to that proposal and make an announcement as soon as possible. He should not dismiss the idea out of hand.
12.19 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): I welcome this opportunity to speak to the House about the benefit integrity project. I congratulate the hon. Member for Moray (Mrs. Ewing) on obtaining this debate on a matter of wide public interest. I also congratulate her on setting a constructive and helpful tone, which has generally been followed for the past hour and a half.
I acknowledge that the benefit integrity project has been the subject of debate, controversy and concern, much of which has been reflected in speeches made from both sides of the House. I have had a great many requests to respond in my summing up to many specific issues. I shall not be able to do so in the time available, but I give an assurance that all issues raised about the delivery of the project will rightly be given careful consideration. In the time available, I will clarify the reasons for the benefit integrity project and, equally importantly, lay to rest many of the fears about its purpose and intent. I shall look at the experience of the project to date, and set out how the Government have responded and will respond to that experience.
First, and most importantly, I want, through this debate, to reassure disabled people. The benefit integrity project is simply about ensuring that disabled people receive the right amount of disability living allowance—the amount to which they are entitled. It is not an anti-fraud drive; it is not a cuts exercise by another name; it is not part of the Government's wider agenda of welfare reform, or a precursor of it. It is concerned with disabled people and their entitlement to benefit under rules that Parliament has

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laid down. No rules on the entitlement to DLA have been changed. The responsibility for decision making rests with the people who have always exercised that responsibility.
Mr. John Swinney: Will the Minister say why DLA has been singled out to be checked and clarified while other benefits have not? It leads to suspicion that the Government have some ulterior motive.
Mr. Denham: As I shall make clear, DLA has not been singled out in the process of action being taken on incorrectness and other problems in the Department of Social Security.
Guidance given to decision makers on the need to take into account all appropriate evidence remains unchanged. I want to reassure disabled people. We want to ensure that benefit payments are right. We want to act sensitively and we want people to have confidence in the actions taken as part of the project.
Why was the benefit integrity project initiated? I do not think that any Member would question the need to take action across all benefits to ensure that benefit payments are made to those—and only those—who have a legal entitlement to them. As the hon. Member for Moray said, we must, of course, recognise that even establishing that somebody is not entitled to benefit has an impact on their life, so the situation needs proper and sensitive treatment.
The previous Administration initiated a series of benefit reviews to establish the extent of error and fraud across all major benefits. In each benefit, the findings of the reviews have or will lead to appropriate changes in the way in which benefits are administered and entitlement is established. Disabled people and DLA recipients have not been singled out.
Mr. Archy Kirkwood: Will the hon. Gentleman give way?
Mr. Denham: I will not give way because I have very limited time in which to answer at least some of the points raised.
The DLA benefit review was undertaken in 1996 and published in February 1997. It reported that 73 per cent. of people were receiving it at the correct rate at the time that they were visited, meaning that 27 per cent. of people were receiving DLA at an incorrect rate. Incorrectness may have arisen for a variety of reasons, and involved under-provision as well as overpayment. In line with other benefit reviews, the DLA review reported a headline estimate of fraud of 12.2 per cent. The sample was extrapolated to produce the estimate of fraud of about £499 million that has been used.
I should make it quite clear that it would be totally wrong to suggest that the majority of people receiving DLA are doing so fraudulently. There is absolutely no evidence to support that. I should go further. Although the benefit integrity project has broadly confirmed the level of incorrectness identified by the DLA benefit review, it has not sustained the suggested level of fraud. But—this is the critical point—even if the benefit review estimate of fraud can be debated, it none the less indicates a worrying level of incorrectness.
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The benefit integrity project has broadly sustained the estimated level of incorrectness and has justified the decision to proceed with the project when we took office in May. I should make it clear that the BIP was already fully designed under the previous Administration—contrary to the history described by the hon. Member for West Chelmsford (Mr. Burns)—and we had to take some very early action to improve its design.
Hon. Members need to understand that the points that they raised about decision making relate not to the BIP, but to the fundamental nature of DLA as a benefit. It is a complex benefit. It is paid to provide help with the extra costs associated with a disabling condition. Entitlement is based on the effect of a disability, not purely on the fact that a person claiming benefit is disabled in some way. The same condition can, of course, affect individuals in very different ways. As part of the claiming process, we ask people to describe the effect of their disability on their daily life, and through an understanding of the need that they have for help with personal care and getting around, decisions are made about entitlement. The BIP uses the same process.
It is fundamental to the nature of DLA that we rely to a considerable degree—sometimes entirely—on the information that we ask people to provide about their daily lives. It is not easy for many people to describe accurately the precise levels of need which arise from their disability. That is not to say that people are setting out to mislead or exaggerate, although it is important that we recognise constraints in the assessment of DLA entitlement generally before we begin to look more closely at the operation of the benefit integrity project.
Mrs. Ewing rose—
Mr. Denham: I hope that I can make some progress because I have some important points to cover.
I have already mentioned the difficulties that disabled people may have in recognising when to let us know that their circumstances have changed. The focus of the benefit integrity project was dictated by the findings of the benefit review, and is focused on groups of recipients who are thought to be the least likely to contact the Department about change. The House will, of course, recognise that there is a strong incentive for people to let us know when their needs increase, but less so as needs decrease, and even less if it is unclear when they should take such action.
The project results so far have underlined the need for the exercise. Up to the end of January, 55,000 cases had been examined and more than 12,000 people had had their benefit changed. Almost 1,300 people have seen an increase in their award, while some 4,000 people have moved off benefit altogether. Of the 44,000-plus cases with an on-going award of benefit that have so far been examined, 16 per cent. have resulted in change to the benefit paid. Some 48 per cent. of awards in renewal claims are being changed. In total, the level of incorrectness found, at 21 per cent., is broadly in line with the level of incorrectness found in the review. I should stress again that the project is seeking to establish current entitlement against current rules. None of the rules has changed.
In seeking to reassure the House that there is a sound basis for the benefit integrity project—the integrity, of course, refers to the integrity of our system, not to the

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integrity of recipients—I do not want to give the impression that we are in any way complacent about the way in which the project is being carried out or the concerns of disabled people who receive DLA. It is essential that the project is carried out properly, sensitively and with full and proper concern for each individual disabled person who might be affected by it. Although I cannot comment on individual cases raised in the debate, I accept that we do not always get it right, despite our best intentions and—I genuinely believe—the best efforts of our staff to carry out their responsibilities properly and effectively.
From the outset, the Government have sought to address issues of concern, learn from the experience of the project and tackle problems that emerge. We are determined that disabled people should be dealt with properly and fairly, and that they should have sufficient information about what is required of them and the purpose of the exercise to allow them to provide the required level of information about the effect of their disability on their need for help with personal care and getting around. Most of all, we want the decisions that are made as a result of the project about benefit entitlement to be the right decisions.
When we inherited the project designed by the previous Administration, we discovered at the outset that no effort had been made to ensure that visiting officers had appropriate disability awareness training. The present Administration introduced that.
We have had several meetings at ministerial and official level to discuss the development of the project, and have recognised that some of the individuals contacted may not have understood the level of detail required about their daily lives. That is why my right hon. Friend the Secretary of State for Social Security announced on 9 February that a new safeguard was being introduced. Details have been sent to hon. Members.
So far, we have kept the working of the project under constant review, and we shall continue to do so. We shall also continue to meet organisations of and for disabled people. It is important to understand that the project is about ensuring that disabled people receive the right amount of DLA—that to which they are entitled. I believe that the results so far endorse the need for the exercise, and that it would be difficult for us to stop taking action to secure the proper payment of benefits.

Irish People in Britain
12.30 pm
Mr. John McDonnell: Astoundingly, this appears to be the first recorded debate in the history of the British Parliament specifically on the subject of the Irish community in Britain. That is all the more astounding because, as the House will be aware, Irish migration to Britain goes back as far as the first forays by Irish chieftains to Wales, during which they reputedly kidnapped a small boy who grew up to become our patron saint, Saint Patrick.
After the 12th century Anglo-Norman invasion of Ireland, emigration escalated, and by the 1600s there were sizeable Irish communities in most major cities. Some of that migration was the inevitable and natural movement of peoples, but certainly over the past two centuries the growth in the numbers of Irish people coming to Britain was overwhelmingly a direct result of the colonial exploitation of Ireland—a process which included discriminatory measures that suppressed and destroyed whole sections of Ireland's economic base.
Racism and discrimination are also tools of colonial oppression. The denigration of the Irish has been used not only to justify colonial invasion and occupation but to reinforce oppression. Liz Curtis' s excellent book, "Nothing but the Same Old Story", charts the depiction of the Irish within British culture and the media as some brutish sub-species, from the earliest Norman tracts to the present-day Murdoch newspapers.
Over time, racism has been as effective a weapon of oppression as any sword or gun—more effective in some ways, because it is less overt and can even be internalised by the victims, undermining their feelings of self-worth.
Remarkably, however, until last year there had been no comprehensive investigation into discrimination experienced by the Irish community in Britain. Throughout the 1980s, a number of organisations, including the Federation of Irish Societies, the Irish in Britain Representation Group, the Action Group for Irish Youth and the Irish Women's Centre, campaigned to highlight the discrimination faced by the Irish in Britain.
Those organisations were joined by local authorities such as the Greater London council, Camden, Haringey and Lewisham, and the Association of London Authorities. To its credit, the Irish Post, under the editorship of Brendan McCluha and Donal Mooney, became the vehicle in which that anti-Irish racism was exposed.
The campaign culminated last year in the publication of an excellent and authoritative research project by Dr. Mary Hickman and Dr. Bronwen Walter, commissioned by the Commission for Racial Equality. The report examines the extent to which Irish people in Britain experience various forms of discrimination. I pay tribute to Herman Ouseley, the first chair of the CRE to take the issue of anti-Irish racism seriously.
To many, the results of the research project are startling. The researchers drew on the 1991 census data and consulted a wide range of organisations working within the Irish community. They also conducted a pilot

1017
survey among the Irish population in Britain. They catalogued the inequality that Irish people have experienced, and described finding in many people of Irish origin
"a powerful sense of hurt and unjustified exclusion from an equal place in British society."
The researchers demonstrated that
"deep seated Irish stereotypes affected many areas of the lives of Irish people, including workplaces, access to housing, treatment at benefits offices and interactions with neighbours and the police.
Drawing on the census data, the research confirmed that the Irish in Britain experience a range of social disadvantages compared with the white indigenous population.
The findings revealed that the Irish experience lower than average rates of upward social mobility, and that their housing provision is of significantly lower standard than that of the white population, with twice the level of overcrowding and the worst amenities of any major ethnic group.
Of all the ethnic minorities in Britain, the Irish have the poorest record of physical and mental health. That finding has been reinforced recently by a research report in the British Journal of Psychiatry that revealed that Irish men are the only migrant group whose life expectancy worsens on emigration to England. Those excessive mortality and morbidity rates persist into the British-born children of Irish migrants.
The research study's survey of Irish community groups and advice agencies consolidated the results extrapolated from the statistical data with the views of those working at the sharp end of dealing with the problems faced by the Irish community.
The survey exposed a widespread denial of specific Irish needs and a refusal by statutory bodies to include an Irish dimension in consultation on, and the planning of, service delivery, including community care plans and housing investment strategy. It depicted the stereotyped responses and comments by service providers that meant that Irish concerns were not taken seriously, and included reports of harassment ranging from violent physical attack on Irish individuals and organisations to the everyday occurrence of verbal abuse.
Regrettably, the survey also revealed an element of police harassment, sometimes triggered by the hearing of Irish accents of names, and often associated with the use of the prevention of terrorism Acts.
The research programme went on to survey a cross-section of the Irish population in Britain, and the researchers concluded:
"The most striking finding was the high levels of anti-Irish hostility routinely encountered by Irish people in Britain".
They revealed
"a catalogue of demeaning treatment which built into a cumulative picture of normal levels of harassment, punctuated by a number of more frightening and aggressive acts".
The survey showed that all aspects of Irish people's lives were affected by racism. That was manifested in many ways. For example, 25 per cent. reported negative responses from the police, ranging from verbal abuse to assault, 24 per cent. described discriminatory treatment at benefit offices, and 79 per cent. recorded that they were
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subjected to derogatory anti-Irish remarks, jokes and comments, which 70 per cent. of those surveyed found offensive.
Occasionally and increasingly, Irish people have resorted to legal action under the Race Relations Act 1976 to overcome racism and discrimination, and there is now a body of court and tribunal judgments against anti-Irish discriminatory practices. However, the survey found that the general response of Irish people when they encountered anti-Irish racism was to adopt a low profile or "heads down" approach.
That must not be the Government's response to the findings and recommendations of the research. We must develop a strategy that puts in place the policies, structures and resources that will enable us to take the first steps in eradicating anti-Irish racism in our community.
The CRE report and the contribution of many Irish community organisations to the debate has set a clear agenda for the Government, and for us all, to follow. The first step is to break through the barrier of the traditionally crude, "black and white", binary approach to tackling racism and discrimination in this country.
The debate about racism in Britain has been limited by the definition of ethnic status based on skin colour, and the belief that the white population is a homogeneous group. That denies the diversity of ethnic composition of the white population and the diversity of its cultural and historical roots.
The strong resistance, especially in central Government bureaucracies, in sections of local government and in Government-appointed agencies, to the acceptance of a distinctive Irish experience in Britain has meant that Irish needs are generally not accepted or specifically catered for.
If we accept that the Irish in Britain encounter particular problems and have specific needs, it follows that we can tackle those problems only if we have a sound body of information and research relating to the Irish experience in Britain. For that reason, I join with the organisations, including the CRE, that are pressing for the inclusion of an Irish category in ethnic monitoring systems and in the next census in 2001.
Unfortunately, the introduction of ethnic monitoring has been uneven across public bodies. It is vital, therefore, that the Government take the lead in insisting on the establishment of ethnic monitoring systems within all key areas of public service, and on the inclusion of an Irish ethnic category within those systems.
Given the deep-seated resistance of some public agencies to the very concept of anti-Irish racism, I do not believe that it can be left to individual Government Departments and agencies to decide on the principle or the practice of ethnic monitoring for the Irish in their respective spheres. Thus, I would urge the Government to co-ordinate the introduction of these systems, setting a definite pre-determined deadline for their implementation. That could be facilitated by the convening of a cross-departmental group, meeting representatives of the CRE and the major Irish representative community organisations to work through a programme for the common introduction of ethnic monitoring.
If we are to be a Government dedicated to providing equal opportunities to all in our community, we must ensure that the needs of the Irish are recognised in the

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development of our policies and the allocation of resources. That must include the firmer recognition of the housing needs of the Irish community by the provision within the housing association sector of a fairer allocation of resources to successful and effective housing associations, such as the Cara and Innisfree housing associations.
The strategy should also include greater support to the voluntary sector organisations and advice bodies that are struggling to work within the Irish community to provide culturally sensitive services and to develop self-help groups to tackle the problems faced by the Irish community.
If we are to tackle the disproportionate level of ill-health among the Irish in Britain, we need to ensure that resources are targeted to health authorities where there are concentrations of the Irish population. That would provide the basis for addressing the specific health needs of the Irish community, taking into account the particular problems identified recently among the elderly and the mental health problems of a migrant community. Integral to our approach to combating anti-Irish discrimination should be an exercise that provides training to staff involved in direct service delivery, raises consciousness on the issue among policymakers in all echelons of Government and develops that within other funding bodies.
Within the criminal justice system and police service, it is clear—regrettably—that some discriminatory attitudes remain to be changed and could be best addressed by training programmes, backed by performance monitoring. We do not want to repeat the cases of the Guildford Four and the Birmingham Six, but there are other cases outstanding that need to be tackled in the near future. I name Frank Johnson as one such case in which we must secure the release of an innocent person.
Change will not be effected unless structures are established to co-ordinate implementation. For that reason, I urge my hon. Friend the Minister to consider the establishment of a cross-departmental ministerial group to take forward a programme of policies aimed at addressing the needs of the Irish community and, alongside that, to set up a consultative forum between Irish community organisations and the Government.
I also recommend that close liaison takes place with the Irish Government, especially on issues such as mobility between Britain and Ireland and enabling housing transfer and exchange for many who may wish to return home on retirement or simply to be nearer their family. Such dialogue has commenced, but it may need resourcing to ensure its effectiveness.
Parliamentarians can also play a part in progress chasing the implementation of the Government's policy and overall programme, and in voicing the concerns and aspirations of the Irish community. To facilitate this role, I intend to seek support for the formation of an all-party parliamentary group devoted to representing the interests of the Irish community in Britain and to serving as a channel for the Irish community to voice its concerns to Parliament.
The Irish have made their contribution to British society over centuries. They have—literally—physically constructed Britain' s infrastructure. They have served in every walk of life, but have made a special contribution to our health and education services.
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The Irish have made eloquent contributions to our artistic and cultural lives—ranging from Oscar Wilde, Bernard Shaw and James Joyce to the brilliance of today's poets and writers, such as Seamus Heaney, Edna O'Brien and Ronan Bennett. In theatre, film and dance, we have recently been inspired by an Irish renaissance.
In politics, Irish leaders such as Bronterre O'Brien and Fergus O'Connor were the foundation stones of the modern Labour and trade union movement. I pay tribute to my hon. Friend the Member for Hull, North (Mr. McNamara), my right hon. Friend the Secretary of State for International Development and others in the Chamber today who, at some personal cost, have faithfully represented the interests of the Irish in Britain over the years.
In return for the contribution that the Irish have made to this country, the Irish community at least deserves the right to live free from discrimination and in equality and respect. As a Labour Government, we must dedicate ourselves to securing this basic human right and to that end I pledge my support. I urge the Government to implement the recommendations of the CRE report, to establish structures for consultation and dialogue and to go forward to eliminate anti-Irish discrimination as a scourge within our community.
12.45 pm
The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): I congratulate my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) on securing this important debate on the Irish in Britain. My hon. Friend the Member for Wigan (Mr. Stott) is in the Chamber, and he and most of us in the north-west know of the considerable historical links between our constituencies and constituents and Ireland. Clearly, that has an impact on our feelings when we come to the subject.
We have heard about some of the problems that the Irish can encounter in this country. I will speak about those in a few moments. I would like to begin where my hon. Friend the Member for Hayes and Harlington ended—by paying tribute to the successes of the Irish in Britain. The Government fully recognise the contribution that people of Irish origin have made to British society. Over the centuries, they have become an integral and essential part of our national life, and their achievements are visible in many walks of life.
Only last week, we read of the BMRB/Irish Post survey—to which my hon. Friend referred—which confirmed the successes of many Irish people in our society. It overturned some traditional stereotypes and painted a different, up-to-date picture of skilled, well-educated people coming to Britain to add their expertise to the economy. It suggested that one fifth of people born in Britain have a family member from Ireland, either directly or through marriage. A book detailing the 150 most successful Irish people in Britain was also recently launched. Clearly, the Irish influence in Britain is flourishing—something which I personally welcome.
My hon. Friend talked about the concerns of the Irish community, and the record of achievement and integration should not blind us to the problems that he raised. The Government are not complacent. While the very many successes are gratifying, they are no excuse for not paying attention to other real concerns.

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The debate follows a report produced by the Commission for Racial Equality in June last year, entitled "Discrimination and the Irish". My hon. Friend dealt with that in some detail. When the report was launched, my right hon. Friend the Home Secretary took the opportunity to congratulate the CRE on its efforts to raise awareness of the position of the Irish in Britain, and to welcome the research.
The report concluded that there was a lack of acknowledgement of Irish needs and rights, and that discrimination and disadvantage existed. A list of recommendations for action was produced, and my hon. Friend referred to many of those recommendations. The Government recognise that these problems exist and have taken them seriously across Whitehall.
Improving community relations and equality of opportunity is high on the Government's agenda. We are committed to tackling the problems of racism and discrimination—to creating a society in which everyone, regardless of background, colour or creed, has equal rights, responsibilities and opportunities. This is a policy of inclusion, not exclusion. We take seriously the concerns of every section of our society.
It should be re-emphasised today that Irish people already receive protection under current legislation. The Race Relations Act 1976 covers discrimination against anyone on grounds of colour, race, nationality or ethnic or national origins. The Act makes racial discrimination generally unlawful in the areas of employment and education, and in the provision of goods, facilities and services.
The Act has been an important tool in combating discrimination. It is now over 20 years since it was introduced, yet racial discrimination and hostility still exist. We intend to ensure that the legislation in this area is adequate to protect ethnic minorities and that it keeps pace with changes in our society. A number of organisations, principally the CRE, have put proposals to us for amending the Act; we are now looking carefully at those proposals. We need to ensure that all sections of the community can live their lives free from discrimination.
Measures to tackle racial violence and harassment are also contained in the Crime and Disorder Bill. We do not underestimate the harmful effect that such crime has on the victim, and the wider damage it can do to the trust and confidence that have built up between our communities. The creation of specific offences will send out a strong message that racial violence and harassment is unacceptable.
The Irish community will reap the benefits of a renewed emphasis on equality of opportunity across the board. We recognise that it has particular concerns—Ministers across Government have met representatives of the community to hear those concerns at first hand. The Under-Secretary of State for the Home Department, my hon. Friend the Member for North Warwickshire (Mr. O'Brien), has discussed the concerns with the Irish ambassador and with representatives from a wide range of Irish organisations.
The Federation of Irish Societies has met Ministers and officials at the Department of the Environment, Transport and the Regions and officials at the Office of National
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Statistics. The Department of Health is meeting Irish voluntary organisations to establish how it can support them in developing work on the health of Irish communities.
My hon. Friend the Member for Hayes and Harlington mentioned benefits. One of the initiatives that has been taken is that the Benefits Agency has held Irish-awareness programmes in targeted offices. We hope that the difficulties to which he referred will be dealt with at that level.
My hon. Friend also expressed concern about housing. My hon. Friend the Minister for Local Government and Housing has met a delegation of the Federation of Irish Societies to discuss its concerns. The Housing Corporation has set up a black and minority ethnic advisory group and although the Irish are not listed in the group's title, their concerns are included—indeed, the chief executive of the Irish Innisfree housing association is a member of the group. I am pleased to say that its work is under way. My hon. Friend the Minister for Local Government and Housing has asked the Housing Corporation to draw up a revised black and minority ethnic strategy, which will shortly be published for consultation.
Mr. Kevin McNamara: What my hon. Friend the Minister says is important, but we do not have the bare, raw statistics. Can he say whether the next census will include a specific Irish category? That is the key to progress, which will otherwise be haphazard, valuable and welcome though it is.
Mr. Howarth: My hon. Friend raises an important issue, which I shall deal with in a moment.
My right hon. Friend the Home Secretary intends to create a new race relations forum, which will be at the very heart of Government. In keeping with the Government's practices, it will include new voices and provide new solutions. Individual membership has yet to be decided, but I can confirm that it will include a member from the Irish community.
The forum will be part of the overall development of a community relations strategy that has been instigated by the Home Secretary and is being developed by the Under-Secretary of State, my hon. Friend the Member for North Warwickshire. We are determined to take those responsibilities seriously.
My hon. Friends the Members for Hayes and Harlington and for Hull, North (Mr. McNamara) both mentioned ethnic monitoring. I do not have time to talk in detail about all the issues that the CRE report highlighted, but I shall deal with the census and statistics. Ethnic monitoring and a separate Irish category in the 2001 census is a major concern of the report. We are aware of that concern from our meetings with representative groups.
The Registrars-General for England and Wales, for Scotland and for Northern Ireland are responsible for consulting census users in Government Departments, local and health authorities, academia and the private sector about their requirements for information from the next census of population and housing, which is planned to take place in 2001. The objective is to reach agreement on the questions that will be included in the census. Users have expressed strong support for the inclusion of a

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question about ethnicity, and for statistics that are, as far as possible, comparable to those produced from the 1991 census. A number of users support the inclusion of a separate Irish category.
The census offices are conducting an extensive programme of testing possible questions for the 2001 census, including ethnic questions incorporating an Irish category. They will shortly draw together the results of that programme, and assess customer requirements in preparation for finalising the questions that will be included. The Government's proposals for the 2001 census will be published in a White Paper in the autumn.
In making the final selection of questions, the Government will consider not only the strength of users' needs for information, but the acceptability of questions to the general public and the burdens placed on them in filling in the questionnaire. It is important that we consult people in local government, in health, in housing and in the private sector to assess the value of those questions. Part of the concern is that we are able to measure the success of policies that are targeted to deal with the inequalities highlighted in the report.
It is also important that we are as inclusive as possible. The proposal for the inclusion of an Irish representative on the forum takes into account the concerns expressed by my hon. Friends the Members for Hayes and Harlington and for Hull, North, which I entirely appreciate.
Mr. McNamara: One of the most important strands of the current three-strand talks is the one dealing with the east-west relationship between Westminster and Dublin. Can my hon. Friend give any indication of the state of relations between the two Governments over the important question of the fate of Irish immigrants to Britain and of British people residing in the island of Ireland? After meetings between the two Prime Ministers, statements about intergovernmental relations have been printed at the margins, but has the Home Office been involved in such discussions?
Mr. Howarth: It is important to be careful and measured in any response to the detail of the points that
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my hon. Friend raises, but I shall consider whether it would be appropriate to put into writing the particulars of some of the discussions. More positively, in the difficult negotiations on initiatives in Northern Ireland, there has been a strong understanding between the two Governments on how the process should be taken forward—relationships between the Governments are good.
Rev. Martin Smyth: The debate has focused on the Irish in Britain, but it has encompassed the question of the census. Will the census refer to the Irish in Scotland? Will the question on ethnicity extend to Northern Ireland, or will it apply only in Britain?
Mr. Howarth: The hon. Gentleman raises a wider issue, which is not in the compass of this debate, although it would fall within our consideration of ethnic monitoring in the census. As I understand the matter, however, we are specifically dealing with people whose origin lies in the Republic of Ireland. The hon. Gentleman raises an interesting side issue, which may be considered in the consultations on the 2001 census.
Mr. McDonnell: In the discussions that have taken place so far, the question of ethnic status has covered everyone from the island of Ireland—it does not distinguish between people from the Six Counties and people from the Republic.
Mr. Howarth: I am grateful to my hon. Friend for that clarification.
The debate has done a great deal to remind us all of what has been achieved and what remains to be done. We will continue to consider carefully the concerns raised in the CRE report and elsewhere, and we will ensure that the Irish community has full access to the rights and opportunities that we will create for all our citizens.
This has been a useful debate and, as my hon. Friend the Member for Hayes and Harlington said, it was probably overdue. It certainly gives us all in Government much food for thought. There are still issues to be resolved, but we are engaging with those issues, and I hope that, in due course, improvements can be made.

Insulin-dependent Diabetics (Driving Restrictions)
12.59 pm
Mr. Adrian Sanders: This is a debate about improving road safety in the United Kingdom and in Europe. The Department of the Environment, Transport and the Regions road strategy document, "Current Problems and Future Options", dated October 1997, states:
"There is no evidence that medical unfitness plays a significant role in causing accidents; indeed, accidents with medical factors involved are too few to show up in any of the statistics that are collated."
Nevertheless, there is a suspicion that people with a medical condition such as diabetes are less safe behind the wheel than others.
That suspicion lies behind European Community directive 91/439, the origins of which are in discussions that took place in 1980. There have since been 18 years of medical advance and improvements to diabetic control that have dramatically reduced the complications of diabetes through the encouragement of better blood sugar control. The suspicion is outdated, and neither the European Union nor the United Kingdom Government can point to any statistical or actuarial evidence to support the concerns underlying the directive.
The Government's own assessment of the medical impact of drivers' medical conditions on the total road accident rates puts the issue into context. According to the Driver and Vehicle Licensing Agency, between April 1995 and March 1996 there were 163 notifications of collapse at the wheel, of which only 27 involved insulin-dependent diabetics.
Compare that with the 16,050 drink-driving accidents or the 31,050 accidents caused by driver fatigue. To follow the logic—if logic is the right word—should not we impose driving restrictions on anyone who drinks alcohol at any time or on everyone who at one time or another will suffer from fatigue?
I am not here to embarrass the Government or to score points. I want to help the Minister to find a way out that improves road safety while being fair to those individuals who are insulin-dependent diabetics and can prove their fitness to drive. I declare an interest, in that I am an insulin-dependent diabetic. The DVLA has yet to write to me to impose its ban for the vehicles that I shall mention in a minute, but I also have an interest on behalf of constituents and others who have written to me on the issue.
The Government have introduced a blanket ban, preventing people with diabetes who inject insulin from driving vehicles in category C1, which covers cars weighing between 3.5 and 7.5 tonnes, and category D1, which covers vehicles with between nine and 16 seats. Those vehicles come under group 2, which is the category referred to in the directive.
The ban was not even required by the original EC directive, which clearly states:
"In very exceptional cases may driving licences be issued to, or renewed for, applicants or drivers in group 2 suffering from diabetes and requiring insulin treatment, and then only where duly justified by authorised medical opinion and subject to regular medical check-ups."
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Sadly, the Government have gone much further than the directive and introduced a policy that is not applied in other EU member states.
The Netherlands, for example, issues group 2 licences on an individual basis for one or three years, subject to independent medical examination. Finland and Sweden protect existing licence holders who use their licences as part of their employment, defining that as one of the directive's "exceptional circumstances".
According to the Danish Ministry of Transport executive order of March 1997, Denmark grants group 2 licences when a proper justified medical certificate is available, and provided that regular medical examination is carried out.
The Government have allowed discrepancies in the law in their interpretation of the directive. They allow people to drive vans, which are in category D1, on a voluntary basis but not professionally. That is surely proof that there was not sufficient evidence to introduce a complete ban. There was enough political pressure to protect voluntary drivers.
The Government have allowed the retention of licence rights to some drivers of even heavier vehicles, such as heavy goods vehicles, while preventing others from driving much lighter vehicles; they have allowed drivers from other EU states to come and drive over here in vehicles denied to United Kingdom drivers; and they have disregarded the rights of many drivers who have been driving for many years without any accidents or hypoglycaemic attacks at the wheel and who are now faced with unemployment without compensation.
People are already losing their jobs, and many more will follow as the DVLA notifies them of the ban. I have in my office a file of case studies from throughout the country. One concerns the BT engineer who will lose his job but will still be able to drive a minibus for cub scouts in his free time. Others concern employers who do not want to sack loyal, long-serving staff. I recently received a letter from an employer who asked:
"Is there anything that can be done to help this very valuable, faithful, long-term friend and employee?"
The situation is ridiculous for a Government who promised to help people to move from welfare to work.
Mr. Conn Pickthall: Many hundreds, if not thousands, of people will be grateful to the hon. Gentleman for raising this issue. Like him, I am an insulin-dependent diabetic. Tommy Wright, my constituent, is an HGV driver who became insulin dependent and lost his job. Because of his good record, the company kept him on to drive a minibus. Because of the blanket ban, he will now lose that job, even though he would be perfectly entitled to drive a minibus on a voluntary basis. Does the hon. Gentleman agree that that is totally unjust, and that the Government's blanket imposition of the ban is reprehensible?
Mr. Sanders: I agree entirely. I applaud the hon. Gentleman's work over the years on behalf of both insulin-dependent and non-insulin-dependent diabetics.
The situation is ridiculous. The Government promised to fight inequality in their new public health strategy and to tackle the problem of social exclusion, but this policy will have the opposite effect: it will drive people from

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work into welfare; encourage inequality; and lead to unemployment and further discrimination against, and social exclusion of, people with diabetes.
The Government say that they have taken the decision in the interests of road safety, on the advice of the honorary advisory panel on driving and diabetes, but that body is yet to reveal the sources of the information on which it based its decision; has not, to my knowledge, commissioned any review of the evidence; and did not even meet for four years, during the critical time when the previous Government were drafting the UK regulations.
In those years, new studies, from America and Denmark in particular, had not yet been published. The Federal Highway Administration evidence showed that the accident rate for diabetic drivers was lower than the United States national rate. In Denmark, a review of nearly 8,000 people with diabetes showed no increased risk of accidents, including road traffic accidents.
Surely the Government could consider more pressing and effective road safety measures rather than spending time discriminating against a small group that does not even figure in their own accident statistics and has been shown in some studies to be safer than other drivers on the road.
The new rules could compromise road safety rather than enhance it, because they will act as a disincentive to newly diagnosed diabetics to inform the DVLA of their condition. If the DVLA does not know about a person's diabetes, it cannot impose restrictions on his or her licence. The self-regulatory system has worked until now, with conditions being imposed on diabetic drivers of certain categories of vehicle, subject to medical tests. That regular assessment has undoubtedly led to poorly controlled diabetics being taken off the road. That may no longer be the case as a consequence of the legislation.
All we ask is that the Government listen to the medical evidence and instigate an urgent review. The insurance industry—not known for its altruism—has listened and does not impose higher premiums on insulin-dependent diabetic drivers. So, what would be the fairest way to protect the rights of drivers who are in complete control of their diabetic condition, while targeting the minority who are less well-controlled and who should be the target of legislation? It is possible to identify people with the highest risk of hypoglycaemia through three strong predictors: a history of unawareness; experience of frequent severe hypoglycaemia; and previous hypoglycaemic-related injury or accident.
The British Diabetic Association and I, along with the hon. Member for West Lancashire (Mr. Pickthall) and my hon. Friend the Member for Isle of Wight (Dr. Brand), recently presented a series of such proposals to the Minister. The association is also convening a group of medical experts to draft how a system of individual assessment might work, which will be presented to the Government and the honorary advisory panel on driving and diabetes. Its proposals already have the support of the Transport and General Workers Union, the United Road Transport Union, the Royal College of Nursing, the Employers Forum on Disability, the Drivers Action Movement, the Federation of Recruitment and Employment Services, Unison, the Road Haulage Association and the RAC.
That is by far the most sensible way forward. Can we have the Minister's assurance that individual assessment of fitness to drive is the fairest way forward and that the
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BDA's proposal will be seriously reviewed, in line with the evidence, by the Government in passing the law? Finally, will the Minister please say why individual assessment is not included in this legislation?
1.11 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): I thank the hon. Member for Torbay (Mr. Sanders) for affording the House the opportunity to discuss this extremely important issue. As he said in his opening remarks, it is essentially about road safety, although the main thrust of the hon. Gentleman's arguments has been driving restrictions for insulin-dependent diabetics and, as chair of the all-party parliamentary group for diabetes, the House would expect nothing less from him.
The Government are well aware, from representations from hon. Members, individual drivers and bodies such as the British Diabetic Association, of the strength of feeling among those who stand to lose their entitlement to drive medium-sized lorries and minibuses, particularly when they drive such vehicles for a living. We do not underestimate the consequences for those drivers and have every sympathy with their situation.
Of course, it is the duty of the Government to listen to all concerns and to consider all the implications. As the hon. Member for Torbay said, on 12 February my noble Friend the Baroness Hayman met representatives of the British Diabetic Association with him, my hon. Friend the Member for West Lancashire (Mr. Pickthall) and the hon. Member for Isle of Wight (Dr. Brand). Indeed, in an intervention my hon. Friend the Member for West Lancashire raised the case of one of his constituents and how the restriction is impacting on his life.
However, it is also the duty of the Government to take account of the wider interests of road safety and to make clear decisions, even if those decisions may sometimes have unwelcome consequences for some. It has been said that the change in the law that prompted these concerns is not based on well-founded evidence and that British drivers are being discriminated against compared with drivers from other European Union member states. Although I am sure that there is now general awareness of the effect of the new law, it would perhaps be helpful to say a few words about the background to the new requirements and explain how the change in legislation, which has been portrayed as being specifically directed against drivers with diabetes treated by insulin, has come into being.
For many years, the United Kingdom differed from the rest of Europe in that we had long-standing arrangements that allowed a person who passed a driving test in a car of any size to drive a wide range of vehicles, including lorries weighing up to 7.5 tonnes, category C1, and non-commercial passenger vehicles with up to 16 seats, category DI. If we were devising a new driving licence scheme for modern road, vehicle and traffic conditions, it is unlikely—probably unthinkable—that we would give entitlement to drive such a wide range of vehicles on the strength of a driving test that could be taken in the smallest car.
The second driving licence directive, which was adopted in 1991 and whose provisions the UK fully supports, requires anyone wishing to drive 3.5 to

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7.5 tonne lorries or minibuses with 9 to 16 seats, to take separate driving tests and to meet the more stringent health requirements, which in the UK formerly applied only to drivers of large goods vehicles over 7.5 tonnes and buses and coaches. Given the size and weight of the vehicles in question, it is fair to say that those are sound and sensible requirements based on legitimate road safety interests. It is significant that during the consultations prior to implementation of the directive and in the period since it was implemented in the UK in January 1997, there have been almost no suggestions that anyone taking up driving for the first time should not have to comply with those requirements. Nor has the ban on people with certain medical conditions driving buses and lorries of over 7.5 tonnes and buses, which has applied for many years, been seriously questioned.
Also, if we were devising a driving licence scheme from the beginning, how would we decide which medical conditions should prevent a person from holding a licence or permit the driving of smaller vehicles yet preclude the driving of larger and heavier vehicles, bearing in mind the consequences if the person were involved in an accident? We would surely seek expert medical guidance on the risk associated with the particular medical condition. Assessment of medical evidence can be supported and supplemented by accident data, but lack of accident data should not invalidate the medical assessment.
The Secretary of State for the Environment, Transport and the Regions has a number of panels comprising experts in particular medical fields, which were set up to provide objective medical advice on the risk from driving by people with particular health conditions. One of those panels—the honorary advisory panel on driving and diabetes—has endorsed the decision that category C1 and D1 vehicles should be driven only by those who can meet the more stringent health requirements, which preclude among others insulin-treated diabetics. It would be irresponsible of the Government to ignore its advice.
Mr. Sanders: Can the Minister confirm that at the last meeting of the honorary advisory panel on driving and diabetes the majority of people on the panel were not medical experts but departmental officials?
Ms Jackson: I cannot confirm or deny that, but I will certainly inquire into the matter and respond to the hon. Gentleman by letter. As I have argued, it is unlikely that the Government would have taken any decision that was not based on objective, informed and particular medical advice.
We do not have comprehensive accident data that could alone support the medical assessment that insulin-treated diabetics should not drive the heavier, larger vehicles. That is because information on the medical circumstances of those involved in accidents is not routinely collected, nor would it be practicable to do so. However, there have been individual studies. It has been found that insulin-treated diabetes was responsible for 17 per cent. of 1,605 police-reported accidents involving collapse at the wheel in which the driver survived and was minimally injured to the point that driving could subsequently be resumed. DVLA records also identified 23 hypoglycaemia-related serious accidents from November 1997 to mid-February 1998. The hon. Member
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for Torbay contrasted those figures with those involving drink driving and driver fatigue. However, both of those conditions can and should be avoided. Collapse at the wheel due to hypoglycaemia, however, comes without warning.
Mr. Pickthall: May I point out to my hon. Friend that that is simply not true? Most diabetics get considerable warning of a hypoglycaemic attack. We are worried because the ban treats all insulin diabetics as if they were the same, which is not the case. Unlike other drivers, most of us have regular medicals, eye tests and check-ups. Insulin-dependent diabetics are often safer on the roads than other people.
Ms Jackson: I am grateful to my hon. Friend for that intervention, but I understand that the detailed and specific health checks to which he referred take place over three years. I apologise to the House if I have done so, but I do not believe that I said that all hypoglycaemic attacks that cause collapse come without warning. Attacks that occur without warning when a driver is at the wheel are the greatest cause for concern.
Mr. Richard Allan: What is the Minister's response to the telling point made by my hon. Friend the Member for Torbay (Mr. Sanders) about the actuarial position taken by insurers? Insurance companies are not known for doing people favours and are happy to load premiums when they believe that there is a risk. The Government must be aware that insurance companies do not believe that insulin-dependent diabetics pose a significant risk. Is not that one of the best indicators that insulin-dependent diabetics do not pose a genuine risk?
Ms Jackson: It is worth repeating that accident statistics alone, on which actuarial tables are based, cannot be the deciding factor. The point at issue is whether people with a known medical condition that carries the risk of collapse at the wheel without warning should be permitted to drive vehicles that are of such weight and size that there could be serious consequences if they were involved in an accident. That assessment can be made only by those with the detailed medical knowledge to understand the implications and to look at the issue with detachment and objectivity.
For those reasons, we support the medical standards prescribed in the directive and the requirement that they should apply to drivers of vehicles weighing more than 3.5 tonnes or with more than eight passenger seats. Understandable concern has been provoked by the issue of whether those requirements should extend to drivers who already hold entitlements to drive such vehicles on the strength of the less stringent testing and health regime which, until the directive was implemented, applied in the United Kingdom. Is it reasonable for the Government to remove entitlements which, in many cases, have been held for years and, in some cases, are being used by drivers in their jobs? As I said during the debate on road safety in the House in January, it is better to err on the side of what some might call overcaution than to increase the risk of death and injury on our roads.
It has been said that the UK has implemented the directive over-zealously, and that that is not reflected in the approach taken by other member states. The directive prohibits the issuing or renewing of licences for the

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vehicles in question to those with diabetes treated by insulin other than in "very exceptional cases". The advisory panel has advised that there are no exceptional cases that medical opinion would recognise as being lower risk than others, and that, while modern treatments have improved the control of diabetes, they have not eliminated the possibility of a hypoglycaemic attack.
On the basis of that advice, we have decided against individual assessment of drivers—a point that the hon. Member for Torbay asked me to address—other than for the purposes of holding a licence to drive a car. Some member states may have provided for exemptions from that requirement, but only to a limited extent in most cases, and only for non-professional drivers. We do not know what expert advice those states took in making such arrangements, but it is right that we should take our own counsel.
The United Kingdom's enviable road safety record has largely been achieved by taking firm decisions.
Mrs. Jackie Ballard: The hon. Lady says that the United Kingdom has an enviable road safety record. She talked earlier about increased risk. Does she agree that there will be no increased risk if current licence holders are not restricted? How could not imposing restrictions make our enviable record worse? I hope that she follows my argument.
Ms Jackson: I do, indeed, follow the argument, but our enviable road safety record is of no comfort to people who have lost children or family members in a road traffic accidents. Surely all Governments have the responsibility to try to improve our enviable road safety, and this Government are committed to doing so.
We do not underestimate the consequences for insulin-treated diabetics who drive these vehicles for a living, but the rules are based on medical advice that is generally accepted throughout the EU. I assure hon. Members that the rules will be kept under review, both by our medical advisers and through our representation on the EU committee set up to consider health requirements in the light of advances in scientific knowledge and treatment. Road safety will continue to underpin such consideration.

Green-belt Housing (Silsden)
1.25 pm
Mrs. Ann Cryer: I thank my hon. Friend the Under-Secretary for making the time to reply to the debate.
I preface my remarks with a disclaimer: to put the record straight, I am not on the side of the hunting and gun lobbies which paid for and organised the demonstrations in London last Sunday. I have large rural areas in my constituency and, for the sake of my constituents, I wish that they had organised their march 18 years ago. They might have saved rural bus services from deregulation, and our farmers from the enormous problems of BSE, which were brought about by the deregulation of the preparation of animal foodstuffs. They might also have prevented the selling off of nearly all our once much-admired village council housing and the closure of village schools and other facilities. However, village schools in the Keighley area have survived due to the support of our local authority.
I shall discuss the question of the erosion of the green belt at Silsden. I hope that such erosion can be avoided.
Nearly three years ago, friends at Keighley asked me to let my name go forward to Keighley Labour party, which was in the process of selecting a parliamentary candidate. I was already aware that many people in Keighley were still struggling to come to terms with the fact that the Conservative Government of 1970–74 had pushed the old borough of Keighley, the urban districts of Silsden and Ilkley, and the rural district parishes of Steeton, Eastburn and Addingham into the Bradford metropolitan district council area.
For me, the bolt from the blue was the Bradford unitary development plan, especially the main point at issue: the allocation of a beautiful area of the Aire valley around Silsden for the building of about 1,500 houses. Straight away, I questioned the need for using such a massive amount of green belt. I was told by the chair of Bradford planning committee that the Conservative Government had put a great deal of pressure on the committee to make large amounts of land available for housing. The three Bradford constituencies were heavily built up and there was little room for development, so the committee had to consider Keighley and the constituency of my hon. Friend the Member for Shipley (Mr. Leslie).
I was regarded as a nuisance for raising the issue. It was explained that none of the councillors for the Keighley area, including Craven, which takes in Silsden, had made representations on the proposals. The majority of Keighley wards, five years ago, were represented by Conservative councillors. Most are now Labour, and their councillors take a view similar to mine on the erosion of the green belt and the use of green-field sites.
People in some political circles take the view that the pressure put on councils by the previous Government to release land in attractive rural areas was not completely detached from the generous contributions to the Conservative party by companies involved in housing development. I have been discussing and corresponding about the unitary development plan with Bradford council for three years. After the general election on 1 May, my hon. Friend the Member for Shipley and I took the matter up with the Department of the Environment,

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Transport and the Regions. They all tell me the same—that it is too late. The plan has been approved, and nothing can be done.
As Silsden is only one of the areas with whose allocation for housing I disagree, I realise that—along with the various action groups—I shall have a very busy time in the next few years arguing against developments as and when developers come along with their detailed plans. Although I am disappointed that our Government can do nothing to revise the UDP, I am encouraged by the possibility that my constituents and I will be helped by my right hon. Friend the Secretary of State and my hon. Friend the Minister when we argue against individual developments.
The Secretary of State has said:
"We are resolute in our desire to avoid unnecessary encroachment into the countryside. The presumption against development in the green belt will remain as strong as ever. But this does not mean that there will never, ever be any building on green field sites."
I can accept the need for green-field sites in some areas to infill between already developed areas, but large encroachment on the green belt, as at Silsden, or removal of village green space—as the UDP proposes for Manor Garth, Addingham or Leeming at Oxenhope—is unacceptable if we are to retain our green and pleasant land.
The two developments on village green space were opposed by Bradford council, but the council was overruled by the inspector following an appeal by the landowners, one of whom has since sold his plot at an enhanced value.
I applaud the Secretary of State's comment:
"The vast majority of our people live in cities and towns. I want to see a renaissance of our cities. That will mean using existing empty houses, offices and warehouses for new affordable flats, not just for city yuppies."
The type of housing that will be attracted to the new UDP areas will not help my constituents who are living in overcrowded or sub-standard housing in the middle of Keighley. They would be helped if we could return to the system of many years ago, when local authorities could lend money for home improvements that would be repayable on the death of the owner and/or the sale of the house. That was particularly helpful to older people and poorer families who were unable to raise a second mortgage on their homes.
The proposed new developments are likely to be four-bedroom, two-garage detached houses that most of my constituents could not afford or even consider in their wildest dreams. They will be bought by well-paid professionals working in Leeds, Bradford or even Manchester. They will be dormitories, generating the sort of traffic and environmental problems that our Government are trying to plan against.
In an excellent edition of "Panorama" on 19 January, the Silsden town action group presented its arguments with clarity and intelligence. We saw the splendid Lister's, Manningham Mills, in the constituency of my hon. Friend the Member for Bradford, West (Mr. Singh). Yes, it would take a great deal of money, imagination and enterprise to convert that memorial to West Yorkshire's magnificent industrial past into flats for people, but it could and should be done.
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There are many smaller mills and warehouses in Keighley that could be converted. The once elegant but now rotting royal arcade was to be given new life by our local authority in a living-over-the-shop scheme—an idea that would not only breathe new life into the centre of Keighley, but combat crime and vandalism. I hope that problems with the owners of the arcade will eventually be overcome, and that the scheme will reach fruition.
A few months ago, I was shown derelict but still sound warehousing on various stretches of the Leeds-Liverpool canal. Some were in the constituency of my hon. Friend the Member for Shipley (Mr. Leslie).
Mr. Christopher Leslie: My hon. Friend called the debate in order to talk about housing problems in her constituency, with specific reference to Silsden. My neighbouring constituency—also a rural area—contains many examples of the way in which dormitory, executive, spec-built housing developments of the sort that my hon. Friend has described have begun to encroach on green-field sites.
The whole of the Bradford UDP was framed in the last Conservative Government's planning legislation. It is very unfortunate that so much green space was set aside, never to be recovered once it had been built on. I am glad that the new Government have indicated that they will encourage more use of brown-field or recycled sites.
My hon. Friend has mentioned recycling existing buildings. As she has said, my constituency also contains many mills and listed buildings that need to be reused. I hope that the Government will consider giving local authorities some support, helping them to intervene proactively in the market, to find developers and to match them up with derelict sites. If we leave it to the market to find recycled land—
Mr. Deputy Speaker (Mr. Michael Lord): Order. The hon. Gentleman is making a very long intervention. If he has the permission of the hon. Member for Keighley (Mrs. Cryer) and the Minister, he may make a brief contribution when the hon. Lady has stopped speaking.
Mrs. Cryer: The regional manager of the British Waterways Board tells me that the board is anxious to dispose of the derelict warehouses, and has asked for my assistance. Although intact, the warehouses are looking a little decrepit, but they would make very attractive flats. They would not be suitable for families with small children, because of their position near the canal, but in other respects they are beautifully positioned, with lovely views.
The warehouses would be suitable apartments for others, if only we can persuade developers to consider that sort of challenge rather than the easy profits of green-field sites. Perhaps a levy on green-field site development will remedy the imbalance about which I understand my right hon. Friend the Secretary of State has some ideas.
I look forward to the provision of new or improved council housing following the release of council house receipts, which is already in our programme, and the redressing of 18 years of Tory neglect of our towns and cities to make them again into places where people want to live.

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All those changes must—and, I hope, will—come. I only hope that the shift from rural to urban housing does not come too late to save the lovely green areas around our towns, without which we, our children and our grandchildren will be much poorer.
1.36 pm
Mr. Christopher Leslie: I thank my hon. Friend the Member for Keighley (Mrs. Cryer) for giving way to me earlier. When she did so, I raised the whole question of green-field development throughout the Bradford district. Incidentally, when we talk about the Bradford district, people tend to forget about Keighley and Shipley. In fact, Bradford is the fourth largest metropolitan district in England and Wales. It is a significant piece of land in the Yorkshire region, and also a very built-up area in which half a million people live.
My hon. Friend has made some valid points. In a built-up area such as Bradford district, there are planning pressures to develop incrementally, by attrition, on the surrounding green-field sites. Part of the difficulty encountered by Bradford council relates to the calculation of the amount of land that must be set aside for development. The last Administration gave the council a calculation that it met virtually in full, but, unfortunately, it did so largely by allocating large chunks of green-field land.
I am concerned about Warren lane and Clarendon road in Gilstead, and Sty lane in Micklethwaite. These are valuable spaces, separating communities. As my hon. Friend pointed out, Silsden has a community integrity that is all its own. Gilstead, Eldwick and Micklethwaite also have long histories, but those villages will be subsumed in the growth of commuter-type housing in an area that does not really have a town centre. There are no proper planning considerations for village or town life—even for shopping facilities—and there is very little consideration for traffic generation. The Bradford area is very hilly, and narrow valleys cause transport problems.
The local authority has allocated many sites, including Silsden, in its unitary development plan, but I hope that, when it considers planning applications in the light of sewerage constraints, highways constraints and so on, it will go through the details with a fine-toothed comb, and possibly adopt some of the arguments that my constituents and those of my hon. Friend the Member for Keighley are using, to say that development should not go ahead on those sites.
1.39 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Angela Eagle): I congratulate my hon. Friend the Member for Bradford—
Mrs. Ann Cryer: Keighley.
Angela Eagle: I am sorry—I meant my hon. Friend the Member for Keighley (Mrs. Cryer). I must have the Bradford unitary development plan on my brain. I congratulate her on securing the debate, and I congratulate my hon. Friend the Member for Shipley (Mr. Leslie) on his contribution to it.
My hon. Friend the Member for Keighley has raised some important issues relating to planning policy and the way in which it has been developed in Bradford. She has
1036
also rightly pointed out that the background against which these often complex and difficult issues are decided is in the process of being changed by the new Government. However, until we can put the changes into effect, these issues must be decided according to the existing planning rules. My hon. Friend also knows that unitary development plans evolve on a rolling programme; I hope that that gives her hope that she can start to have an effect on the way in which the plans become reality.
The issues are complex, as my hon. Friend the Member for Keighley acknowledged, and they are by no means easily resolved. Therefore, the planning system attaches considerable significance to development plans, which are formulated after examining local issues in great detail. Such plans provide the framework for resolving development issues at local level.
Responsibility for Bradford's UDP rests with Bradford city council. In preparing the plan, the council is required to take account of development issues throughout the metropolitan district; to follow established procedures; and to consider objections made to its proposals.
The city council started work on the current UDP before 1993. In November that year, the draft UDP was published and made available for objection by the public. I understand that many objections were made, including a considerable number about the proposals for Silsden to which my hon. Friend the Member for Keighley refers. More than 1,500 objections each were made to the four sites zoned in the plan for housing development and to one that was earmarked for industrial use.
Those proposals meant that about 50 hectares of the green belt would be taken at Silsden. I know that it will be of no comfort to those in the Aire valley, but I believe that the matter must be viewed in perspective. It is worth recalling that the total green belt in the metropolitan district as a whole is more than 23,000 hectares, so between 0.2 and 0.3 per cent. of the green belt is involved.
The development plan system is subject to rigorous procedures. A very important safeguard is the right for anyone who has made an objection to have it considered by an inspector at a public inquiry. The inspector is independent, and reports directly to the local planning authority.
In Bradford, the UDP inquiry was held between May 1995 and February 1996. Any local planning authority must give very serious consideration to what an inspector has said about a plan. I know that Bradford city council accepted almost all the inspector's recommendations, including those about Silsden. Although he noted that some sites are subject to constraints on their development, the inspector considered that the principle of development at Silsden was justified.
In the inspector's view, the needs for effective long-term planning and economic regeneration constituted exceptional circumstances to justify the removal of the land from the green belt. Acceptance of that view then became a matter for the council's judgment. Decisions about planning issues in local areas are usually best taken locally.
Obviously, there is a debate about whether the council has the detail of its planning strategy exactly right for the metropolitan district, but I am firm in my view that the development plan system is the best way of reconciling all the different views that there may be about the way ahead in each locality.

1037
Inevitably, some decisions will not be to the liking of objectors; but the system allows for open discussion and independent arbitration about them. Any plan that takes more than four years to complete is testimony to the thoroughness of the process. Although our document "Modernising Planning" considers ways to speed up the process, the process will not be speeded up at the expense of safeguards and people's rights to object to a plan and to have those objections fully considered.
It is important, too, that each local planning authority sticks to the correct procedures for the preparation of its development plans. I understand that, for some proposed development sites in Bradford, there is concern that the council decided not to hold a second public inquiry, but that is a matter for the council, which has a duty to follow the statutory regulations.
My right hon. Friend the Deputy Prime Minister carefully considered arguments made to him in the light of existing guidance regarding ministerial intervention in development plans—I emphasise "existing". The powers of intervention in plans are used very sparingly and as a last resort, such as when a plan raises issues of national or regional importance or gives rise to substantial controversy—for example, extending beyond the area of the plan-making authority.
In this case, our considered judgment was that it would not be appropriate to intervene. The Bradford UDP was formally adopted by the city council on 23 January 1998, so, as I am sure hon. Members recognise, my right hon. Friend has no further jurisdiction regarding the policies contained in Bradford's UDP.
That is not to say that we are unconcerned about the general issues that arise from the concerns of my hon. Friend the Member for Keighley. She has drawn particular attention to the location of land for housing, arguing for greater attention to housing and development opportunities in the urban areas. The planning system allows for assessment of those issues in deciding how best to accommodate future development.
In March 1996, the previous Administration published regional planning guidance for Yorkshire and the Humber region. That is being reviewed, and we shall ask for views about its content. The review will take account of better information about the capacity of the region's urban areas to accept new development. More important, it is our intention that there will be much more of a regional contribution to the guidance, and a greater regional input in the way in which we plan for new housing.
I know that my hon. Friend the Member for Keighley has campaigned vigorously on behalf of her constituents in Silsden to express their concerns about the UDP, and I congratulate her on her attention to their views and her determination in ensuring that we know what they are. She has contributed to the debate on planning for the
1038
communities of the future, and she has written several times about the issues for Silsden, notably on behalf of the Silsden town action group, while raising issues for other parts of her constituency.
Hon. Members will recall that, in a statement on 23 February 1998 on planning for the communities of the future, my right hon. Friend the Deputy Prime Minister set out a range of measures to meet future housing needs. I need not repeat that statement, but I would respond to a point that my hon. Friend the Member for Keighley raised about recent decisions.
In the case of Bradford city council, the UDP has been adopted, so my right hon. Friend has no further jurisdiction in the matter. However, we propose to move as quickly as possible to the new approach set out in my right hon. Friend's statement, and the reviews of regional planning guidance that are under way provide an early opportunity to put that into effect.
When new regional planning guidance is ready, it will be open to local authorities to review their development plans. I believe that my hon. Friend the Member for Keighley has already made a few suggestions for that review. She came up with some interesting ideas about recycling land and putting it to housing use, which is the essence of the policy change that the Government have inaugurated.
However, it is important to remember that green belts are not a national designation. They are established by local authorities by means of development plans. The general extent of green belts is fixed in structure plans, taking account of regional planning guidance. It has always been open to local authorities to propose changes to green belt boundaries; but exceptional circumstances are required to justify alterations. That happened several times under the previous Administration.
My hon. Friend the Member for Keighley spoke about the strength of feeling in her constituency on the issues that she raised today; my hon. Friend the Member for Shipley did likewise regarding his constituency. The Government have set out their proposals for tackling the issues at the heart of this debate, which are about regenerating our urban areas and looking for the most sustainable solutions to meet our long-term development needs.
Our statement of 23 February charts the course for taking this issue forward. We have emphasised that we want to stimulate debate, particularly at local and regional level. I have listened carefully to the debate, and I am sure that Bradford council will pay careful attention to it. We shall continue to listen and to provide strategic leadership in what will, I am sure, be a continuing debate in the coming months.
It being before Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Oral Answers to Questions
  DUCHY OF LANCASTER
  The Chancellor was asked—

  Freedom of Information
  Miss Melanie Johnson: What responses he has received to his White Paper on freedom of information. [30864]
  The Chancellor of the Duchy of Lancaster (Dr. David Clark)rose—
  Hon. Members: Where are the Tories?
  Madam Speaker: Order.
  Dr. Clark: It is nice to see at least one Conservative Back Bencher coming into the Chamber. I welcome him.
  The freedom of information White Paper, "Your Right to Know", has excited a massive response at home and abroad. I have received more than 500 responses so far from individuals and organisations, and the numbers are increasing day by day.
  Miss Johnson: I thank my right hon. Friend for his response and for the very full consultation on the much-welcomed White Paper. What is the timetable for the proposed draft Bill, which will be one of the first Bills to go through the new pre-legislative Select Committee procedure? I am sure that the Select Committee would like to receive the Bill in early June so that it can carry out much of the necessary scrutiny before the summer recess.
  Dr. Clark: The consultation period has just ended and we are carefully considering the responses. However, as parts of the Bill are non-controversial, the information on those parts has already been sent to the parliamentary draftsmen, in the hope that we can ensure that the Bill is ready by early summer. It can then go before the Select Committee, which may be able to complete its consideration in time for the Bill to be included in the Queen's Speech.
  Sir Patrick Cormack: Among the many responses that the right hon. Gentleman has received, is there one from the senior official to whom he entrusted the leak inquiry? Will he tell us what has been discovered, if anything—and in telling us that, will he also say how many copies of the White Paper were legitimately circulating within Whitehall at the time of the leak?
  Dr. Clark: The preliminary leak inquiry has been carried out and I have seen the report. It concluded that too many copies were distributed to enable the inquiry to ascertain where the leak came from. The information
  1040
  gained in the inquiry has been passed to the Cabinet Secretary, with suggestions about how to minimise circulation and reduce the potential for leaks.
  Sir Patrick Cormack: The right hon. Gentleman said that many copies were circulating; could he say precisely how many?
  Dr. Clark: Three drafts of the White Paper were in circulation. I cannot be absolutely precise, but I understand that the number was in three figures.
  Mr. Baker: What steps he has taken to ensure that new initiatives in the operation of central Government comply with his proposed freedom of information legislation. [30865]
  Dr. David Clark: Last month, I published substantial background information on the White Paper "Your Right to Know", to exemplify our freedom of information commitment to active disclosure.
  Mr. Baker: I have no doubt of the Minister's, or the Government's, commitment to freedom of information. However, may I ask the Minister to investigate the compatibility with freedom of information legislation of the strategic communications unit that has been established by the Prime Minister? Is the Minister aware that the Prime Minister refused to provide detailed answers to questions on the strategic communications unit tabled by me and by other hon. Members? Is he aware also that the unit seems to be operating in a manner that restricts Departments in issuing press releases, that it is acting as a filter, and that it is therefore contrary to the principle of freedom of information?
  Dr. Clark: Currently, we operate under a code, which obviously does not have statutory authority. We believe that the code is inadequate, which is why we require further legislation. The strategic communications unit is a means of ensuring that information circulates in Whitehall, helping us to ensure good government. That is its purpose.
  Mrs. Dunwoody: Will my right hon. Friend examine the mechanics of the distribution of information technology, particularly in Departments? There are very real worries that some of the systems that are currently operating, and some of the new ones that are supposed to be introduced into Departments, will not be capable of carrying the information or providing the access that he and I definitely want them to.
  Dr. Clark: One of the unfortunate legacies that we inherited 10 months ago was the chaos in IT within government. Some Departments cannot speak electronically to other Departments. We plan to enhance the CabEnet system. I hope also that, before too long, we will have a secure intranet through which Government information can be passed electronically. It is ludicrous that, in this modern day, we have been left with a ramshackle machine in which Ministers cannot e-mail fellow Ministers.

  Better Government White Paper
  Mr. Mackinlay: When he expects to publish the White Paper on better government. [30866]
  The Parliamentary Secretary, Office of Public Service (Mr. Peter Kilfoyle): My right hon. Friend the Chancellor of the Duchy of Lancaster intends to publish the White Paper on better government later in the spring of this year.
  Mr. Mackinlay: The Minister will understand that the Government's package of measures will be most welcome to the increasing number of our constituents who are bewildered by the plethora of agencies that have been created, particularly in the past 18 years. Constituents are sent from pillar to post trying to exercise their rights and get satisfaction. Will the Minister ensure that public sector unions and other representative organisations are included in the consultation process on the White Paper? Those organisations are the providers of those services, and they often—very unfairly—receive blame that should be apportioned elsewhere. There is a need for sensitivity in dealing with public sector unions, so that the White Paper and package of measures will be a success for our constituents.
  Mr. Kilfoyle: To make public services more readily accessible to more people, the Government are considering many proposals, such as one-stop shops. I have been consulting public service providers, which work at the sharp end in delivering public services. Only yesterday, I consulted public service providers in Edinburgh, and we have already conducted similar exercises in London, Leeds and Southampton. I intend to continue that process in other parts of the country, to effect the fullest possible consultation with those stakeholders who work at the coal face in providing public service.
  Mr. William Ross: Does the Minister agree that the democratic principle provides the basis for the best form of government in any state? Does he understand that hon. Members in my party are delighted that that standard will apply to the devolved institutions in Scotland and Wales? Do the Government intend to apply the same standards to any devolved institution in Northern Ireland?
  Mr. Kilfoyle: The principles underlying attempts to effect better government apply equally in Northern Ireland, Scotland, Wales and England. We shall apply the same principles of transparency, accountability and accessibility in Northern Ireland as we do elsewhere.
  Mrs. Gillian Shephard: I listened carefully to that answer. What importance will the proposed White Paper attach to parliamentary democracy? Does the hon. Gentleman agree that the better government White Paper should end his Government's practice, which has been established in just 10 months, of bypassing the House and making announcements via leak, press briefing and the media? What proposals will the White Paper contain to restore parliamentary democracy which has been destroyed by his Government in just 10 months?
  Mr. Kilfoyle: I am sure that the right hon. Lady can anticipate my reply. I think it is a bit rich for the
  1042
  Conservatives, after 18 years of inspired leaks and 18 years of circumventing parliamentary due process, to make such an accusation against us. The Government will ensure that the better government White Paper does exactly what it is intended to do, which is to ensure that small businesses and citizens, who were ignored for 18 years, are given the opportunity to access government service in a simple, open, transparent and efficient way.

  Freedom of Information
  Mr. Grogan: If he will make a statement on the representations he received during the consultation period on the freedom of information White Paper. [30867]
  Dr. David Clark: It is clear that the White Paper on freedom of information has caught the imagination of many people, not only in this country but overseas. The consultation period ended only last week, on 28 February. Most of the overwhelming number of responses have been positive. We are now studying them and are greatly encouraged by the positive suggestions that they make.
  Mr. Grogan: In the spirit of freedom of information and open government, will my right hon. Friend say what measures he is taking to encourage Government Departments to be more open in their practices in the period leading up to legislation?
  Dr. Clark: I believe it is very important that the Government themselves are pre-emptive in their approach to the release of information. In that respect, I intend to publish on the internet and to place in the Libraries of both Houses the consultation papers that I have received, except where people have requested confidentiality.
  Mr. Soames: What representations has the right hon. Gentleman received from the civil service about advice tendered by civil servants to Ministers? Does he agree that it is of the utmost importance that if officials are to give the best possible advice to Ministers, that advice must remain confidential?
  Dr. Clark: We have made it quite clear that the Government cannot operate in a goldfish bowl. We have provided some protection for the advice on policy given to Ministers by civil servants, but we believe that much of the factual and analytical background information can be published. I have already done that in respect of the preparations for the White Paper.
  Mr. Campbell-Savours: Is not a good indicator of our seriousness about freedom of information to be found in the answer that my right hon. Friend gave to the hon. Member for South Staffordshire (Sir P. Cormack)? When my right hon. Friend gave him details of a leak inquiry in a way that was unprecedented in the House, he revealed information that Ministers in previous Governments had ducked giving in Parliament.
  Dr. Clark: I am glad that the House has appreciated the openness and frankness with which I tried to approach this matter, as I believe it was the right and proper thing to do. Indeed, we need to build bridges between Whitehall

  1043
  and Westminster, and I hope to be in a position in the next two or three weeks to announce various initiatives that may help to build those bridges.
  Mr. Ruffley: Is the Chancellor aware of our great concern at the fact that he has failed to discover the source of the leak of the White Paper earlier this year? In the interests of openness, will he disclose to the House who the leak inquiry officer interviewed? If he has not interviewed the Minister without Portfolio, why not, as most of the Lobby seem to think that he was the source of the leak in the first place?
  Dr. Clark: It really is a bit strong for the Conservatives to say that, given that, when they were in government, they gave us no information whatever about leak inquiries. I have been open with the House. There was a full preliminary leak inquiry, and a number of people whom the independent interviewing officer judged it necessary to interview were indeed interviewed.

  EU Presidency
  Dr. Starkey: What discussions he has had with his EU counterparts on (a) simplifying EU rules and (b) reducing bureaucratic requirements imposed by the EU during the UK presidency. [30868]
  Mr. Kilfoyle: My right hon. Friend the Chancellor of the Duchy of Lancaster, last month attended the informal meeting of internal market Ministers in Cambridge for discussions on better European Union regulation. It was agreed to establish, before the end of the UK presidency, pilot test panels of businesses in some member states to comment on EU legislative proposals. It was also agreed to have regular exchanges of information on our national simplification initiatives and to give renewed impetus to Commission work to cut EU red tape for business.
  Dr. Starkey: I thank my hon. Friend for that reply. He may be aware that in my constituency of Milton Keynes a large number of small businesses have been active in expanding their level of exports to the European Union. Excessive regulations bear particularly heavily on small businesses. Can the Minister say whether any actions are being taken specifically in the interests of small businesses?
  Mr. Kilfoyle: Small businesses suffer disproportionately from too much bureaucratic red tape. Within the SLIM initiative—simplification of legislation within the internal market—moves are afoot, which we support within the Commission, to minimise the effect of over-regulation on small businesses within the European Union and the single market.
  Mr. Hogg: Is it not true that complexity and bureaucracy are the inevitable hallmarks of EU legislation, and that, if we are to achieve the objectives of the hon. Member for Milton Keynes, South-West (Dr. Starkey), we need to reduce the scope and probably the competence of the EU?
  Mr. Kilfoyle: I disagree with the right hon. and learned Gentleman. My right hon. Friend has already flagged up three areas and we will continue to pursue them
  1044
  throughout the presidency. First, we must raise the profile of the problem of burdensome regulation. Secondly, we must look at those areas within existing legislation that can be simplified. Thirdly, we must ensure that in future a minimal amount of regulation is imposed on business within member states. All those initiatives are being promoted and pursued now under the UK presidency.

  Data Management
  Mr. Todd: What steps he will take to improve the efficiency of data management in Government. [30869]
  Mr. Kilfoyle: The central information technology unit in my Department has established a Government secure intranet service, which will enable the secure exchange of electronic communications between Government Departments to improve the efficiency of data management in government.
  Mr. Todd: In an earlier answer, the Chancellor of the Duchy of Lancaster referred to the shambles of information technology management left as a heritage by the previous Government. One of the critical areas in dealing with that is the imposition of coherent standards in data management. What steps are being taken to ensure that we not only set standards but enforce them and that we collect information on the various technologies used within government to store data?
  Mr. Kilfoyle: My hon. Friend will be aware that there are about 132 separate registrations for a simple matter like a name. We are seeking to simplify that in a way similar to that used by our competitors in Asia. In Singapore, one can have one's name and address changed through the information technology that is available with one call on government. Currently there is a plethora of different systems. My right hon. Friend the Chancellor of the Duchy of Lancaster is taking forward the work of maintaining the information technology with the millennium bug in mind and we are taking the opportunity to look at information technology across a whole range of Government Departments.
  Mrs. Gillan: May I suggest that the Minister starts with his own Department when improving the efficiency of data management? Is he aware that the summary of departmental plans to deal with the year 2000 computer problem does not tally with the back-up papers provided by the Chancellor of the Duchy of Lancaster, which contain omissions and vague information? Will the Minister ask his right hon. Friend to withdraw the quarterly statement that was slipped out yesterday by way of a written answer and to give to this critical and increasingly costly programme the detailed attention that it requires? If he cannot transfer data accurately from one piece of paper to another, how can we have confidence in his ability to solve the 2000 problem?
  Mr. Kilfoyle: First, I remind the hon. Lady that it was not on paper—it was on CD-ROM. The important point for Opposition Members to recognise is that this is too serious a matter for them to try political point scoring from it. We are making all the appropriate efforts to ensure compliance in respect of the millennium bug

  1045
  problem, which is a problem that raised its head long before 1 May 1997. To charge my right hon. Friend the Chancellor of the Duchy of Lancaster with anything less than the appropriate industry and application in trying to resolve the problem and make information available to the House is churlish of the hon. Lady.

  Reports (Publication)
  Mr. Simon Hughes: If it is his policy for reports commissioned by Government from outside individuals or agencies to be published; and if he will make a statement. [30870]
  Mr. Kilfoyle: Work commissioned from outside individuals or agencies is subject to the same criteria for publication and disclosure as other information held by government.
  Mr. Hughes: That is not a very helpful answer. Does the Minister agree, for example, that, if the Department of the Environment, Transport and the Regions commissions, at taxpayers' expense, a report from independent academics about the electoral system for London, that report should be published in the form in which it was submitted, rather than being sent back to the authors, altered at the Government's request and published only when it more accurately reflects the sort of messages and information that the Government want it to contain?
  Mr. Kilfoyle: First, the specifics of that question would be best answered by my right hon. Friend the Secretary of State for the Environment, Transport and the Regions, and I shall bring them to his attention. The presumption in Government is that, unless there are good reasons to the contrary, such analytical information at least would be published.

  Freedom of Information
  Mr. Dalyell: What representations he has received on his freedom of information White Paper in relation to whistleblower activities. [30871]
  Dr. David Clark: I met my hon. Friend and the hon. Member for Aldridge-Brownhills (Mr. Shepherd) on 22 January. In addition, a small number of responses received to the White Paper on freedom of information have raised issues concerned with whistleblowing.
  As the House will know, the Public Interest Disclosure Bill is about safeguarding the interests of employees who make unauthorised disclosures in very specific circumstances and it has the support of the Government.
  Mr. Dalyell: I thank my right hon. Friend for the manner in which he and his senior officials entered into dialogue with us on 22 January. Does this help legitimate deep throats?
  Dr. Clark: Yes.
  Rev. Martin Smyth: I welcome the right hon. Gentleman's response, but does he share my concern that an attitude still seems to prevail among some senior civil
  1046
  servants that frowns on any civil servants speaking—even as a citizen—to their Member of Parliament and sharing their concerns about what is happening?
  Dr. Clark: I said earlier that I believe that it is time to build bridges between Whitehall and Westminster. It is my intention to bring forward certain suggestions which will improve standards and contact between Members of Parliament and civil servants.
  Mr. Paterson: Following consultation and legislation, would the right hon. Gentleman like to see more freedom of information established in this country than currently prevails in the United States of America?
  Dr. Clark: It is widely acknowledged that the freedom of information White Paper marks the next stage of freedom legislation throughout the world. In that sense, I believe that it will offer a much better opportunity for the people of Britain to find out information that may relate to themselves and which they may want. I believe that that will make a huge difference to the political culture of Britain and that it will bring the government of our country closer to our citizens.

  Electronic Service Delivery
  Mr. Alan Campbell: What representations he has received on the potential use of smartcards to deliver Government services. [30872]
  Dr. David Clark: The Government believe that there is a need to use smartcards and commercial smartcard services for electronic Government transactions. Such cards would not function as identity cards. My officials have reported to me on a number of meetings that they have had with representatives from manufacturers and other interested groups on smartcards.
  Mr. Campbell: I am grateful for that answer. Is my right hon. Friend aware of the excellent work being done by Siemens in my Tynemouth constituency to develop new smartcard technology? Does he agree that there is great potential for the use of such technology to deliver public services in a cost-effective and user-friendly way?
  Dr. Clark: I agree that we can use smartcards to improve services to our citizens. If we can bank 24 hours a day, why cannot Government services be available 24 hours a day? I am aware of the work of Siemens just across the river from my constituency. The Government cannot afford to miss out on a system that has improved customer services in the private sector. It should be applied to Government services as well.
  Mr. Hawkins: Does the right hon. Gentleman accept that the smartcard technology developed by Siemens was approved when the cross-party information technology committee saw it in Germany last summer? Will he confirm that the use of smartcard technology can help to cut crime, particularly benefit fraud? That is one reason why many Conservative Members want that technology extended so that one day we shall have proper identity cards to help cut crime.
  Dr. Clark: I welcome the hon. Gentleman's general points, but I do not agree with him on identity cards.

  1047
  Smartcards are not identity cards and we do not see them as such. By using smartcards and other cards with magnetic strips, we can improve services to our citizens. That should be the aim of all hon. Members.
  Mr. Hoyle: What pilot projects are currently under way to develop the technology used in delivering Government services. [30873]
  Dr. David Clark: As part of my work on the better government White Paper, I am encouraging IT initiatives in central and local government. We will use technology to cut red tape and make life easier for businesses and citizens. We are making imaginative use of touch screens and electronic forms to get rid of the notion that government is just about queuing and filling in forms.
  Mr. Hoyle: I thank my right hon. Friend for that answer. Does he agree that there should be closer links between central and local government using IT? Such links would benefit the people of Chorley.
  Dr. Clark: My hon. Friend is correct. My right hon. Friend the Deputy Prime Minister has established a joint working group between central and local government, which is trying to work out ways of co-ordinating services to our citizens. The use of IT and one-stop shops throughout the country can bring Government services closer to our citizens, making life more comfortable for them. Information technology is the key. [Interruption.]
  Madam Speaker: Order. The House must come to order. It is far too noisy. It is all right agreeing with what is said, but let us have quieter conversations.
  Mr. Ian Taylor: I am pleased that the Chancellor of the Duchy of Lancaster is carrying on the good work of the previous Government on IT. Has he extended the work that we were doing? Is he still getting support from industry for his efforts? Has the central information technology unit been able to advance any further ideas on how to distribute kiosks and other centres so that the public have easy access to them?
  Dr. Clark: We are trying to develop the use information technology through various approaches. That will result in a better end product than the route followed in the United States, which has largely used the internet.
  By using a mixture of touch screens and the internet, we will be able to provide IT that is not only very friendly to our citizens but will revolutionise their lives.

  EU Presidency
  Mr. Alan W. Williams: If he will make a statement on his Department's objectives for the UK presidency. [30874]
  Mr. Kilfoyle: Three departmental objectives for the UK presidency have been set. The first is to convince our European partners, the Commission and the European Parliament of the importance of better regulation. That is vital if we are to free business to create jobs and wealth. The second is to ensure simplification of burdensome rules. Simpler EU rules will help bring the EU closer to
  1048
  its citizens. The third is to improve the EU's regulatory processes to ensure better quality regulations for business and citizens in future.
  Mr. Williams: I thank my hon. Friend for that reply and for the initiatives that he has taken to simplify European recognition for business and the citizen. At the risk of being too pessimistic, may I ask whether he agrees that European regulation is over-bureaucratic and obsessed with red tape?
  Mr. Kilfoyle: Although, as my hon. Friend says, there is certainly too much red tape, there is a commitment in the EU to overcome it. Indeed, my right hon. Friend the Chancellor of the Duchy of Lancaster will host a presidency event this weekend in Manchester—which will be attended by more than 200 people from throughout the EU—that is dedicated to supporting the European business test panel and the simple legislation for the internal market initiative, for example.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Mr. Corbett: If he will list his official engagements for Wednesday 4 March.
    The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. Later today, I shall have further such meetings.
    Mr. Corbett: In offering our sympathy to the families of the two men who were so brutally and senselessly murdered last night near Newry, will the Prime Minister confirm that he will not allow criminal fanatics to derail the peace process, which people from both communities so very much want to succeed?
    The Prime Minister: Yes. We can all use the normal and right but ritualistic language about an evil atrocity, those appalling murders, and how senseless and wicked they are. They are all of those things. I think that the two men who were murdered last night—two friends across the community divide—in a sense symbolised the future in Northern Ireland. The gunmen, in the evil atrocity that they committed, symbolised the past. We have now got to make progress—real progress—in the talks. That should be our mission, so that the hopes of the future drive out the demons of the past. That is what we intend to do.
    Mr. Hague: On behalf of the Opposition, may I echo and support the Prime Minister's remarks?
    On a different subject, the Prime Minister says that he made clear throughout the election campaign that he would implement the Dearing recommendations on higher education. We have made clear that, if he does, we will support him. Why has he broken his promise?
    The Prime Minister: We have not broken a promise at all. We have accepted substantially the Dearing

    1049
    proposals, with this change, which was, in fact, made quite clear during the election campaign: we believe that it is better to replace the maintenance grants with help for lower-income families with tuition fees. There is a choice. We can have either no maintenance grants but help for low-income families with tuition fees or a flat-rate tuition fee, which is what Dearing suggested, and help with maintenance grants. I am afraid that we cannot have both.
    Mr. Hague: The Prime Minister is breaking his promise. He said that he would implement the recommendations of the Dearing committee and he is not implementing the recommendations of the Dearing committee. Does he realise that, by not implementing Dearing, his proposals will mean that the poorest students will either be £2,000 worse off in total or will not go to university at all? What is his justification for that policy?
    The Prime Minister: No, precisely the opposite is the case for the reason that I shall explain to the right hon. Gentleman. I repeat that we did not break any promise on this. We made it clear that we believe that the maintenance element should go. Under our proposals, one third of students will be exempt from tuition fees and another third will pay a reduced amount, so a large proportion will pay either no fees or reduced fees. Under the Dearing proposals they would all, irrespective of their income, have to pay the £1,000 tuition fees. That is why our proposals will help lower-income students, not harm them. In addition, as a result of the proposals that we have announced, whereas Dearing said that contributions should be repaid when people reached an income of £5,000 a year after leaving university, our figure is £10,000 a year, so we are giving additional help to low-income families in that respect as well.
    Mr. Hague: Let us get this clear for the Prime Minister, because he clearly does not understand his own policy. It is no good his saying that he is not charging the worst-off students tuition fees. They do not pay tuition fees now—but they do get grants, and the Prime Minister is abolishing them. If one abolishes a grant that is most generous to the worst-off people, the worst-off people will be the hardest hit. Anybody in the country can work that out. If that is not the case, why have overall student applications fallen by 4 per cent. this year and applications by mature students fallen by 18 per cent? So much for lifelong learning. For the sake of thousands of students and families, will the Prime Minister now, before it is too late, implement the actual recommendations of the Dearing report, as he promised to do?
    The Prime Minister: Let me explain it to the right hon. Gentleman again. The Dearing proposals, which he says we should support, are that everybody, irrespective of income, pays a flat-rate tuition fee. Under our proposals, one third are entirely exempt and another one third pay reduced fees. That is why our proposals are better for lower-income families. Secondly, we have to introduce the reform because under the Conservative Government there was a cap on student numbers, which means that only 30 per cent. of school leavers are entitled to go to university. As a result of our reforms, we shall get about 500,000 extra students into further and higher
    1050
    education over the next five years. That is why our reforms are a better deal for universities, for students and for the country.
    Mr. Hague: The facts do not support the Prime Minister. Under the previous Government, higher education was hugely expanded, but now the number of applications is falling. Students and their families feel betrayed, and they are right to feel that way. They are right to be angry at the Government's deceit and double dealing. The Lords amendments passed on Monday night would give some help to the worst-off students. Even the Prime Minister cannot argue about the fact that those amendments would give more help to the worst-off students. Will he now acknowledge that the Government have got that part wrong and agree to accept the amendments?
    The Prime Minister: The answer is no, for the very reason that I have already given the right hon. Gentleman—but let me give it to him again. Under his proposals, students who under our proposals will be exempt would pay tuition fees. He must accept the fact that they would pay that extra money. In addition, under his proposals, as under the previous Government, there would be a cap on student numbers—but we can now raise that cap. Also as a result of our proposals, an extra £165 million will go into higher education next year. That is why the vice-chancellors have welcomed our proposals.
    The choice is simple. The right hon. Gentleman says that applications have fallen, but there will be more students in further and higher education next year because of our proposals. If we were to return to the system that he proposes, fewer students and less money would go into universities and fewer people would get the chance of a university education. That is why our proposals are better for Britain.
    Mr. Hague: The Prime Minister talks only about tuition fees; he neglects to mention the grant, which he proposes to abolish. That is a key part of the equation. Before the election, the right hon. Gentleman said that he had no plans to introduce tuition fees; during the election campaign, he said that he would implement the Dearing report; after the election, he broke both promises. As soon as the Government got into office, power went to their heads, their principles went out of the window and their promises went in the bin. Is not their treatment of students a shabby tale of deceit from beginning to end?
    The Prime Minister: As I explained in my very first answer, there is a choice. Either the situation is left as it is, with maintenance grants and full tuition fees, or we do not have maintenance grants but exempt the poorest students from tuition fees. We have chosen the latter course because it is better and fairer. As for lectures from the Tories about student poverty, they introduced the most discredited student loans scheme that the country has ever seen. Students know perfectly well about the raw deal they got under the Tories. That is why they will not believe a word of what the right hon. Gentleman says now.
    Mrs. McGuire: Given the image of pastoral tranquillity before 1 May 1997 that has been painted by the Conservative party, would the Prime Minister be surprised to find that one of the last pieces of research on rural affairs from the Scottish Office under the Conservatives showed significant decreases in gross domestic product and incomes, and a massive increase in homelessness? Would it not have been more appropriate for the Conservative party to reflect on their government than to don a corporate Barbour jacket and plunge headlong into collective denial?
    The Prime Minister: My hon. Friend is absolutely right. The Conservatives are in a state of denial about their record over 18 years. Following the Conservatives's period in office, 450 rural schools have been closed, only one in four parishes now has a bus service worthy of the name, crime is up, poverty is up and they gave the country BSE. [HON. MEMBERS: "Oh!"] Let me repeat it—they gave the country BSE.
    On that point, fortunately, I have good news to report from Brussels today. There has been a majority for the Commission proposal which, if held at the Agriculture Council next week—I very much believe that it will—will mean that the export certified herds scheme is through. At long last, after long years of Conservative failure, there is at least some light at the end of the tunnel.
    Mr. Ashdown: Can the Prime Minister tell us in what year of this Government he expects to start to make progress on his early pledge to reduce NHS waiting lists?
    The Prime Minister: I want to make progress this year and further progress next, but that must be done against the background of keeping a tight discipline on public spending, sorting out the structural budget deficit we inherited and making sure the public finances are sound. As soon as that is the position we will be able to put into health the investment that we need to get waiting lists down.
    Mr. Ashdown: The Prime Minister knows that he has not made progress this year—in fact, waiting lists have gone up by 100,000. Is he aware that NHS waiting lists went up by 250,000 during the whole term of the previous Government? It is predicted in a recent and respected report that this Government will achieve an increase of 250,000 in NHS waiting lists by the autumn. Does the Prime Minister understand the gravity of that? If that were to be achieved, would he count it a success or a failure?
    The Prime Minister: Of course I do not want that to happen. Before the election, the Liberal Democrats asked for £1.1 billion extra health spending. We put in £1.5 billion, but they say it is not enough. We want to get waiting lists down, and we shall. I hope that when we achieve the reduction that we have promised we will get cheers instead of the cat-calls we get now. We have to do that against the background I described. The Conservatives doubled the national debt and we will now pay out in interest payments on that debt this year more than we spend on the whole schools system of the UK. It is precisely for that reason that the Chancellor—I
    1052
    entirely agree with him—has made it clear that investment in our schools and hospitals has to depend on sorting out the public finances.
    Mr. Hayes: Tell that to the sick and the dying.
    The Prime Minister: The Conservative party spent 18 years letting those people down. It will take time, but I can assure the right hon. Member for Yeovil (Mr. Ashdown) that, at the next election, the pledge we made will have been fulfilled.
    Mr. Livingstone: Will the Prime Minister confirm that he has been lobbied by members of the Confederation of British Industry who want Labour to drop its commitment that trade union recognition should be granted when a simple majority of those voting in a ballot vote for recognition? The CBI proposes instead that there should be no change in the status quo unless an absolute majority of all workers—even those not voting—vote for it. Will he point out to the CBI that, if such a system had applied in the general election last year, the Conservative party would still be in government and that we have no intention of having one rule on ballots for ourselves and a different one for trade unions?
    The Prime Minister: I thank my hon. Friend for that question. I think that we were both elected under the first-past-the-post system, but perhaps that is another argument. It is important to realise that I have been lobbied by all groups, not only the CBI, on this matter. The Government are considering the matter—we shall make our views known in due course. I hope very much that a different approach by the Government can bring business and trade unions together—as we have found on many issues, not least the social chapter and the minimum wage—on trade union recognition. If there are outstanding questions, we shall have to resolve them in the Government. We shall make our views known once that decision has been reached.
    Mr. Pickles: Does the Prime Minister's new-found enthusiasm for the countryside apply to rural hospitals? If so, will he send a message of support to the staff of the Ongar War Memorial hospital and the surrounding community? Until 1 May last year, the hospital had a safe and secure future in the national health service, but, under the Labour Government, it faces closure. Do community hospitals have a safe place in the NHS?
    The Prime Minister: It certainly was not the case that they had a safe and secure place until 1 May. As I said, we have spent £1.5 billion more than the Conservative Government were going to spend. In respect of the services that the hon. Gentleman mentions and others, we will do our very best within existing spending constraints. When we can, we shall put in the extra resources that are needed, but the Conservative Government, whom the hon. Gentleman supported, closed hundreds of community hospitals.
    Mrs. Fyfe: As we approach International Womens Day, will my right hon. Friend take this opportunity to reaffirm the Labour party's commitment to the principle of an equal number of men and women in the Scottish Parliament? Has he come across the advice

    1053
    of Noreen Burrows, the professor of European law at Glasgow university, who said that Europe would help, not hinder, our efforts to achieve that? Will he take such views into account before final decisions are made?
    The Prime Minister: We certainly shall take those views into account. We fully support equal opportunities for women. Indeed, it is as a result of the changes that the Labour party made that so many women Members of Parliament are sitting on the Labour Benches. It is a change that we want to see elsewhere in the United Kingdom as well.
    Mr. Keith Simpson: Will the Prime Minister admit that he misled the British public about students and that, as a consequence of the Government's action, the poorest students will now be worse off?
    The Prime Minister: No, I will not confirm that, as it is not true. Moreover, our proposals differ from those of the Conservatives, not only because, as I said earlier, the Conservative party would charge everybody tuition fees, but because, under its proposals—if it accepts the Dearing report—students will start to make repayments after earning £5,000 a year whereas, under our proposals, they will do so after they have earned £10,000 a year. Our proposals will help, not hinder, the poorest students.
    Mr. Llew Smith: The Prime Minister has expressed the importance of tertiary colleges in developing skills for the local work force. Will he comment on the tragedy facing Gwent tertiary college, which was probably the most successful in Wales? The previous principal, Sue Parker, with the support of the college's corporation, turned the college into a financial disaster almost overnight—indeed, it is now accused of misusing European funds. Will the Prime Minister support our demands for the corporation to be sacked and insist that investigations are carried out to ensure that projects that expect European money receive that money—and that that money is not spent on general running costs? Will he also support our demand that such corporations should be taken out of the hands of big business and put into the hands of democratically elected and accountable local authorities?
    The Prime Minister: I certainly support what my hon. Friend says about the misuse of public funds. I am well aware of his long-standing interest in, and concern about, the situation and of the fact that he raised it in a recent debate in the House. I understand that the chair and the vice-chair of the college have resigned and that the principal has left. I understand that a recovery plan is in place and that the college is determined to turn things round.
    I want to reassure my hon. Friend and the House that Welsh Office Ministers intend to keep a close eye on the situation. I understand that there is to be a meeting between one of those Ministers and the Gwent Members of Parliament within the next few days. I shall certainly insist that I am kept informed.
    Miss McIntosh: The Prime Minister referred earlier to the certified herds scheme. Will he give us an assurance
    1054
    that the cost of setting up and running that scheme, not only in Northern Ireland but throughout the United Kingdom, will be met by the Government?
    The Prime Minister: The limitations of the help that we have offered were set out in the statement made by my right hon. Friend the Minister of Agriculture, Fisheries and Food last week. We are well aware of the difficulties that farmers face because of increased costs on top of all the problems with BSE. That was the reason for the statement last week. I shall certainly consider how that fits in with the hon. Lady's point.
    Mr. Mullin: When the time comes—in the distant future, one hopes—for my right hon. Friend to publish his memoirs, may we take it that he will be giving HarperCollins a wide berth?
    The Prime Minister: That question might possibly be a trifle premature. I shall certainly seek my hon. Friend's advice. He may even merit a chapter; who knows? I understand that the Leader of the Opposition's biographer is having a little difficulty finding a publisher. Perhaps they can apply.
    Sir Geoffrey Johnson Smith: It is clear from earlier exchanges between the Prime Minister and my right hon. Friend the Leader of the Opposition that the Prime Minister broke an election pledge. I say that because the Dearing report did not present a choice between the abolition of the maintenance grant and the introduction of tuition fees. Does the Prime Minister accept that the choice was made not by Dearing but by the Labour Government?
    The Prime Minister: No. I do not accept that, for this reason: the same amount of money can be made to go only so far. If we did not have tuition fees for all students and we retained the maintenance grant, there would be something like a £500 million hole in the budget for student finance. That is why there is a choice between keeping the maintenance grant system or having tuition fees but exempting low-income pupils.
    We decided that it was fairer to have exemptions from tuition fees so that two thirds of students will pay no fees or lower fees and will be in a better position on repayments, not having to repay any money until they are earning £10,000 a year or more. That is a choice within the given budget. It is the best choice for students and it is entirely in line with what we said in the general election campaign.
    Mrs. Gilroy: Given the Government's key commitment to attacking poverty by rooting out long-term unemployment, will my right hon. Friend join me in thanking the 77 businesses that recently signed up to support the new deal in Plymouth, following the employers' launch? Will he also join me in congratulating the Employment Service staff in Plymouth on the energy, enthusiasm and determination with which they are making a success of the new deal, in partnership not only with business but with the private, public, voluntary and community sectors?
    The Prime Minister: Yes, I congratulate the staff and the businesses that have participated. Indeed, we are

    1055
    getting a superb response from businesses and people around the country. In the new deal so far—[Interruption.] I am sorry that the Conservative party opposes the new deal, but it is supported by the vast majority of businesses and the country. As a result of the new deal, 5,000 young people are already in unsubsidised jobs and more than 1,000 lone parents are off benefit and in work. That is a huge saving for the Exchequer, quite apart from an opportunity for them.
    Mr. Bercow: Given the Prime Minister's—[Interruption.] I recognise that the children must settle down, Madam Speaker. Given the Prime Minister's professed support for a business-friendly Europe, can he give the House a specific example of one European directive or regulation that he will fight successfully to have repealed during the United Kingdom presidency of the European Union? Does he understand that if he cannot, for all the soundbites it will show that he has no influence in Europe?
    The Prime Minister: As a matter of fact, I can. Last week, as a result of the work done by my noble Friend the Minister for Trade, we have secured a considerable liberalisation of the telecommunications regime, which means changing and getting rid of the European legislation that was hindering the development of the market. I very much hope that we can join hands across the divide and welcome that.
    Mr. Bradshaw: Does the Prime Minister agree that the situation in Kosovo is extremely worrying? Does he also agree that it could become the worst thing that Europe has seen since 1945? Will my right hon. Friend tell the Foreign Secretary that when he meets Mr. Milosevic tomorrow he should leave him in no doubt that the international community has learnt the lesson of appeasement in Bosnia and that we will not stand idly by while he ignites another ethnic war in Europe?
    The Prime Minister: The Foreign Secretary will give that message to Mr. Milosevic very strongly. The situation in Kosovo is extremely grave. That is why the Foreign Secretary has extended his programme to see Mr. Milosevic tomorrow and he will deliver him that message. That shows again the importance of the role that Britain can play, not merely in Bosnia but in the whole region in stabilising it, bringing peace and attempting to prevent conflict growing. I have no doubt that if there is substantial conflict there, or indeed in Bosnia, it will have an impact on us and on the whole of Europe as well as on that part of the world.

    Ministerial Visits
    Mr. Baker: When he next plans to visit the Lewes constituency.
    The Prime Minister: I fear that I must give the hon. Gentleman the same reply as I gave him last time. I have no plans to visit his constituency yet. I am sorry about that.
    Mr. Baker: I am disappointed and I shall keep trying. It is a great pity because many of my constituents who rely on public transport would like to meet the Prime
    1056
    Minister. Is he aware that, since 1974, the cost of rail travel has increased by 78 per cent. above inflation and the cost of bus travel has increased by 57 per cent. above inflation but the cost of private car travel has decreased by 6.5 per cent? Is not that an indictment of the previous Government and a green tax in reverse? Will the right hon. Gentleman give an undertaking that in the weeks ahead the Government will take action to ensure that bus and rail fares are cut?
    The Prime Minister: I cannot give that undertaking, but I can give an undertaking that the White Paper on the integrated transport strategy will deal precisely with how we ensure that the different forms of travel fit in with one another and how we make a regulatory system that matches the needs of consumers. What impact that will have on fares in the long term it is too early to say, but that approach is the right one—rather than leaving it to market forces—and I hope that it will be welcomed by the hon. Gentleman's constituents.

    Engagements
    Mr. Bill Michie: I welcome my right hon. Friend's answer to the question asked by my hon. Friend the Member for Brent, East (Mr. Livingstone) on industrial relations and the forthcoming Bill. May I draw my right hon. Friend's attention to early-day motion 826 which concerns 350 workers who have been sacked by management even though they went through the proper legal procedures? Will the new legislation ensure a level playing field for workers and employers and prevent the present problem of the unions having to obey the law while, for some strange reason, employers can flout it?
    The Prime Minister: The purpose of the proposals is to make it clear that there has to be fairness in the workplace. I know about the Magnet dispute since it happened just outside my constituency. I very much hope that the Advisory, Conciliation and Arbitration Service can be involved. I know that it was at one point, but it is not at present. I hope that the negotiations can resume. That is easily the best way to resolve the dispute.
    Dr. Fox: Responsibility for abortion is not to be devolved to the Scottish Parliament, yet on 29 January, Hansard reported the Under-Secretary as saying—
    Madam Speaker: Order. The hon. Gentleman knows that he may not use quotations at Question Time.
    Dr. Fox: The Under-Secretary said that if there was to be change to the abortion law in Northern Ireland, it should be considered by a devolved assembly. Why should there be such a difference between Northern Ireland and Scotland?
    The Prime Minister: Scotland and Northern Ireland need not necessarily be treated in the same way across the various programmes for devolution. One of the points of devolution is that what happens in Northern Ireland or in Scotland is a matter of debate and can be decided in different ways.
    Ms Beverley Hughes: Does my right hon. Friend agree that the deal brokered by Kofi Annan to

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    allow access to presidential sites must be tested as soon as possible to ensure that Saddam Hussein does not renege on commitments that he has entered into? Does my right hon. Friend also agree that it is important that the policy of diplomacy backed by force remains in place?
    The Prime Minister: My hon. Friend is absolutely right. Contrary to speculation, the Security Council resolution is a big step forward. It makes clear that the severest consequences will flow if there is any breach of
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    the agreement. That is written into the resolution and it sends the clear message to Saddam Hussein that he must allow inspectors in, and testing to begin, or force will inevitably follow as a result of his breaching the agreement. The mixture of diplomacy and force has got us to where we are, and it is right to continue to use it. British troops, with American troops, will remain in the Gulf to ensure that the agreement that Saddam Hussein's Government have entered into is tested, adhered to and obeyed.

Legal Aid
3.31 pm
The Parliamentary Secretary, Lord Chancellor's Department (Mr. Geoffrey Hoon): With permission, Madam Speaker, I should like to repeat a statement on improving access to justice that is being made in the other place by my noble and learned Friend the Lord Chancellor.
At present, the legal aid system is failing us all. The system is failing the millions of people on modest incomes who do not qualify for legal aid and simply cannot contemplate going to law because they would have to pay legal costs if they lost, and it is failing people on legal aid, because the Government cannot direct money to those who need it most and to those cases where there is a public interest in seeing justice done. Finally, the system is failing the taxpayer, who, year on year, is being asked to pay more and more, but can rarely get help from legal aid when it is needed.
Although legal aid is costing us more and more as costs run away, ahead of inflation, it is helping fewer and fewer people each year. It is, therefore, our intention to modernise the way in which civil cases are paid for. We want a system of civil justice which is there for everyone when they need it, not just the rich or the very poor. We intend to transform the legal aid scheme to ensure that we get good value for money from lawyers who are paid from legal aid, and so that we spend taxpayers' money on those who need it most and on those areas where it can do most good.
Achieving all our reforms will require the approval of Parliament through new primary legislation, but, even using existing powers, we can start the process of change. It is on that first stage that I wish to concentrate today.
The publication of the consultation paper marks the first stage of our modernisation of legal aid and legal services. When my noble and learned Friend the Lord Chancellor announced the programme of reform at the solicitors annual conference in October last year, he said:
"it is essential that the details"
of our proposals
"are right … We shall be consulting widely and openly".
That is precisely what we have been doing in the four months since October, and will continue to do for a further two months of the formal consultation period. This is a listening Government: we are listening to views on these proposals, and will continue to do so. We have had detailed discussions with the legal professions and with many interest groups—and more are planned. Their comments have contributed to the development of the proposals, but we shall not confine our listening to the legal profession, because our aim is justice for all.
The consultation paper invites views on a proposal that will allow the majority of people in England and Wales to secure access to justice. We propose to allow conditional fee agreements—no win, no fee agreements—to be used in all except family and criminal cases.
Conditional fees offer a new way for people to bring their cases. Lawyers share the risk of litigation with the client by agreeing to work without a fee if the case is lost. If the lawyer is successful, he is entitled to a success fee in addition to his normal fees. Although the maximum success fee can be up to 100 per cent., normally it is
1060
50 per cent. or less. In nearly all cases, the lawyers also voluntarily limit the success fee to no more than 25 per cent. of the damages in any event. Conditional fees have been available since 1995 for a limited range of proceedings—personal injury, insolvency and human rights cases—and they are working well.
More than 30,000 people have taken advantage of this approach to bring personal injury claims. Many would have been unable to afford to pursue their claims without conditional fees. I refer to people who are only just above the legal aid limit—people who are far from well off. They constitute the great majority of the population who are in work, with families, mortgages and savings—or other assets—that mean that they are not eligible for legal aid, but who cannot contemplate the open-ended commitment of meeting lawyers' bills. Only the very rich can face the thought of lawyers' bills without any financial fears, and even they must worry sometimes. To continue to restrict narrowly the use of conditional fee agreements is to deny an avenue of access to justice to the majority of people.
The consultation paper seeks views on any changes to the current law and practice that might improve the operation and use of conditional fees—for example, by allowing the success fee and the insurance premium to be recoverable from the losing party. It also invites views on the Government's plans to begin modernising legal aid. Over the past seven years, the cost of civil and family legal aid has tripled to some £671 million. The average cost has grown from £1,442 to £2,684–53 per cent. above the rate of inflation. The number of acts of help funded in 1996–97 fell by about 39,000. Taxpayers are paying more and getting less. That cannot be right, and it cannot continue.
We need a modern legal aid system, in which only cases that cannot reasonably be funded in any other way, and which have the necessary priority, are backed by the taxpayer. It has never been our intention to abolish civil legal aid, as has been wrongly claimed. We want to focus taxpayers' money where it is most needed and can do most good—on matters connected with social welfare, such as employment, housing, dealing with debt, state benefits and actions against officialdom and bureaucracy. To achieve that clear focus on social welfare issues, the Government intend most money or damages claims to be funded through conditional fees in future. Consequently, they propose to transfer most money and damages claims currently supported by legal aid to the conditional fee system.
However, as my noble and learned Friend told the other place on 9 December, we do not intend to remove legal aid from housing cases, in which the main purpose of the action is often to achieve a home fit to live in. That is precisely the kind of case to which legal aid ought to be directed.
In addition, the ability to challenge public authorities through judicial review is a necessary check on the use of the power of the state, and a positive encouragement to maintain high standards in public administration or public bodies. The poor must also be able to exercise that right of challenge.
Legal aid will remain available for those who qualify. We also believe that legal aid must continue to be available when a person claims to be the victim of wrongdoing by public authorities—for example,

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the police. There, too, the ability to challenge misdeeds is an encouragement to maintain high standards and proper behaviour to those over whom public bodies exercise authority.
The extension of the availability of conditional fee agreements will provide an alternative means for people to bring most money or damages claims without public funding. Our aim is to create conditions in which anyone—regardless of financial status—can use conditional fees to bring cases, across the whole range of litigation in which the main remedy sought is money or damages. However, we recognise that the current financial structure of solicitors' firms may not allow that, and that the insurance and finance industry needs time to develop products to assist in the expansion of the use of conditional fee agreements. The Government therefore propose a measured approach to encouraging this change to take place.
The Government propose to remove most personal injury actions from the scope of legal aid by the middle of the year. Lawyers working in that area have considerable experience of taking cases using conditional fee agreements. Similarly, the insurance industry has developed products, with premiums that, in most cases, are about £155 or less. The Government will work with the insurance and banking industries to help them develop more and even better products to allow everyone, regardless of their financial standing, to bring cases using conditional fee arrangements. That combination—the experience of lawyers in that area of litigation, and developed insurance products—is sufficient to allow such cases to be alternatively financed through conditional fee agreements.
In addition, there are certain categories of proceedings that the Government believe no longer have sufficient priority to command continued public funding. It is important that scarce public funds are directed to where help is most needed. The Government are not persuaded that cases that involve, for example, disputes arising from the course of running a business, inheritance, partnerships or trusts meet that criterion. Nor do we believe that taxpayers' money should be used to help neighbouring landowners to settle boundary disputes. In those cases, there will be assets at issue, which would allow the case to be taken with a conditional fee arrangement. In any case, the issues will generally be too narrow or too specific to deserve the use of public money, when such support means less for other matters of greater public importance. The consultation paper seeks views on the proposals to remove those categories from the scope of legal aid.
The Government have been listening carefully to comments that we have received regarding medical negligence cases. The Government believe that many lawyers practising in that area need to modernise the way in which they run their firms, so that they can structure their finances to enable them to take cases on behalf of clients, regardless of their financial standing. However, we accept that it will take time. Therefore, the Government do not propose to remove such cases from the scope of legal aid for the present.
However, we intend to do what we can to reduce the high failure rate of such cases. It cannot be right that only in as few as 17 per cent. of the cases that are supported
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by a legal aid certificate is more than £50 recovered in damages. Medical negligence cases should be conducted by practitioners who are experienced in that field of litigation. We cannot any longer allow inexperienced practitioners to take such cases. I have no doubt that part of the reason why the failure rate is so high is that lawyers take such cases without the necessary experience. Therefore, they are unable to make timely, informed decisions on the merits of a case, or on whether an offer of settlement is appropriate, or reasonable in amount.
It serves no one's interests if cases are brought with little prospect of success—least of all the victims of the alleged negligence. Therefore, the consultation paper invites views on a proposal to allow only experienced practitioners to take cases on behalf of assisted persons in that field. We propose that the Legal Aid Board should establish contracts only with lawyers of sufficient experience. Anyone who is granted legal aid to pursue a medical negligence case will be required to use a lawyer who holds a contract with the board. We are keen to hear what criteria could be used to establish whether a lawyer is sufficiently experienced to hold a contract to take cases on behalf of those receiving legal aid.
We intend to remove the remaining money or damages claims from the scope of legal aid as experience of conditional fees among lawyers and insurers develops and they become more widely and readily available.
The Government recognise that, during a transitional period, help will be needed to assist in the transfer of funding away from legal aid. There may be some extraordinary cases among the categories to be removed that lawyers may not initially be able to support fully on conditional fee arrangements. The Government believe that, in time, it will be possible for such cases to be financed solely by conditional fee agreements. Therefore, the Government intend to establish a limited transitional fund. That fund would provide support, for example, in cases involving very high costs—few lawyers' firms are financially structured to carry such cases, because they could not afford the risk of losing—or where there are high investigative costs of establishing the merits of the case.
We expect the need for the fund to support such cases to cease because we believe that, in the long term, those cases will find lawyers whose practices are financially structured to take them on under conditional fee agreements. The transitional fund would also provide help in cases that we exclude from legal aid but which demonstrate a significant wider public interest. That would allow us to start to provide assistance in that type of case under the transitional arrangements, ahead of primary legislation to establish a public interest fund. The size of the transitional fund will be set each year according to other priorities for spending legal aid money and the diminishing extent to which the fund is needed.
The Government will develop a modernised legal aid system. We are working toward a system in which we can control expenditure; obtain good value for public money; and target legal aid where there is the greatest need and it will do most good.
In future, the Government's main priority for using public money to provide legal services will be to assist those who are excluded from society because they are unable to exercise their legal rights. The Government will achieve that through the legal aid scheme and through the creation of a community legal aid service.

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The consultation paper sets out the steps towards that goal that can be taken now: making conditional fee agreements more widely available; targeting civil legal aid on social welfare matters; and creating a special fund for public interest cases.
We shall welcome responses to the consultation paper and will consider them carefully before arriving at considered decisions on specific proposals to bring before Parliament.
Mr. Edward Garnier: I begin by thanking the Minister for giving me an advance copy of his statement after lunch, and for giving the press an advance copy after dinner last night. Does he accept that the Lord Chancellor's plans, which were announced at the Law Society conference in Cardiff in October, were ill thought out, socially divisive, economically illiterate and politically inept? Does he not recall that the Lord Chancellor proposed to abolish legal aid for money claims, largely personal injury cases, and to replace it with conditional fee arrangements? Does he agree that everyone, apart from the Lord Chancellor, knew that, far from increasing access to justice for the least well-off, his proposals would deny access to justice to a great many people who, thanks to legal aid, are currently able to get to court?
Does the Minister not agree that, far from staunching a financial haemorrhage in the legal aid budget, the Lord Chancellor was intent on abolishing the very part of the system that the hon. Member for Hendon (Mr. Dismore), an experienced personal injury lawyer, says makes the Treasury a profit, while doing nothing at all about legally aided family and criminal law cases which most certainly need to be looked at? That still seems to be the case, judging from the Minister's statement.
Does the Minister further agree that the Lord Chancellor launched his new policy in October without having had any real discussions with the insurance industry, the professions and consumer and welfare groups? Is it not the case that they are all deeply sceptical and that, as a result, the Lord Chancellor is deeply unpopular? The Minister will recall the speech by the present Lord Chancellor at the Bar conference in 1996 when he said:
"Supporters of legal aid must never cease to emphasise that it is a highly successful public social service."
Does he not recall the Lord Chancellor, then the shadow Lord Chancellor, saying:
"In civil cases which reached judgments in 1995 to 1996, there were judgments in favour of the assisted person in 81 per cent. of the cases. The proportion of cases where there was either a settlement or judgment in favour was 91 per cent"?
Does he not also recall the then shadow Lord Chancellor saying:
"Personal injury litigation as a category was conspicuously successful. Obviously the greater the success rate, the closer the legal aid system can approach self-funding. These success figures tell against any argument that legal aid is generally granted too readily"?
No doubt the Minister recalls those words very well.
The Minister says that, over the past seven years, the cost of civil and family legal aid has tripled to £671 million. What analysis has he done to discover the reasons for that increase? He made a similar complaint in
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the House in November. Surely by now he should have done his homework and found out why there has been that increase.
May I congratulate the Minister on having finally grasped the point that I put to him in November, which is that many solicitors' firms, especially those in the smaller towns and urban communities outside the big centres of population, cannot afford to carry conditional fee arrangement claims, and there is also no adequate insurance available to protect litigants? He says that the Government will work with the insurance and banking industries to develop products that will enable everyone, regardless of financial standing, to bring personal injury claims. Why did not he start that work last year?
I welcome the Minister's decision to think longer and harder about medical negligence cases—which, again, he should have done last year. Will he also look at industrial diseases claims in the same light? Will they remain within the scope of legal aid?
Will the Minister tell us more about the transitional fund? How long is "transitional"? How big will it be? Are there to be restrictions on its use? For example, will it be available only to assist in claims for £100,000 or more? The Minister says that it is available for public interest cases. Will they also be limited to claims for £100,000 and over? When will the preliminary legislation come before Parliament?
The Minister also referred to his consultation paper. In the context of the Lord Chancellor's Department, that must be an oxymoron. When, precisely, will the consultation period close? Last November, I described the Government's proposals—accurately, as it now turns out—as a thorough mess. Yesterday, the Lord Chancellor said that other events that he was being questioned about by the Public Administration Committee were no more than a storm in a tea cup. Does the Minister agree that if the hand on the saucer were a good deal steadier, we would not have to put up with these troubles, and nor would the hon. Gentleman have had to make this statement?
Mr. Hoon: I am just a little disappointed that the hon. and learned Member for Harborough (Mr. Garnier) chose to prepare his case on the basis of the rhetoric that he might use to address a jury, rather than on homework that he might have done were he to address a High Court judge.
On the hon. and learned Gentleman's first point, if he had read the Lord Chancellor's speech at Cardiff a little more carefully than he appears to have done, he would have noticed that my noble Friend said that it was the Government's intention to abolish legal aid for most money claims. Most money claims does not mean all money claims. Indeed, our proposals, if carried through, will result in 60 per cent. of money or money damages claims being removed from legal aid.
I am also disappointed that the hon. and learned Gentleman did not give the Government credit for listening carefully to the responses to a four-and-a-half-month period of consultation. In his speech at Cardiff, my noble Friend the Lord Chancellor stressed on no fewer than 12 occasions his determination to consult all those affected. Precisely because we have consulted and listened, we are able to bring forward this consultation paper today—which, in any event, will allow for a further two-month period.

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In answer to one specific question, I anticipate that the consultation period will end on 30 April, after which the Government will reflect upon the answers to the questions set out in the paper and bring forward proposals for Parliament ultimately to decide upon.
There is no doubt that the Government intend to look more carefully at family and civil law cases in general. I anticipate that, whenever opportunities arise, the Government will bring forward further proposals for primary legislation that will affect the existing rules on the granting of legal aid in this area.
I continue to be impressed, if I may say that, by the hon. and learned Gentleman's ability to avoid answering any questions on the subject. In particular, the House would be interested in his observations on legal aid and whether he judges that its present cost is too high, too low, or about right. In the course of the various opportunities that the Government have afforded to the hon. and learned Gentleman, he has not answered those quite important questions. It is quite easy to come before the House and criticise; I have yet to see any example of the hon. and learned Gentleman explaining the Opposition's policy in these important areas, which affect the great majority of citizens in our society.
The purpose of the transitional fund is to make available financial support for important cases between now and whenever primary legislation is approved by Parliament. That will not necessarily be limited to cases involving costs of more than £100,000, although clearly that is a useful guideline for the sort of support that might be available. In particular, the purpose of the transitional fund—as, indeed, will be the purpose of a public interest fund, assuming that Parliament approves such a proposal—is to allow those who have cases that are dependent upon important matters of public interest to bring those matters before the court and have those important issues resolved.
Mr. Gerald Bermingham: I welcome the Minister's proposals on legal aid, particularly as they affect housing cases. Perhaps we should consider whether, when a housing case is won against a public corporation or other body, it should be beholden upon lawyers to obtain costs on behalf of the legal aid fund. Is he aware that if, as is proposed, the small claims court extends its jurisdiction to cases involving up to £5,000, there is a risk that some housing cases might fall within the category in which legal aid would not be available and costs would not be recoverable?
Mr. Hoon: I am grateful to my hon. Friend for his remarks. I appreciate his concern, and assure him of the importance of housing matters to the Government. However, the jurisdiction of the small claims court is a matter for separate consultation. We are carefully considering the matter and have received representations on it. I shall certainly take his views into account.
Mr. John Burnett: Will the Government let us know, first, what research they have made into conditional fees—a system that is riven with conflicts of interest? Last year, the Policy Studies Institute concluded that it was far too early to gauge the effectiveness of those fees.
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Secondly, who will pay the insurance premiums of the poorest and most deprived in our society, who will now be denied legal aid?
Finally, what are the Government's views on using a contingency legal aid fund as the best means of opening access to justice to middle-income Britain?
Mr. Hoon: Research has been conducted—the hon. Gentleman mentioned the PSI research, which was not nearly as depressing in its conclusion as he suggests. PSI's report stated:
"Many of the potential problems identified before conditional fees were introduced seem to have been successfully addressed."
On balance, the institute felt that the operation of conditional fees had been successful.
I add to that a further piece of evidence: more than 30,000 cases have now been agreed to be taken under conditional fees. Moreover, the rate of negotiation of those agreements has increased month-on-month and year-on-year, presumably as lawyers get more accustomed to operating under such agreements.
My Department has not received a single complaint on the operation of conditional fees funding—in contrast to the complaints that I receive daily on the deficiencies of legal aid. Hon. Members on both sides of the House will have had constituents writing to them and appearing at their surgeries to complain about the operation of legal aid, whereas, in my knowledge, constituents have not been complaining about the operation of conditional fees funding, which seems to be remarkably successful.
We continue to study carefully proposals on the operation of various contingency funds which have made to us by the Bar and by the Law Society. However, as our consultation document says, we are concerned that if we allow development of conditional fees and the creation of a fund, there is a clear danger that the best cases will be dealt with on a conditional fees basis, leaving weaker cases to the fund—therefore making it unlikely that the fund will be financially self-sustaining. Both the Bar and the Law Society are attempting to deal with that problem, and we await with interest the outcome of their efforts.
Mr. Dennis Skinner: Does the Minister agree that one factor in the escalating cost of legal aid is the reduction in union membership? The fact is that, 20 years ago, there were 30 million trade unionists, every single one of whom would be represented free of charge—either by their union representatives, or by lawyers paid for by their representatives—in cases of personal injury at work, allowing them to make their case. Now, the number of trade unionists is just over 6 million, creating a gap that has undoubtedly made a massive contribution to the number of people in various types of employment who have to go to legal aid. We will have to take that factor into account.
Will the Minister take it from me, and from others, that one of the biggest issues in legal aid that the Government will have to address is that, regardless of what legal aid system is introduced, we are not convinced that people such as the Maxwells and the Levitts will be deprived of large legal aid sums—which should be going to the many thousands of people who want to fight their little case on its merits with the help of the legal aid system? That is

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the problem. How will the Government deal with multi-million pound fraud cases? Will those cases continue to get those sums?
Mr. Hoon: My hon. Friend is absolutely right to draw attention to the excellent schemes operated by trade unions and their lawyers, which provide effective, specialist representation to a wide range of people who receive support as a result of their trade union membership. Indeed, my hon. Friend may well have seen towards the end of last year an interesting suggestion from John Monks on behalf of the Trades Union Congress that those schemes should be extended to people who are not trade union members, so that the expertise available could be used to benefit the generality. That is something to which we refer in the consultation document. It is an interesting development which I hope my hon. Friend would welcome.
On my hon. Friend's second point, about people in receipt of legal aid in large-scale fraud cases, I assure him that the Government will continue to bear down on those who seek to secure legal aid when they are not financially eligible. It is vital for the integrity of the scheme that we channel legal aid to those who need it, not to those who are disguising their assets overseas or elsewhere.
Mr. Douglas Hogg: May I welcome the Minister's statement that his Department is looking further at the contingency fee fund concept? Within the profession, there is a feeling that if a choice has to be made between contingency fee funds and conditional fee agreements, there would be a strong preference in favour of the contingency fee fund because it avoids the conflict of interests already referred to and because it avoids the necessity of plaintiffs having to find the insurance premium.
On the question of medical claims and legal aid being confined to lawyers who have special expertise in that sphere, does the Minister understand that he will be creating monopolies, and that in many areas—for example, rural areas—there will be no lawyer to whom a plaintiff can turn for advice and assistance?
Mr. Hoon: I am grateful for the right hon. and learned Gentleman's support. On the question of a fund, I suspect that he is speaking unconsciously on behalf of the Bar, which would probably prefer a fund to the arrangements that are currently in place. I am not entirely sure that the Law Society would prefer a fund in place of the opportunity for its individual members to take forward conditional fee agreements. However, that is clearly a matter for the professions, and we would await with interest the outcome of their deliberations.
I also suggest that it might well be possible to create a fund in a narrower category of cases, that it might be appropriate to establish a fund in discrete areas of litigation. Indeed, the Government are seriously considering taking appropriate powers, whenever Parliament might approve such a course, that would allow the creation of such funds. That might well be a way of reconciling the right hon. and learned Gentleman's concerns with mine.
I appreciate the right hon. and learned Gentleman's comments about medical negligence cases. These are sensitive and difficult cases which require extensive
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investigation before any return can be made. That is why the Government are convinced that it is appropriate only for those who are experts to conduct such litigation. While the right hon. and learned Gentleman makes a good point about the importance of securing access to local justice and of having a lawyer available nearby, I hope he will agree that it is much better to have a lawyer available who knows what he or she is talking about and who has dealt with that kind of case before, rather than simply to go down the road to someone who might recently have done one's conveyancing but who knows nothing about medical negligence.
Mrs. Sylvia Heal: Having been a magistrate for more than 20 years, I am well aware of the value of legal aid and, indeed, of the rising cost of legal aid. However, I am also aware that many people do not qualify for legal aid. Can my hon. Friend assure me that the Government's proposals will be fair to those people who currently do not qualify for legal aid?
Mr. Hoon: I very much appreciate my hon. Friend's comments. The complaints that I referred to earlier, which people bring to their Members of Parliament in writing or at their surgeries, generally turn on financial eligibility for legal aid. The way in which successive Governments have controlled the cost of legal aid has been by bearing down on eligibility. Clearly, one option available to this Government to restrict the cost of legal aid is simply to continue to bear down on eligibility; to take out more and more people so that, ultimately, only a handful of people would qualify for legal aid. That was not the course on which we decided. We believe that it is much better to try to find the appropriate means of funding cases. That is why we propose an extension of conditional fee agreements. That will make the legal aid fund go further and allow us to concentrate it on those people and areas of real need. I hope that, in that way, I will be able to satisfy my hon. Friend's concerns.
Mr. Ian Bruce: The Minister will know that I have an interest in expert witnesses in personal injury cases. I wonder whether he can say more about how expert witnesses will be paid for. Some lawyers are telling them, "You should share the same risk as me, whether we win the case or not." That is inappropriate because the expert witness is supposed to be giving unbiased evidence to a court. What will the Minister do about that and how will he ensure that the losing litigant will not face a massive bill at the end? We must remember that the Department of Social Security is the first to be paid after a personal injury case is paid out.
Mr. Hoon: I shall confine my remarks to personal injury and I hope that that will satisfy the hon. Gentleman's concern about expert witnesses. Expert witnesses appear in a range of cases. I share the hon. Gentleman's reservation at the prospect of such witnesses sharing in the costs of a case. One of the great weaknesses that we have identified about the way in which civil litigation operates is the development of an expert witness industry, where expert witnesses are available for any argument that a lawyer wishes to advance. Too many cases are made expensive simply because both sides have teams of expert witnesses and, inevitably, have to pay for them.

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I look forward to a day—these are proposals contained in our consultation document on reform of the civil justice system—when expert witnesses are genuinely expert and give objective advice about a case. In those circumstances, it is important that their fees—as the hon. Member for South Dorset (Mr. Bruce) said, they can be considerable—are paid for. That is why we believe that it is important to establish the conditions in which lawyers, the insurance industry and, where appropriate, the banking industry can work in partnership to fund certainly the more expensive cases, and to seek the development of the insurance products that will allow for the cost of expert witnesses to be properly met.
Mr. Chris Mullin: I broadly welcome my hon. Friend's statement. The fact that he has obviously taken on board many of the representations made in the past few months is a cause for celebration, not criticism. It was always inevitable that there would be teething troubles with such a radical change. As long as he is prepared to listen to the representations made from benign quarters, I see no long-term problems with the changes.
On medical negligence, should not we be moving towards no-fault compensation for the most serious cases? They can sometimes drag on for up to seven years and that is in nobody's interest except the lawyers.
Mr. Hoon: Benign is not a word that I have often associated with my hon. Friend, but I can see that I am wrong. I appreciate his support. The figures for recovery in medical negligence cases show that only 17 per cent. of cases produce recovery of more than £50. The average recovery appears to be about £4,000, with £4,000 paid in costs to achieve that. That makes a strong argument for no-fault compensation.
There are other difficulties about no-fault compensation that we would have to address. This might be one of the areas where such an approach is appropriate and, together with colleagues from other Departments who have a clear interest in this matter, we will be considering carefully whether that is the appropriate way of taking these cases forward.
Mrs. Eleanor Laing: While I welcome the Government's aim of reducing the burden of legal aid on the taxpayer, is not the Minister concerned that making solicitors' firms bear the financial risk in some cases is an unbearable burden for smaller firms and makes the lawyer personally involved in his or her client's case? Is he not concerned that there is a danger that the objective nature of the legal profession itself will be undermined?
Mr. Hoon: May I deal first with the point about whether solicitors can afford the costs of this sort of approach? The Government have commissioned some research by KPMG into the business case for solicitors' firms undertaking much of their litigation under conditional fees. The report has been received and will be published in due course. I hope that the hon. Lady will study it with care and decide, in the light of the research conducted, whether or not it is possible for small firms to conduct widespread conditional fee arrangements. We
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must bear in mind the fact that lawyers earn their money from a number of different sources, of which legal aid is one; and legal aid will continue to be available in range of cases.
Conditional fees, particularly as we propose to extend them to the great majority of cases, will extend the opportunities of the great majority of citizens to take legal cases before the court. I said that only the very rich and the very poor are currently in a position to take cases before the court. I hope that the hon. Lady will accept that our proposals will open up access to justice for the great majority of people in our society. That should provide lawyers with financial opportunities that are not currently available to them.
I appreciate the hon. Lady's concern about lawyers being involved in their clients' cases and that potentially affecting their judgment of what is appropriate. However, I hope that she accepts that there is no evidence so far of that happening under the conditional fee agreements that have been concluded to date.
Moreover, the fears to which I referred when replying to the hon. and learned Member for Harborough (Mr. Garnier) have not been borne out in any of the research. Indeed, in the more complex cases, there will in any event be a member of the Bar who ought to be able to bring a degree of objectivity to bear on the assessment of the case. We should see a degree of partnership developing between solicitors and banisters in the assessment of risk in given cases and the appropriate level of recovery.
Several hon. Members rose—
Madam Speaker: Order. We cannot continue with these long questions and very long answers. I understand the complexity of the statement, but I should like to call as many hon. Members as possible and for that we need to have shorter questions and answers.
Mr. Andrew Dismore: As a specialist personal injury solicitor, may I ask my hon. Friend whether he agrees that, if fewer cases succeed under the revised proposals, the Government could be a net loser; and that the acid test will be whether more cases succeed? In that context, I welcome the proposal to extend the recovery of the success fee and insurance premium from insurance companies, as opposed to taking them out of the victim's pockets. Will my hon. Friend comment on whether block contracting will still be permitted as part of these developments?
Mr. Hoon: We anticipate that more successful cases will be brought as a result of these proposals, because one of the advantages of allowing lawyers to participate and risk their own funds in the prosecution of cases is that they will have an interest in selecting good cases to take forward. We believe that that is a good thing. As for my hon. Friend's various more technical points, I hope that he will accept that we are concerned to take forward a modernisation of the justice system and that contracting will be a feature of it.
Mr. Edward Leigh: The Minister used the word "modern"—naturally—several times in his statement. Why is it necessarily modern or right to move

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in the American direction, towards a highly litigious society plagued by unscrupulous lawyers, in which doctors and others who work in the public interest are saddled with huge insurance costs?
Mr. Hoon: I do not accept for a moment that we are moving in the American direction. I hope that the hon. Gentleman will accept that we are seeking to achieve a situation where only good cases are brought before the courts and our courts are not occupied by cases of dubious merit that are drawn out over weeks, months or even years. That will be precisely the opposite of the American experience. We do not intend to go down that route.
Ms Hazel Blears: One of the attractions of conditional fee agreements is that they should free considerable resources to enable us to extend our community legal service. That will be of great assistance to my constituents in the inner city, where legal advice is often thin on the ground. Will my hon. Friend tell us about the time scale for the community legal service and when we can hope to see some flesh on its bones?
Mr. Hoon: I am grateful for my hon. Friend's observations. Unless we can control the cost of the existing traditional legal aid system, we shall not have the resources to create a community legal service. Work is being conducted as a matter of urgency in the Department. A team has been established to develop proposals for a community legal service. I hope to be able to tell my hon. Friend the outcome of that work as soon as possible.
Mr. David Ruffley (Bury St. Edmunds): The Minister skated over the crucial issue of the affordability of insurance premiums for those poorer households that want to go down the conditional fee route. Which insurance companies has he spoken to? Have they given him reassurances that they can price insurance policies so that the premiums are affordable to the poorest?
Mr. Hoon: Ministers and officials in the Department have had meetings with a range of insurance companies. The speech in Cardiff last October in which my right hon. and noble Friend the Lord Chancellor set out the principles has concentrated minds remarkably. Lawyers are thinking more constructively. The insurance industry is interested in such work. The average cost of PI insurance is in the order of £155. Insurance products are being made available that will avoid those costs being borne by individual litigants who are unable to meet them. There are a variety of ways of funding insurance. A partnership between insurers and lawyers to sustain the costs of litigation in this developing market should satisfy the hon. Gentleman.
Mr. Michael Jabez Foster: I congratulate my hon. Friend on having listened and on making it clear that this is not a cost-cutting exercise, but a means of redistributing the funds available. When litigants cannot afford to take out insurance, would it be possible for the premiums to be paid from the transitional fund? Would it be possible to extend legal expenses insurance, perhaps by tax relief, so that many more folk could choose solicitors without personal cost?
Mr. Hoon: My hon. Friend has made valuable suggestions in the past. I am grateful to him for
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acknowledging that we have listened to him. I hope that he accepts that I cannot give him an answer today on his further suggestions, but we shall look at what he has said.
Mr. Elfyn Llwyd: I have mentioned previously two savings that the hon. Gentleman's Department could make without affecting anyone. First, an appointments system in magistrates courts would save £42 million at a stroke. Secondly, in family and ancillary relief cases, arguments over the slightest issues can often result in lawyers' fees 10 or 12 times greater than the sums being argued about. May I draw the hon. Gentleman's attention to those economies before he hits people who validly want to make personal injury claims and have no lawyer to take them on?
Mr. Hoon: The process of modernisation of the justice system will continue on a number of fronts simultaneously. I assure the hon. Gentleman that we shall consider carefully any proposals for saving money in the magistrates courts and on family cases. We shall establish a system of contracting, which will bear down on the considerable costs of family work.
Fiona Mactaggart: Does my hon. Friend agree that, in most areas of public expenditure, there are robust mechanisms to ensure the quality of the service that the public are paying for? Is the proposal for allowing perhaps only a limited number of expert firms to take on medical negligence work a first step so that in other areas where specialist legal knowledge is needed, we might examine ways of ensuring quality for people who depend on legal aid?
Mr. Hoon: That is exactly the direction in which the Government intend to go. I hope that the use of experts in relation to medical negligence cases will establish a useful precedent for the use of expert lawyers elsewhere. Once Parliament has approved any legislation that we bring forward, contracting will allow us to contract only with those who are expert and knowledgeable in particular areas of law. That seems a wholly welcome development, for the benefit of practitioners, and, above all, for the benefit of those whose cases go before the courts.
Mr. Richard Allan: The Minister will be aware that many disadvantaged people use law centres to access the legal system. Law centres depend on voluntary workers, solicitors and bits of local authority spending. Does he envisage direct Government support for law centres as part of his legal aid reform package?
Mr. Hoon: Very much so. Indeed, in the summer, Parliament approved changes in statutory instruments that allow legal aid money to be used to pay the salaries of lawyers who work in law centres and for citizens advice bureaux and similar advice-giving agencies. As part of the community legal service, I look forward to an extension of that provision, to move the traditional legal aid away from simply supporting particular cases towards supporting institutions that are providing advice and assistance to those most in need.
Mr. Ross Cranston: I, too, warmly welcome my hon. Friend's statement. Does he agree that, parallel to the changes in the legal aid system, we need to

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be thinking about new ways of resolving disputes? I know that his Department is involved in developing protocols, for example. Does he agree with the Woolf inquiry recommendation that private ombudsmen or alternative forms of dispute resolution need to be encouraged?
Mr. Hoon: My hon. Friend was a very distinguished member of the inquiry. He probably knows rather more about the details of the preparation than even I do. I am most grateful to him for his suggestions. The Government are determined to develop alternatives to going to court. Mediation is certainly one. A range of other options are available to us. Anything that can reduce the cost and time taken in litigation must be welcomed.
Mr. Dominic Grieve: Does the Minister agree that one of the consequences of the proposals is that the power of the state will be greatly increased? The system will involve discrimination by the state about which categories of litigation should command state support through legal aid.
In that context, the Minister made a differentiation in ring fencing housing cases but excluded, as an example, disputes between neighbours over boundaries. It is my experience that disputes over boundaries often involve the harassment of a person with no means by a neighbour with considerable means and a willingness to resort to litigation, which makes the life of the former a complete misery. How is the distinction between the two categories of housing and boundary disputes to be drawn?
Mr. Hoon: If the hon. Member will forgive me for saying so, I did not entirely follow his reasoning about the power of the state. That may be my fault. I assure him that legal aid will continue to be available to those who wish to bring actions against the state in its various guises.
On neighbourhood disputes, the issue is not whether the state has an interest in determining who should or should not bring a case but whether it is possible to fund such a case—whether by legal aid or some other means. We are simply proposing—I hope that the hon. Member will respond to the consultation—that, in disputes between neighbours, particularly over where a fence should be or how much land is owned by one party or the other, a fund is available which allows such litigation to take place on the basis of conditional fees, rather than having to expend taxpayers' valuable and scarce resources on paying for such private disputes.
Mr. Gareth Thomas: May I welcome my hon. Friend's statement? Those who have been involved professionally in this area know that radical reform to improve access to justice is long overdue. However, as I am sure that he would agree, difficult questions need to be resolved. Will any fixed costs under any fast track for litigation which may be developed take into account the fact that, to some extent, solicitors will be using successful cases to subsidise unsuccessful cases?
Mr. Hoon: My hon. Friend knows that the question of fixed costs and the regime that will operate are subject to separate consultations. He has made his views on the matter known on previous occasions. We are still
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considering the results of that consultation, and will continue to do so before bringing specific proposals before Parliament.
Mr. Steve Webb: On affordability, the Minister suggested that the figure of £150 or so, which would be way beyond the means of the poor, might be covered by some sort of further insurance for legal expenses. However, as the poor typically cannot afford to insure even the contents of their homes, would not taking out further insurance—unless they were forced to do so—be the last thing that they would think of doing?
Mr. Hoon: I am sorry if I gave that impression to the hon. Gentleman. What, essentially, I would say about such cases is that there is no reason why innovative insurance products should not take up the cost of the up-front insurance—it is not always absolutely necessary for someone to pay the £150 in advance of litigation. Alternatively, there is no reason why a firm of lawyers, confident of the outcome, should not meet the cost of insurance in an appropriate case. I sought to explain that we expect partnerships to develop between lawyers and insurance companies, perhaps involving the banking sector, too, to allow such cases to go to court for such litigants.
Dr. Brian Iddon: Like other Members, I am worried about medical negligence cases, especially the serious cases involving the death of a young breadwinner. Is my hon. Friend aware that many such cases are carried all the way almost to the day of entering court, when everything is almost proven, but that, at the last minute before the court hearing, solicitors try to put pressure on plaintiffs to drop cases or to accept paltry damages out of court, on the ground that the legal aid, which appears to have been capped, is running out? Does he agree that when so much legal aid money has been spent and the case is almost proven, it should go to court so that justice is seen to be done? I have given my hon. Friend an example of such a case, although obviously I cannot cite the details now.
Mr. Hoon: I appreciate my hon. Friend's concern, and I would certainly welcome from him in writing the details of any particular case; I hope that he will accept that it would not be appropriate for me to comment on a particular case at this stage.
It is unlikely that a legal aid certificate will run out. One of the problems with legal aid is often that once it is granted it supports a case to the conclusion of a court hearing, even when those who have heard the case might judge that it was not entirely appropriate for it to have been brought in the first place. The Department has received several representations from judges questioning whether legal aid should ever have been granted in certain cases.
I hope that my hon. Friend will accept that our proposals for medical negligence cases will guarantee access to legal aid for the moment for those who presently enjoy it, but will also point the way to significant change by ensuring that only those who are expert and specialist in the field will be able to act on behalf of plaintiffs. I hope that that safeguard will satisfy him that we are carefully considering the position of such plaintiffs.
Mr. David Kidney: Several hon. Members have made suggestions about the best use of any savings

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to public funds that may result from conditional fee agreements. Can the Minister confirm that such savings will be available for use, rather than being returned to the Treasury? If so, what will be the role of regional legal services committees in deciding their own regional priorities on such matters as extending eligibility and paying for more local law centres?
Mr. Hoon: I am grateful to my hon. Friend for his observations. I have made it clear that to fund our manifesto commitment to create a community legal service, the Government need first to bring the costs of traditional legal aid under control. When we have done so, we can consider ways of funding the community legal service. We see the regional committees as providing a local element in terms of identifying the needs of different parts of the country. In rural areas, there may be different needs and priorities, and we expect that the regional committees will be in a position to identify those and to communicate local needs and concerns to the Legal Aid Board.

Welfare of Broiler Chickens
4.29 pm
Mr. Bill Etherington: I beg to move,
That leave be given to bring in a Bill to protect the health and welfare of broiler chickens kept in indoor husbandry systems.
It is almost two years to the day since my hon. Friend the Member for Mansfield (Mr. Meale) proposed a similar Bill. I thank him for his endeavours, and I pay tribute to Lord Beaumont for his work in the Lords on this matter. I should also like to thank Compassion in World Farming, and its legal and political officer, Peter Stevenson, for their assistance, advice and encouragement.
To avoid any confusion, I should point out that two flocks of hens are reared in this country. One, battery hens, is reared purely to provide eggs. That involves birds being kept in small cages. I have seen this, and I was not terribly impressed by the system. The other flock is broiler chickens, which are raised purely for meat. Over 80 per cent. of those birds are kept indoors in captivity.
I propose the Bill because the only legislation on the matter—which, in my view, is totally inadequate—is the Welfare of Livestock Regulations 1994. Although the regulations cover battery hens, cattle and pigs, there is no regulation covering broiler hens. This matter needs to be addressed and corrected. All we have at the moment is a Ministry of Agriculture code of practice which is inadequate in the way in which it addresses the density of birds on the ground and, according to the British Poultry Meat Federation—which is not sponsoring the Bill—is not adhered to and has no legal status.
There can be up to 40,000 birds in large sheds deprived of natural light. As long ago as 1992, the Farm Animal Welfare Council advised legally binding regulations, rather than leaving the matter to what is little better than self-regulation by the breeders.
The underlying problem is the selective breeding and rich diet feeding of the birds, which enables them to reach maximum weight in only six weeks—twice the speed of 35 years ago. This leads to endemic problems with the strength of the legs of the birds, and the failure to match the increasing body weight leads to crippling leg failure. Academic research has estimated that as many as 180 million birds per annum suffer in this way. The Farm Animal Welfare Council working group found such problems on practically every farm it visited.
Professor Webster, of Bristol university's veterinary school, has been particularly scathing after carrying out extensive academic research on the matter. It has been found that rapid forced growth affects the heart and lungs of the bird, and that the problem of dirty litter exacerbates the leg injuries. However, the British Poultry Meat Federation has objected to the wording of the clause in the Bill which refers to clean and dry litter.
I do not want to get bogged down in statistical nit picking. That has been used for many years in this House, and everywhere else, to try to cloud arguments. I will go no further than to refer to a judgment made last year by Mr. Justice Bell, who was dealing with the McDonald's libel case. He found that the overcrowding of the birds was "intentional and unnecessary", and, in his judgment, cruel. He found that the leg problems affected at least 7 per cent. of broilers. He also said that the welfare of

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between 7 and 31 per cent. of the birds was compromised by leg problems. I am not too concerned whether the percentage is seven or 31—whatever it is, it is too much. Regulations are needed to eradicate this unnecessary and cruel system.
The judge also examined the issue of broiler breeders—the small number of birds that are kept only for breeding. As they are fed so intensively in the early part of their lives, they have, in effect, to be starved so that they do not become too weak to breed, which leads to intense hunger and great discomfort. The judge said that it was highly likely that the birds felt hungry in human terms, because they spent an inordinate proportion of their time foraging, and consumed large amounts of litter.
Finally and most damningly, he stated:
"My conclusion is that the practice of rearing breeders for appetite, that is to feel especially hungry, and then restricting their feed with the effect of keeping them hungry, is cruel. It is a well-planned device for profit at the expense of suffering of the birds."
In his summary, he said:
"I find that there have been cruel practices relating to … the restriction of feed for breeders, the leg problems of broilers bred for weight gain, the stocking density in the last few weeks of the females' lives at least, the catching and handling of the broilers when caught for slaughter".
He also criticised some aspects of slaughter, although I shall not refer to them, as that is not the subject of the Bill.
I have given a copy of the Bill to my right hon. Friend the Minister of Agriculture, although he has not commented on it to me. I have also given copies to the Royal Society for the Prevention of Cruelty to Animals—which, when I have talked to it, seemed to be in favour—and to others. I urge all hon. Members, if they have not already done so, to watch the video produced by Compassion in World Farming, which shows graphically, far better than I could hope to describe, that the industry is barbaric.
The industrial spokesman of the British Poultry Meat Federation, Mr. Bradnock, did not invite me to visit any of the farms to which he referred. I accept that there have been improvements—largely because of public pressure; the public now perceive more clearly than ever before the
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value of animal welfare—but the industry and its representatives have totally refused to endorse any of the Bill's provisions.
The Bill would ensure that
"the broiler chickens are stocked at a density which does not exceed 21 kilogrammes per square metre;
the flock size does not exceed 3,000 broiler chickens".
It would also ensure that the chickens have legs that are strong enough to bear their weight, so that they can live in comfort. Density needs to be reduced so that flocks can be thoroughly inspected at least twice each day—any chicken that shows signs of discomfort can then be dealt with humanely.
Another of the Bill's provisions is that the litter should be kept clean and dry at all times. I should have thought that all hon. Members would accept that—unfortunately, the poultry meat industry will not. I hope that my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, who is present, will introduce Government legislation, because, as everyone knows, ten-minute Bills have little chance of being enacted. Nevertheless, I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Bill Etherington, Mr. Vernon Coaker, Mr. Ivor Caplin, Mr. Ken Livingstone, Mr. Chris Mullin, Dr. Nick Palmer, Mr. Harry Cohen, Angela Smith, Mr. Terry Lewis, Sir Richard Body, Mr. Roger Gale and Mr. Nigel Jones.

WELFARE OF BROILER CHICKENS
Mr. Bill Etherington accordingly presented a Bill to protect the health and welfare of broiler chickens kept in indoor husbandry systems: And the same was read the First time; and ordered to be read a Second time on Friday 13 March, and to be printed [Bill 136].
Mr. John MacGregor: On a point of order, Mr. Deputy Speaker. Is it not outrageous that we should have only 50 minutes left to discuss by far one of the most important parts of the Scotland Bill, because of the deliberate positioning of a long Government statement before it? Is there any way in which, in the interests of the House, the time can be extended?
Mr. Deputy Speaker (Mr. Michael Lord): I understand the right hon. Gentleman's point, but we are governed by a resolution of the House.

Orders of the Day

  Scotland Bill
  [6TH ALLOTTED DAY]
  Considered in Committee [Progress, 23 February].
  [MR. MICHAEL LORD in the Chair]

Clause 81

  SCOTTISH REPRESENTATION AT WESTMINSTER
  Amendment proposed [23 February]: No. 258, in page 37, line 32, to leave out from the word 'is' to end of line 33 and insert the words
  '120 per cent. of the electoral quota for England.'.—[Dr Fox.]
  4.41 pm
  Question again proposed, That the amendment be made.
  The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): I remind the Committee that with this we are discussing the following: clause 81 stand part.
  Amendment No. 259, in clause 114, page 52, line 13, at beginning insert—
  'Subject to subsection (3) below,'.
  Amendment No. 260, in clause 114, page 52, line 17, at end add—
  '(3) With the exception of an order relating to section 81, no order may be made under subsection (1) until each House of Parliament has approved any draft Order in Council which may be required to give effect to the first report of the Boundary Commission for Scotland to be submitted after 31st December 1997 under section 3(2) of the Parliamentary Constituencies Act 1986.'.
  New clause 6—Restrictions on voting rights of Scottish members of House of Commons—
  'As from the day on which the Parliament first meets, no member of the House of Commons representing a constituency in Scotland shall be entitled to vote in that House on any matter certified by the Speaker as relating solely to another part, or other parts, of the United Kingdom.'.
  New clause 16—Restrictions on voting rights of Scottish members of House of Commons (No. 2)—
  'Members of the House of Commons representing constituencies in Scotland may continue to participate in any vote in that House unless the Speaker deems the vote to relate to matters exclusive to England, or to England and Wales.'.
  New clause 19—Restriction on voting rights of Scottish Members (Committees on English Affairs)—
  '.—No member of the House of Commons representing a constituency in Scotland shall be entitled to vote in, or participate in any other proceedings of, any committee of that House established under any enactment or by the Standing Orders of that House, the functions of which are to consider matters exclusively in relation to England which are not reserved matters within the terms of Schedule 5 to this Act.'.
  New clause 22—Voting rights of Scottish members of the United Kingdom Parliament—
  '.—Scottish members of the United Kingdom Parliament shall by standing orders be entitled to speak but not to vote on matters which arise in that Parliament affecting only those parts of the United Kingdom other than Scotland.'.amendment No. 259, in clause 114, page 52, line 13, at beginning insert—
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  'Subject to subsection (3) below,'.
  Mr. Tam Dalyell: The guillotine falls at 5.30 pm, so we have 50 minutes. I hope that the Lords have a serious discussion of the clause, because it represents a geological flaw in the Bill.
  With the benefit of the marvellous advantage of hindsight, we can see that it is perhaps unfortunate that, in 1977, the late Enoch Powell invented the sobriquet "the West Lothian question" as shorthand for the real dilemma with which I wearied Michael Foot and the late John Smith, who was doing the job now performed with less overt bad temper by my hon. Friend the Minister for Home Affairs and Devolution. If my hon. Friend entertains exasperations when I speak, he is better at concealing them than John Smith was.
  I have come to believe that Mr. Powell did the argument a disservice, because the shorthand tends to camouflage the real dilemma, which is not about parliamentary niceties or, as my right hon. Friend the Secretary of State put it, the Schleswig-Holstein question, but about the exercise of power and the principle of direct relations between government and the governed. Power devolved is not power retained.
  Mr. John McAllion: Hear, hear.
  Mr. Dalyell: My hon. Friend says, "Hear, hear," and his interpretation is important; we do not want him, my hon. Friend the Member for Falkirk, West (Mr. Canavan) and my other hon. Friends to feel deceived.
  In practical terms, I do not suppose that matters will come to a head during this Parliament, in which one party has a majority of 180. The size of the majority submerges the problem. As soon as Holyrood, or Strathclyde house, or whatever we call it, is inaugurated, the Chief Whip will have to get along without my vote on purely English business.
  The self-evident problem becomes acute when a Government party has to depend on its favourable majority in Scotland to get its English business through the House of Commons. Then the Government really will be asked: how come whoever is the Member of Parliament for Linlithgow or for Livingston can vote—and vote decisively—on policies for Liverpool and London on matters that not only English Members but Scottish Members cannot trespass upon in relation to Linlithgow or Livingston, unless of course, clause 27(7) will be operated differently from how we have come to believe?
  To put it in practical terms, I suppose that it is really the Two Feathers in Hebden Bridge question so beloved of Bernard Ingham. I will spare the House the expletives, but the Two Feathers question is this, "What are all those … jocks doing coming … telling us what to do when they've got a … Parliament of their own?"
  That is the question that will be asked. Therefore, my question is, how long can such a situation last? It simply cannot endure in anything like the form that the Bill proposes. Whatever else it is, the Bill is not a settlement. The deal must not be seen by the English majority, either at the outset or as experience builds up, as giving Scotland one-sided privileges and advantages of an unacceptable type and scale.

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  We all have to curtail our speeches, so the House will forgive me for reading one quotation from Sir Michael Quinlan, one of the cleverest civil servants of his generation, who was called in by John Smith to tackle precisely those problems. Writing in The Independent on 2 January 1995, Sir Michael said:
  "But this leaves the enormous and still unanswered 'West Lothian' question … If we take away from Westminster and give to a Scottish Assembly effective law-making power over, say, education, health and transport in Scotland by what possible right do the 70-odd"—
  or 60-odd—
  "Scottish MPs at Westminster continue to vote on education, health and transport for England? But if they are excluded, there stands to occur a situation—given particularly that, while Scotland is usually Labour, England is usually Conservative—in which there is a settled Labour majority at Westminster on some subjects and a Conservative one on others. (That would have been the case for certainly three and probably four of the five Parliaments in which Labour has governed since 1945.)
  Such a political arrangement would not be coalition or even cohabitation. Given the interdependence, especially in tax and expenditure terms, of large areas of public administration, it is simply not possible to run coherent parliamentary government in this way."
  That is the considered view of the civil servant who, along with Sir John Garlick, was asked by John Smith, Bruce Millan and Michael Foot to give his mind to the problem in the late 1970s. Sir Michael Quinlan's view at least has to be answered in depth, and it cannot be answered this afternoon before 5.30 pm. On Report or in the House of Lords, we should hear a considered Government answer.
  Finally, judging by all the arguments so far, I see no reason to retract the view that I expressed constantly and daily during the referendum, that, unfortunately, we are on a motorway without exit to an independent state.
  Mr. John Major: I echo the remarks made by my right hon. Friend the Member for South Norfolk (Mr. MacGregor) about the utter unacceptability of the fact that the time permitted to discuss this, perhaps the most crucial and central part of the whole Bill—the part upon which this whole constitutional experiment may founder to the damage of the whole United Kingdom—has been squeezed by a statement that could have been left until tomorrow, and an important Bill on broiler chickens.
  Mr. McAllion: Will the right hon. Gentleman give way?
  Mr. Major: No, I shall not give way. I have things to say that are more important than answering the hon. Gentleman's questions.
  I am delighted to speak after the hon. Member for Linlithgow (Mr. Dalyell). Throughout the consideration of the Bill, he has bravely identified the difficulties inherent in it, as he did with its predecessor many years ago. He and I do not always agree. In Hebden Bridge terms, there have been moments when others, not myself, might have referred to him as a … nuisance, but the way in which he has campaigned against a very bad and blatantly wrong Bill that is self-evidently damaging to the United Kingdom redounds strongly to his credit. I much admire what he has done.
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  This bad Bill will do more damage to the United Kingdom than any Bill for generations, and will institutionalise advantages for Scotland and for Scottish Members of Parliament. The Bill will do more: over time, it will institutionalise resentment against Scotland and Scottish Members of Parliament, which is not a light matter for those of us who care about the unity of the United Kingdom.
  Sir Robert Smith: Will the right hon. Gentleman give way?
  Mr. Major: If the hon. Gentleman Will forgive me, I shall not. Many hon. Members want to speak, so I shall be brief.
  The key point—
  Mr. Andrew Welsh: The right hon. Gentleman has not attended a debate before today.
  Mr. Major: The debate is brief because there is a guillotine at 5.30 pm, and the Government have outrageously wasted most of the available time.
  The key point—what has become known as the West Lothian question—is the way in which the Bill will unbalance the constitution. As the hon. Member for Linlithgow said, what the Bill proposes is unsustainable. Bluntly, what justification is there for Scottish Members of Parliament being able to vote on education, health and other matters affecting my constituents in England, when they cannot vote on those matters as they affect their own constituents?
  There is no logical reason for Scottish Members of Parliament being able to vote on matters that affect the English, the Welsh and the Northern Irish, when English, Welsh and Northern Irish Members of Parliament will be unable to vote on those matters as they affect people who live Scotland.
  What would happen—the hon. Member for Linlithgow touched gently upon this point—if a Government party had an overall majority in the United Kingdom, but was in the minority in England?
  Mr. James Wallace: What happened when the Government party was in the minority in Scotland?
  Mr. Major: If the hon. and learned Gentleman cares to look back, he will see that previous Labour Governments have sustained a majority with Scottish Members of Parliament. The difference is that the Bill proposes that the Scottish Parliament will have exclusive responsibility for certain issues and the power to tax. If he does not understand that, he should listen to the debates and then contribute.
  Mr. Alex Salmond: Will the right hon. Gentleman give way?
  Mr. Major: No, the hon. Gentleman can make his speech in a few moments.
  Mr. Salmond: On a point of order, Mr. Lord. The former Prime Minister, for whom I have some regard, seems to be unaware that we are continuing a

  1083
  debate that we were having 10 days ago. Is it in order to attend the second half of a Committee debate and refuse to take interventions?
  The Second Deputy Chairman: It is up to right hon. and hon. Members to decide whether to take interventions.
  Mr. Major: I shall deal with that point briefly. Of course the debate was going on the other evening, but it was agreed that there would be a further two hours of debate today. There has not been a further two hours of debate, and some hon. Members who want to speak on this issue will not be able to do so. I intend to be brief so that the hon. Gentleman can contribute, if only he will cease interrupting.
  I return to the point about what will happen in England. Will the English be treated less favourably constitutionally than the Scots under this Bill and the Welsh under the Government of Wales Bill? That is not sustainable. With their majority, the Government can drive the Bill through the House, and show every intention of doing so. I beg the Minister for Home Affairs and Devolution to consider what that will do over time to opinion in England. Does he really want to arouse nationalism across an England that resents the Scots and the Welsh? I do not want that to happen; yet I fear that the nature of the Bill, and the way in which the Government are driving it through the Commons, will lead to such an outcome.
  Is there a credible answer to the West Lothian question? Not without a rebalancing of the constitution once the Bill has become law, as it now almost certainly will.
  Mr. Norman A. Godman: Will the right hon. Gentleman give way?
  Mr. Major: If the hon. Gentleman will forgive me, I will not.
  No one in the House has any doubt about my feeling on the issue over many years. I have never made any secret of the fact that I think that the sort of constitutional change that is proposed is very short-sighted. It is being introduced for party political advantage, and over time—a long time—it will backfire. I am concerned about the long-term future of the United Kingdom, not the short-term advantage of politicians who see some advantage in supporting the Bill at the present time.
  The only gainers from the Bill, over time, will be those who genuinely favour—the hon. Member for Banff and Buchan (Mr. Salmond) does, and has made no secret of it—a separatist Scotland, a Scotland broken away from the rest of the United Kingdom. The Government, who claim that that is not their position, will have to answer at the bar of history for having brought about circumstances that may create exactly that eventuality.
  If the Bill goes through, it will be necessary to bring about further constitutional change to minimise the damage and the resentment across the United Kingdom that the Bill will create. I do not know whether that means an English Parliament—which I do not myself favour—an English Grand Committee, or some other stratagem. Clearly, much more thought will be needed than we can give this afternoon, but changes there will undoubtedly need to be once the Bill is on the statute book.
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  I say that changes will have to come, because the constitutional vandalism of this ill-thought-out pig's breakfast of a Bill will demand further change elsewhere in the United Kingdom to protect the position of people elsewhere in the United Kingdom, and to protect the working practices of the House.
  Sir Robert Smith: Will the right hon. Gentleman give way?
  Mr. Major: Surely the hon. Gentleman heard me say that I would not give way. I want as many hon. Members as possible to be able to speak.
  I have made it clear repeatedly over the past seven years, and over the past few months when the Bill has been contemplated, that I absolutely understand, and admire, the sense of national pride in Scotland. No one disputes that. I believe, however, that the Scots will find that the menu that has been laid before them is a menu without price. There is a price to be paid, in Scotland and elsewhere—
  Mr. McAllion: You paid the price.
  Mr. Major: If I did, I paid the price for standing up for what I thought was right for the United Kingdom. I did not stand up for what I thought was right for Labour party political interests, which is what the present Government have done.
  Scotland cannot have extra privileges; it cannot have more public expenditure; it cannot have excessive representation in the House; and it cannot have constitutional advantages over the rest of the United Kingdom—if that United Kingdom is to remain united, as I wish it to. This is a divisive Bill. Let us not mince words. Not so much in the short term, as in the long term, the Bill will damage the unity of the United Kingdom dramatically. It brings change, and it will create a demand for more change. It is a constitutional whirlwind, and we will reap the harvest—not just in the House, where we can cope with our procedures, but in regard to something far more important and far more long-standing: the unity of the United Kingdom itself.
  On that issue, the House may not be able to make changes in the Bill, given the majority in favour of it; but the time will come when those who railroaded it through will have to answer for what they have done, and others will have to correct the errors that they have made.
  5 pm
  Mr. Ian Davidson: It is a privilege to follow the former Prime Minister. However, it is fair to say that he has espoused views that were espoused during the general election campaign; views that led to the Conservative party's representation in Scotland being reduced from 10 seats to no seats—"Nul points", as one would say in the Eurovision song contest—and which led his party to the biggest defeat in living memory in a British general election.
  The British people have taken account of the arguments that the former Prime Minister makes, and rejected them decisively. The Scottish people had the opportunity to hear the views of the right hon. Gentleman and his colleagues in the debates before the referendum, and almost every part of Scotland rejected those views

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  overwhelmingly. Is it not significant that the only Scots that the right hon. Gentleman can find to argue his case are those who could not get elected in Scotland, but had to flee south of the border to find a safe seat in England? In Scotland there is no support for his views.
  Those who seek to destroy the Union speak with the former Prime Minister's voice, and that of the nationalists. The status quo before the general election was not sustainable. Scots made it clear that they wanted to retain the Union, but that they wanted a system of devolved authority—which, I am glad to say, the Government are setting up.
  However, I return, if I may, to amendment No. 258. I took the trouble to be in the Chamber during the previous discussions on this matter and, although I welcome the former Prime Minister's belated interest in these matters, it is significant that this is the first time, I believe, that he has attended the Committee.
  The Conservative amendment suggests not that Scottish representation should be reduced to the same level as that in England and Wales, but that it should be reduced even below that, so that the electoral quota for Scotland should be 120 per cent. of that for England. Evidently the Tories have written off Scotland. They realise that they are, and will remain, unpopular there, so they intend to play the English nationalist card.
  When my hon. Friend the Member for Linlithgow (Mr. Dalyell) mentioned Enoch Powell, I recalled how Enoch Powell used to deplore racism while he was stirring it up. Those who deplore English nationalism while stirring it up are doing the same thing. They are trying to pander to the worst in our society because they have no positive suggestions to make on this subject, or on many others.
  I do not accept that England is an undifferentiated mass. I have been struck by the welcome given to Scottish devolution by many people in England who want something similar for their part of the country. I believe that differing speeds of devolution will develop throughout England and Wales. I believe that the constitution of this country can accept anomalies; that it can accept differences; that it can accept different ways of progressing.
  If the House is supreme, I see no reason why it cannot decide that some matters will be devolved to Scotland, to Wales, to London or to the north of England, without shattering the essential community of the kingdom. It is not as though powers were being devolved in a way that bypassed the House. A decision of the House will devolve those powers. In that way, the House, having taken that decision, is consciously deciding to live with the elements of anomaly that might flow from it.
  My hon. Friend the former Member for West Lothian, now the hon. Member for Linlithgow, made a very interesting contribution. I enjoyed his speech of resignation from the Labour Whip. I am struck by the extent to which all Labour Members except "Oor Tam" are out of step. The basis on which Labour candidates stood at the general election was quite clear, and we clearly presented our case to the electorate. It is also clear that his arguments about Labour Members feeling obliged to refrain from voting on other matters did not reflect Labour's policy.
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  The poll tax was imposed on Scotland by the votes of English Members. In Committee and in the House, I and many others watched local government in Scotland being butchered against the will of the overwhelming majority of Scottish Members by an English majority. That was accepted to some extent because Scotland was part of the Union, and Parliament had decided how such matters were to be arranged. Similarly, it is reasonable and fair to conclude that, when Parliament determines that there is to be devolution, those who were previously in government and who call themselves democrats should be prepared to accept Parliament's democratic will.
  The tactics that are being adopted, especially by some of those who I thought had the seniority and experience to know better, remind me of the baby who throws his rattle out of the pram because it cannot get its own way. It is about time the Opposition accepted that they lost the election, that we and those who support us have a clear mandate to implement our policies, and that we intend to do that.
  I welcome the fact that the Tories have written off Scotland, and that they will presumably decide not to put up candidates for election to the Scottish Parliament. That gives us an even greater prospect of a large Co-operative party representation in that Parliament.
  Mr. Michael Ancram: I join my right hon. and hon. Friends—
  Mr. Salmond: On a point of order, Mr. Lord. To my certain memory, Scottish National party Members were standing in the earlier debate and were not called. They have been rising in this debate and have not been called. Has the Chair taken any cognisance of the fact that the Scottish National party currently has four times the public support of the Conservative party in Scotland and that we have a right to have our view heard in the Committee?
  Sir Robert Smith: Further to that point of order, Mr. Lord. Liberal Democrat Members also rose in both debates, and we have a distinctive Scottish view to put to the Committee. That view takes some of what Conservative Members were trying to achieve but puts it in a constructive form to try to get something out of the Government. That voice has not been heard in Committee. Amendment No. 258 has not been exposed to scrutiny in terms of its threat to the Union because of the way in which it debases the Scottish voter on United Kingdom issues. Those issues should have been put to the Committee.
  Mr. Edward Leigh: Further to that point of order, Mr. Lord. Do you agree that it does not add to the dignity of Parliament when the most important constitutional issue that faces us will receive a total of one hour and 15 minutes debate?
  The Second Deputy Chairman: It is for the Chairman to select who will speak and I remind hon. Members that points of order use up the little time that is left.
  Mr. Ancram: I should like to respond to the points of order by the hon. Members for Banff and Buchan (Mr. Salmond) and for West Aberdeenshire and Kincardine (Sir R. Smith). It may not have occurred to

  1087
  them that, for the first time in our discussions on the Bill, we are debating the impact of constitutional reform on the rest of the United Kingdom. For that reason my right hon. Friend the Member for Huntingdon (Mr. Major) and some of my hon. Friends who are not Scottish Members have a direct interest in the matter. I, too, deplore the fact that the debate has been curtailed. That does not bode well for the spirit of agreed programmes in future. I give notice that I shall seek to return to that issue on Report.
  The debate on the amendment, which was ably moved by my hon. Friend the Member for Woodspring (Dr. Fox) is simply about unfinished business. We face a constitutional vacuum that has been created by a process of one-sided devolution. If that vacuum is left unfilled it will in time seriously destabilise our constitution. It is caused by the residual imbalance that has been left by unilateral devolution to Scotland and has become known as the West Lothian question, but which more accurately should now be known as the English dimension.
  The debate is largely, if not exclusively, about the role of Scottish Members of Parliament at Westminster after devolution and the constitutional propriety of their being able to vote on English matters which, because of devolution, they cannot vote on in relation to their own constituents. It points to the inevitably part-time nature of the Scottish Member of Parliament at Westminster after devolution and the consequent dangers of de facto marginalisation. It foreshadows the potential for mutual alienation between Scots and English, which was so rightly foreshadowed in the remarks of my right hon. Friend the Member for Huntingdon.
  It is because of those dangers and because of our interest in avoiding them that we believe that they must be faced up to now. If ever there has been a time for not burying the political head in the sand, this is it. Even if the manner of its announcement through the columns of The Scotsman this morning was a gross insult to the House, the Government's new-found readiness to take the question seriously, at last, must be welcomed.
  This debate is not about doing down the Scots or stirring up the English, however much nationalists and others would like to portray it as such. That suggestion not only insults the intelligence of both Scots and English, but irresponsibly disregards the fundamental problem.
  Sir Robert Smith: Will the right hon. Gentleman give way?
  Mr. Ancram: No, I shall not give way as time is short. The hon. Gentleman knows that I am usually very good at giving way, but I want to make my speech and give others the opportunity to speak.
  If we do not begin to explore now how the problem might be resolved, we will live bitterly to regret it in years to come. Even the Government, if The Scotsman was right this morning, now realise that. The amendments were tabled to begin the exploration. I am sometimes asked why we have only now started on this process. The reason is simple—the question has arisen only because of this Bill. What, in terms of the referendum, was a Scottish debate exclusive in its franchise to Scotland, is now a United Kingdom debate because the outcome of the Bill will impact upon the constitution of the United Kingdom as a whole.
  There are no simple answers and no quick fixes. There are no off-the-shelf constitutional solutions. We must identify the options or the elements from which solutions
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  might be drawn and then evaluate the feasibility and desirability of any particular approach. For those reasons, the amendments are, by definition, probing. They are the early pieces on the board. There is only one that we will press to a Division because of its immediate significance, as I shall explain later.
  Amendment No. 258 deals with the number of Scottish Members of Parliament at Westminster after devolution. It stems from the principle already enshrined in the provisions of the clause that devolution removes the justification for the relative over-representation that currently exists in favour of Scotland in the Westminster Parliament. The clause would establish relative parity—but I have to say that changing the numbers will not, of itself, answer the West Lothian question. Numbers are the symptom rather than the cause. They are not, and never have been, a constant, but they can play an important part in creating both the perception and the reality of fairness and balance.
  If we are to understand the dangers of the constitutional vacuum in relation to numbers, we must look at the role of the Scottish Member of Parliament at Westminster after devolution.
  Mr. Eric Clarke rose—
  Mr. Ancram: I have said that I will not give way.
  By definition, the Scottish Member of Parliament at Westminster, after devolution, will have far less to do than his English counterparts. Leaving aside the time-consuming constituency mail bag, which would largely disappear, the Scottish Member of Parliament would no longer be able to ask parliamentary questions on domestic constituency matters such as housing, health, education, roads, planning and so on, or take part in debates on those matters. How much of what is left will be taken up by English matters, questions, debates, votes and other issues relevant to the United Kingdom Parliament? If the English aspects are taken away, what will be left?
  On any view, the Scottish Member of Parliament at Westminster, after devolution, will be part time and will be seen to be part time. Dangers flow from that. The lessons of Northern Ireland and Westminster during the Stormont years are salutary. Would the same effect of marginalisation of Scottish Members of Parliament occur after the Scottish Parliament is up and running? Would the part-time perception of those Members of Parliament further exacerbate resentment if strictly English business was carried, on the backs of their votes? Those of us who believe in the Union Parliament see those as real dangers that must be averted. To do that, we need to look at the question of numbers in this context, even if, at this stage, it is only to probe.
  There is one further important issue relating to numbers and boundary changes, which arises under amendment No. 260. Under the provisions of the Bill, there will be an inevitable reduction in the number of Members of Parliament after the boundary commission's report, which in turn will mean a commensurate reduction in both categories of Members of the Scottish Parliament. Under the Bill, within five years of being set up and Members being elected, the Scottish Parliament will be subject to a cull. Between 25 and 30 of the 129 MSPs will disappear. It is hard to see how that can be in the best interests of an infant Parliament striving to establish itself, knowing all

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  the time that it is about to be reduced, but not knowing how or where, and with its Members constantly living under the threat of the axe.
  It therefore makes sense that if such a reduction is to take place, it should happen before the Parliament comes into being. Our amendment would achieve that. It would not cause any delay because if the boundary commission immediately began its work under the revised criteria, there is no reason why it should not be completed and implemented in time for the elections to the Scottish Parliament. If the Government do not accept the amendment, I give notice that, at the appropriate moment, I will press it to a Division.
  5.15 pm
  I want to look at the pieces on the board relating to the English dimension. One that was mentioned by my hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) is the Government's initiative to create regional assemblies in England. He rightly warned that it would be the thin end of the wedge to the Europe of regions, and, indeed, there is no evidence of any widespread demand for such regionalisation in England. It does not arise out of the amendments before us, so I add only that it would not, in any event, answer the West Lothian question, unless those regions were given legislative powers which are not even available to the National Assembly for Wales. In fact, it is part of a different, if no less worrying agenda.
  That leads me to the three most obvious options that offer themselves to resolve the constitutional vacuum, which is the main object of our amendments. The option of an English parliament, separate from this Parliament, was mentioned by my hon. Friends the Members for Rochford and Southend, East and for Woodspring. It was canvassed in a private Member's Bill in January by my hon. Friend the Member for Billericay (Mrs. Gorman). It would certainly resolve the immediate problem, but it would create others. This Parliament would be left effectively as a federal parliament which, without major reform, would contain none of the checks and balances that a federal system would usually require. It would encapsulate the problem that, of the four elements within the United Kingdom, one—England—would represent more than 80 per cent. of the whole. The imbalance would be overwhelming and almost impossible to resolve with any degree of overall fairness. I can think of no comparable example elsewhere from which we might seek answers to the problem, but it must nevertheless remain a piece on the board.
  The concept of an English Grand Committee is raised in new clause 19, which again is designed to probe. It now appears suddenly to be the preferred option of the Government, possibly brought about by the honourable pressure exerted by the hon. Member for Linlithgow (Mr. Dalyell). I have already made clear my view of the deplorable way in which the Government made known that preference, but it begs certain questions about which I have already written to the Secretary of State. I am sorry that he is not here this afternoon to answer them. However, I want to reiterate them.
  We want to know the status given to the proposal—we want to know if it is agreed Government policy. Has it been discussed by the Cabinet or is it merely something
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  that has arisen internally from the Scottish Office? Why was the announcement of an English Grand Committee made public in a briefing from the Scottish Office, when it relates exclusively to non-Scottish matters? Are we to expect proposals to be put before the House to achieve that policy at the same time as the provisions of the Scotland Bill become operative?
  There are a number of difficulties in that approach. What has been proposed would have to be more than the usual Grand Committee, which is ultimately subject to the authority of this House as a whole. For example, it would be required to take all stages of legislation relating to England, or England and Wales, if it were to resolve the West Lothian question. That would immediately raise questions about the status of the Westminster Parliament while the English Grand Committee was in session. It would also raise the financial questions alluded to by the hon. Member for Linlithgow last week. Without its own resources, what would be its relationship to the Treasury, which would inevitably remain a United Kingdom Department? In the event of financial conflict, which of the two would govern, and could a United Kingdom Government with a small majority reliant on Scotland actually pursue an economic policy of any consequence?
  The final obvious option—which might be described as designation—merges in our new clause 16 and in new clause 6, which was tabled by my hon. Friends the Members for Rochford and Southend, East and for Aldridge—Brownhills (Mr. Shepherd), whereby Scottish Members could not vote on matters certified as being exclusive to England and Wales.
  Designation is seemingly the neatest and simplest answer to the English dimension. However, it would immediately create two categories of Member of Parliament at Westminster and threatens the concept of a Union Parliament, in which all Members of Parliament are equal. It would also again beg the financial question: what restraint would be put on English Members in not undermining the overall economic strategy of the United Kingdom Government, while still allowing them to exercise their exclusive legislative rights? The potential for conflict immediately becomes apparent.
  In yesterday's newspapers, the hon. Member for Linlithgow unilaterally declared a self-denying ordinance of voluntary designation. Although I have no doubt that he would honourably abide by such an ordinance, he knows—he alluded to it himself in this debate—that the pre-1972 Ulster experience was not so secure and was not without its price. That experience ran seriously into the shoals in 1965, when Northern Ireland Members attempted to reverse their marginalisation and to reassert their involvement in the major political and economic issues of the day by voting on steel nationalisation—which did not impact directly on Northern Ireland, although its wider economic effects certainly did. The unhappy reaction of the then Prime Minister, Harold Wilson, provides a good example of the difficulties of designating with any precision or fairness in those circumstances.
  Therefore, there is no option which is not in some way constitutionally flawed—although that does not mean that we should simply jettison all options. There may be variants or combinations of options that are as yet unexplored. There may be other, undiscovered options with which current options can be melded. That is why

  1091
  this debate, and the wider debate outside the House—which I hope that we are helping to generate—are so important.
  The corrosive question of the English dimension will not go away. Its consequences may not be immediate, but that is no excuse for ignoring it. Neither is it sufficient to say that we would not have started from here, and simply walk away. An answer must be found, and that answer must be found before the problem arises. When the problem arises—as, one day, it inevitably will arise—it will be too late, and the fires of nationalism that will ignite on both sides of the border will tear at the heart of the United Kingdom.
  We will not resolve the problem today; but the search for a solution starts today. We must not fail.
  Mr. Salmond: I should like to spend a couple of minutes on the mean-spirited and foolish speech by the former Prime Minister, the right hon. Member for Huntingdon (Mr. Major). On the Friday before the general election, I spent the evening in Northampton with the former Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), where we participated in a bout of "Any Questions"—during which I was cheered to echo in middle England, and the former Chancellor was booed off the stage. If there had been an election that night at that meeting, the Scottish National party would have won Northampton. On that programme, I asked the then Chancellor of the Exchequer if he could name one instance this century in which any piece of domestic English legislation had been dictated by the votes of Scottish Members, and he could not give one single example.
  If we contrast that record with how, on one occasion after another, and on one issue after another, two successive Prime Ministers—Lady Thatcher and the right hon. Member for Huntingdon—forced down the throats of the Scottish people specifically Scottish legislation, the breathtaking temerity of the former Prime Minister in talking in this debate about the unacceptable theoretical possibility of the same happening in reverse is obvious.
  I do not object to an English Parliament—I think that it would be a thoroughly good idea—and I have absolutely no objection to an English Grand Committee. In the House, I have never knowingly interfered in English domestic business unless it had a clear Scottish implication. What I find totally unacceptable is the mean-spirited and divisive nature of the former Prime Minister's speech—crowding out hon. Members who spoke in the first half of the debate, and showing the House the face not only of English nationalism but of English prejudice.
  Sir Robert Smith: Amendment No. 258 deserves to be fully exposed for the threat that it is to the Union. The former Prime Minister, the right hon. Member for Huntingdon (Mr. Major) was very unwise to speak in a debate at the Bill's Committee stage without interacting with Committee members. Had he taken interventions, he might have been able to explain to voters in Scotland why—for some reason—he thought that, on United Kingdom issues, one of their votes should be worth only 83 per cent. of the vote of an
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  English voter. If ever there were a threat to the Union, it must be amendment No. 258, and the thinking behind it. In speaking to the amendment, the right hon. Gentleman advocated denying Scottish voters the same representation in the House on United Kingdom issues as other United Kingdom voters enjoy.
  It is far more important for the Government—in attempting to develop a way in which English Members of Parliament deal with only English issues—to take on board the spirit of new clauses 6, 16, 19 and 22. The history of the poll tax demonstrates, at least to Scottish Members, how bad it is for hon. Members to decide legislation that will not affect their own electors. Such a practice is bad in all circumstances.
  In our declaration to the constitutional convention, we argued that if legislation has been devolved by one Parliament, it should not be voted on by representatives of that Parliament. We should like a slightly better settlement, by using the Judicial Committee of the Privy Council to decide disputes. We should like the Government constructively to consider our proposals.
  The Minister for Home Affairs and Devolution, Scottish Office (Mr. Henry McLeish): I should like, by way of preamble, to say a few words about the speech by the former Prime Minister, the right hon. Member for Huntingdon (Mr. Major). I do not think that phrases such as "constitutional vandalism" or "dogs' breakfast" are worthy of him. On 11 September, a very loud democratic voice was heard in Scotland—when 1.7 million people voted for a Scottish Parliament and 1.5 million people voted for tax-varying powers. The principle underlying that result should be respected by all hon. Members—regardless of whether they are a right hon. or hon. Member, or whether they are in or out of government. The people have spoken, and it ill behoves the House to undermine that in any way.
  I tell the right hon. Member for Devizes (Mr. Ancram) that we have absolutely no plans to consider an English Parliament or an English Grand Committee.
  Mr. Bernard Jenkin: What about this article in this morning's press?
  Mr. McLeish: There was absolutely no foundation in that article—[Interruption.]
  The Second Deputy Chairman: Order. It is quite outrageous for the hon. Member for North Essex (Mr. Jenkin) to behave like that. He should know better. Will he, please, behave himself. An apology is called for.
  Mr. Jenkin: I apologise without reservation.
  Mr. McLeish: I am grateful to the hon. Member for North Essex for his apology.
  The important issue in this debate is the concern of Conservative Members. In asking the Committee to reject this group of amendments, I stress that the official Opposition are attacking the fundamental rights in the House of Scottish Members in the post-devolution era. It simply cannot be right to go down that very dangerous road. In a speech last week, the right hon.

  1093
  Member for Richmond, Yorks (Mr. Hague) mentioned four aspects of the West Lothian question that he would like to explore, although I shall deal with only one. The second aspect he mentioned was
  "the withdrawal from Scottish MPs of their voting rights over all legislation that does not apply to Scotland. In other words, the creation of a two-tier Westminster Parliament."
  That is the nub of the speeches made by Conservative Members in this debate. New clause 19 would apply the same standards—to exclude second-class Scots from voting in the House.
  There should be no two-tier mentality in the House. Conservative Members cannot get away with blustering and expressing synthetic indignation. The simple fact is that, under that smokescreen, they are attempting to move in a very dangerous direction. There is simply—
  Mr. Nick Hawkins: On a point of order, Mr. Lord. Can you advise the Committee, Mr. Lord, whether it is in order for the Minister to say that something is utterly impossible, whereas the hon. Member for Linlithgow (Mr. Dalyell) has volunteered to do precisely what the Minister is criticising?
  The Second Deputy Chairman: That is not a point of order for the Chair.
  Mr. McLeish: I make a point of truth, Mr. Lord: in the Committee's previous five sittings, the official Opposition have scurried around, pretending that they are being supportive and respectful of the decision of 11 September—but nothing could be further from the truth. We hear talk of an English nationalist backlash. That worries me, but how real is that in the mind of the English people, as opposed to being solely in the mind of Conservative Members? If Conservatives pursue this idea, they are being anti-Union, anti-Scottish and anti the spirit of the devolution measures. Of course, that is the reality. They can pretend that they are concerned, but we have tonight exposed a core truth about the Conservative Opposition. They cannot face the results of 11 September or the fact that the Bill will strengthen the Union and is an excellent contribution to democratic accountability.
  I ask the Committee to reject the amendments for the reasons that I have outlined so that we can move on and ensure that we have a strong Bill. That is the intention of the Government, the Liberals and the nationalists but not that of the Conservative Opposition—
  It being half-past Five o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [23 February], put forthwith the Question already proposed from the Chair.
  Amendment negatived.
  THE CHAIRMAN then proceeded to put forthwith the Question necessary for the disposal of the business to be concluded at that hour.
  Clause 81 ordered to stand part of the Bill.
  Clause 82 ordered to stand part of the Bill.
  Sir Patrick Cormack: On a point of order, Mr. Lord. As a matter of courtesy, I have tried to give the Leader of the House notice of this matter.
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  When the Select Committee on Modernisation of the House of Commons produced its unanimous report, my right hon. Friend the shadow Leader of the House and I commended it to the House and were glad to do so. We saw it as a constructive attempt to ensure better and more regulated scrutiny of business, and we were happy to agree to the programming of legislation.
  When the Committee stage of the Scotland Bill was decided on, we readily agreed to the programming arrangements. We had no wish to frustrate the will of the Scottish people. We had no wish to filibuster, as has been evident from all the debates, but we were anxious to ensure proper, decent scrutiny of this most important constitutional legislation. However, this afternoon we have witnessed the frustration of the spirit of agreement into which we entered by the fact that the Government made a long statement which took up a full hour of the time allocated for a crucial element of the Bill.
  Had the Government had to come to the House to make a statement about the situation in the Gulf or some matter of prime international importance, we would of course have accepted that it should take precedence. However, we do not believe—[Interruption.] I am seeking to make my point with cogency and courtesy, which cannot be said of the reaction of Labour Members. We do not believe that the statement this afternoon fell into that category. The spirit of the recommendations made by the Select Committee on Modernisation of the House is at risk because if what has happened this afternoon is what is going to happen to crucial legislation, we cannot co-operate.
  The Second Deputy Chairman: They are not matters on which I can rule today, but I have no doubt that everyone has heard what was said and that those with responsibility for these arrangements will review matters in due course.
  Mr. William Cash: Further to that point of order, Mr. Lord.
  The Second Deputy Chairman: I do not think that there can be anything further to that point of order. We have dealt with it thoroughly.
  Mr. Cash: With respect, Mr. Lord, you cannot know until you have heard my point of order. The Secretary of State for Scotland has just come into Committee. We have witnessed a disgraceful exhibition which was an attempt to curtail the debate, as my hon. Friend the Member for South Staffordshire (Sir P. Cormack) pointed out. The Secretary of State did not have the courtesy to reply to the debate. Is not that a matter of the utmost importance? Is not it also a disgrace and a discourtesy to the Committee?
  The Second Deputy Chairman: The time allocated to the debate was decided some time ago.

Clause 83

  CROSS-BORDER PUBLIC BODIES: INITIAL STATUS
  Ms Roseanna Cunningham: I beg to move amendment No. 96, in page 38, line 25, after 'enactment', insert 'or by Royal Charter'.
  The Second Deputy Chairman: With this, it will be convenient to discuss the following amendments: No. 256, in page 38, line 27, leave out from second 'functions' to end of line 28 and insert
  'which relate to or affect Scotland'.
  No. 93, in page 38, line 28, leave out from 'Scotland' to end of line.
  No. 426, in page 38, line 28, leave out
  'do not relate to reserved'
  and insert 'relate to devolved'.
  No. 97, in page 38, line 29, at end add—
  '(7) Without prejudice to the generality of subsection (5), the following bodies are cross-border public bodies for the purposes of this Act—

  (a) the British Broadcasting Corporation,

  (b) the Independent Television Commission,

  (c) Channel 4,

  (d) Channel 5,

  (e) the Radio Authority, and

  (f) the Radiocommunications Agency.'.

  No. 100, in schedule 5, page 66, line 28, at end insert—
  'The functions of the Radiocommunications Agency in relation to Scotland (but not the international negotiations for the allocation of frequencies for the provision of radiocommunications services in Scotland).'.
  No. 101, in page 66, line 28, at end insert—
  'The disposal of that portion which is collected in Scotland of the total revenue from the imposition of fees for wireless telegraphy licences under Part I of the Wireless Telegraphy Act 1949.'.
  No. 98, in page 75, line 32, after 'Corporation', insert
  'except as regards the financing of services provided by BBC (Scotland), the appointment of a national governor representing Scotland, and the appointment and removal of the members of the Broadcasting Council for Scotland.'.
  No. 99, in page 75, line 32, at end insert—'Exceptions from reservation—
  The powers and functions of the Independent Television Commission in relation to—

  (a) the licensing and regulation of regional television services for Scotland provided for under Part I of the Broadcasting Act 1990, as amended by Part III of the Broadcasting Act 1996,

  (b) the licensing and regulation of digital television services exclusive to Scotland,

  (c) the licensing and regulation of local cable services in Scotland, and,

  (d) the promotion and funding of Gaelic television programmes services in Scotland.

  The powers and functions of the Radio Authority in relation to—

  (a) the licensing and regulation of radio programme services in Scotland,

  (b) the promotion and funding of Gaelic radio programme services in Scotland.'.

  No. 311, in page 75, line 32, at end insert—'Exception from reservation—
  The appointment of the National Governor for Scotland of the British Broadcasting Corporation and the appointment of a Scottish member of the Independent Television Commission.'.
  No. 413, in page 75, line 32, at end add—'Exception from reservation—
  The promotion and funding of Gaelic broadcasting in Scotland.'.
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  No. 466, in page 75, line 32, at end add—Exception from reservation—
  The Parliament may require the annual report of the British Broadcasting Corporation and the Independent Television Commission to be laid before it.'.
  Ms Cunningham: I propose to speak to amendments Nos. 96 to 101 and No. 256 which stand in my name and those of my colleagues. I shall deal with them in two groups—one relates to clause 83 and the other to schedule 5—although they are all, in the main, to do with broadcasting.
  I shall speak first to amendments Nos. 96, 97 and 256. This set of amendments returns us to the vexed question of the powers of the Scottish Parliament vis-a-vis bodies not dealing with devolved matters or bodies and individuals based outside Scotland. We had an extensive debate on the generality of this subject when we discussed clause 23, the amendments thereto and the powers of the Parliament to require the submission of evidence, both oral and written, so I shall try hard not to reprise the whole of that debate.
  Clause 83, however, differs from clause 23 because it specifically designates bodies that are to be defined as cross-border public bodies. In the guidance notes provided when the legislation was published, clauses 83 to 85 were described as fulfilling the commitments given in paragraph 2.11 of the White Paper which, in my view, they manifestly fail to do.
  I have read the paper placed in the Table Office yesterday. Among other things, it states:
  "The White Paper … indicated that the Scottish Parliament will be able to require the submission of reports and the presentation of oral evidence from bodies"
  which have devolved interests, but have United Kingdom or Great Britain remits at present. However, in the Bill, that particular power will relate only to devolved matters.
  The paper goes on to state:
  "The commitments given in the White Paper in respect of such statutory bodies are given effect to through clauses 83 to 85 of the Bill."
  As I said, that is manifestly not the case.
  Of necessity, I am going to have to repeat some of the sentiments expressed in the debate on amendments to clause 23. In particular, I want to cite once again paragraph 2.11 of the White Paper because it is important to remind hon. Members of what was originally promised. Paragraph 2.11 states:
  "In certain reserved areas"—
  I stress the word "reserved"—
  "the activities of other UK/GB bodies which are accountable to the UK Parliament will continue to be significant in the economic or social life of Scotland, and therefore likely to be of interest to the Scottish Parliament. The Government propose that the Scottish Parliament should be able to invite the submission of reports and the presentation of oral evidence before its committees from bodies operating in reserved areas in relation to their activities in or affecting Scotland."
  I emphasise the fact that the paragraph deals with reserved areas.
  The definition of bodies given in paragraph 2.11 was that they would
  "continue to be significant in the economic or social life of Scotland".

  1097
  The paragraph then gives some examples of such bodies. I shall not list them all—I have done that before—but, suffice to say, they include, inter alia, the BBC and the Independent Television Commission. Between the White Paper being published and the Bill being published, that has all disappeared.
  The promises made in paragraph 2.11 of the White Paper are not allowed for in clause 23; nor are they in clause 83. Not a single example given in the White Paper of cross-border public bodies has found its way into any of the guidance notes, the list of what the Government regarded as cross-border public bodies when the legislation was published. As far as I can see, not a single one of those bodies appears in the list appended to yesterday's note that was placed in the Table Office.
  I have asked before and ask again now, as I have not yet received a satisfactory answer, where, precisely, is the commitment given in paragraph 2.11 of the White Paper? Where is it implemented in the Bill? Why have the Government turned their back on their promise?
  The Government have changed the whole definition without a single word of explanation and we are left with an emasculation of that commitment. Cross-border public bodies, as newly defined, must include among their functions those relating to devolved matters. That neatly excludes from the slightest accountability not just the entire list in the White Paper, but many other bodies as well, even the Scottish Law Commission; that must rank up there in the top 10 list of idiocies in the Bill.
  Amendment No. 256—and amendment No. 93, which stands in the name of many Labour Members—would restore to the legislation the definition clearly envisaged in the White Paper, if not the whole of the original intent. The amendments would bring back into the definition the list in paragraph 2.11 of the White Paper, which includes the BBC and the ITC. In that way, we can be absolutely certain that we shall at least have reports laid before us, even if we are to be denied the ability to require the submission of evidence. We shall have to make do with "inviting" and hope that, in the case of some of the organisations, it does not mean inviting until the cows come home.
  Amendments Nos. 96 and 97 are clear in their intent and move us on to the Scottish National party's concern about the position of broadcasting when the Parliament is up and running. Notwithstanding any other decision that might be made in respect of clause 83 or schedule 5, the BBC and the ITC would then have some minimum obligations to the Scottish Parliament—I stress the word "obligations".
  Mr. Dalyell: The hon. Lady referred to the SNP's concern. I am not asking this in a hostile spirit, but what is the basis of that concern? I have not fully understood.
  Ms Cunningham: The basis of the concern is the issue of accountability for vast areas of Scottish life that are incredibly important, but about which we shall not even have the ability to require people to come and give evidence.
  This set of amendments is, in the main, to do with broadcasting, but it touches on a wider issue on which we have already had a substantive debate under clause 23. Clause 83 is about different groups of bodies.
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  My contention is that the definition of those bodies clearly changed between the publication of the White Paper and the publication of the legislation.
  Mr. Salmond: I have an advantage over my hon. Friend because I have been watching the visage of the Secretary of State during her speech. He seems to be puzzled by my hon. Friend's words. I am tempted to believe that this may be due to confusion on the part of the Scottish Office; perhaps it did not mean to miss out the list. Perhaps my hon. Friend will help the Secretary of State and point out to him, once again, how things have changed from the White Paper to the Bill.
  Ms Cunningham: I simply refer the Secretary of State back to paragraph 2.11 of the White Paper which states that the bodies covered are bodies that deal with reserved areas but which
  "will continue to be significant in the economic or social life of Scotland".
  The long list of bodies appended to that paragraph includes, in every case, bodies whose interests and concerns are in purely reserved areas. None of that appears anywhere in the legislation. What was clearly envisaged was that, although the bodies do not cover devolved areas, there would be an element of accountability to the Scottish Parliament for their functions within Scotland. Effectively, that has disappeared. The Secretary of State still appears to be puzzled, but, perhaps when the debate is finished, he should have a careful look at the difference between the White Paper and the Bill.
  Amendments Nos. 98 to 101 all relate to exceptions from the reservations contained within schedule 5. In their entirety, they would provide a measure of devolution of broadcasting which was a surprising omission from the White Paper and the legislation. It was surprising, because it is clear from all I have read that many people, including broadcasters, simply assumed that that would be included and were mightily surprised when it was not. Supporters of the call to devolve broadcasting to Scotland include a former BBC controller, Pat Chalmers, Ruth Wishart, who I believe is a close friend of the Secretary of State, and the broadcaster Colin Bell. They are all supporters of the pressure group, Voice for Scotland. I chose them particularly because I suspect that they cover a range of political opinion, but are united on this one issue.
  Mr. Wallace: There does not seem to be a Tory.
  Ms Cunningham: Finding a Tory in Scotland these days can be difficult.
  All those people recognise that we are debating a scheme in which responsibility for the arts, education and Gaelic are all devolved, while responsibility for broadcasting is not. That means that all aspects of cultural life are covered, except broadcasting. There will be a separate Scottish Arts Council, but no body responsible for broadcasting.
  5.45 pm
  An article written by Ruth Wishart, which appeared in The Herald on 2 March, makes that cogent point. She points out that there is a
  "natural logic in broadcasting being part of the devolutionary package."

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  Ruth Wishart uses the Scottish Arts Council as an example of what arguments can be put forward and how pointless they can be. She says that the arguments being used against broadcasting now are the same as those used against the Scottish Arts Council ceasing to be involved with the Arts Council of Great Britain. She says that it would be almost unthinkable to imagine a situation where the Scottish Arts Council was not in the position that it is now, especially given the advent of the Scottish Parliament. She says that broadcasting is in the same boat.
  I am grateful to Ruth Wishart for pointing out another interesting example which she says—I agree with her—is an indication of what can be the big difference between Scotland and the rest of the United Kingdom. She says that consideration of any two newspapers produced in London and Scotland on the same day would show that the editorial priorities are obviously different. She says that if the same test is applied to television and radio, in many ways, Scotland is short-changed. Her view on that is fair and is held by a number of people.
  Broadcasting is a key part not just of cultural life, but of the political process. Those of us who are politically active in Scotland—that is the Labour party, the SNP and the Liberal Democrats—already know that, in many respects, the political debate is quite different from the debate in the rest of the United Kingdom. The advent of the Scottish Parliament will make that difference even sharper. At least one Scottish journalist—Simon Frith writing in The Scotsman on 28 November 1997—questions whether, if we continue with the present arrangements, broadcasters will be able to play their role properly in that debate. There will only need to be another "Panorama" debacle for the issue to be at the forefront of the Scottish Parliament's concern. It will be nonsensical if the decision-making process is left to the London-based establishment after the Scottish Parliament is up and running.
  The Secretary of State for Scotland (Mr. Donald Dewar): Am I to understand that the hon. Lady wants a devolved Scottish BBC? Will she explain how that would work? Would there be a separate royal charter for Scotland because the BBC is rather different from a statutory body? How would it be managed? On a boring, practical point, can she say a little about the financial arrangements? What would be the impact of the change on the financial arrangements?
  Ms Cunningham: If the Secretary of State cares to look, he will see that one of our amendments deals with the issue of licence fee income and the repatriation to Scotland of that portion which is raised in Scotland, which is one way in which to deal with the matter. As for his other point, as I understand it, it is perfectly possible within the context of the current charter to devolve and it would be interesting if that debate were to take place. If there has to be a separate charter, let there be a separate charter, but that is something with which we can deal in the fulness of time.
  Mr. Dewar: That is a very interesting point. The hon. Lady says a separate charter is not needed, because we can devolve broadcasting in Scotland within the BBC charter. I think that she is quite right. It follows that the matter has nothing to do with legislative devolution and a lot to do with persuading the BBC that there should be devolution within that body and likewise persuading other bodies of a similar nature. This issue is not about legislative regulation and the
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  words in schedule 5, but about the spirit in which the BBC and other bodies approach the challenge of devolution and the consequences of that for the United Kingdom.
  Ms Cunningham: The right hon. Gentleman may be correct. Perhaps those bodies will not need persuading and will do it off their own bat—if they did, that would be excellent. However, there is to be a review of the BBC's funding base in 2001 and a charter renewal in 2003 and, although the Scottish Parliament will be well into its deliberations by then, it will have no official role to play in those events—not a single word said in the Scottish Parliament will have any direct effect on either of those deliberations. No doubt, the Scottish Parliament will debate those matters and, no doubt, various persons from the BBC within and—I hope—outwith Scotland will respond positively to invitations to give evidence; but the bottom line is that the Parliament will not have any official input to any part of that debate.
  I gather that there was a conference on Friday last week which was addressed by the Secretary of State, among others. It was referred to in the article by Ruth Wishart that I have already mentioned and in an article by Magnus Linklater, writing in Scotland on Sunday this Sunday past. Both writers picked up on the Secretary of State's comment that he was not saying that devolved broadcasting would mean kailyard programming. However, by making that statement, the right hon. Gentleman was the one to throw it into the pot and, having raised the possibility, however negatively, it becomes like the elephant in the courtroom—impossible to ignore. Such a view displays an astonishing degree of self-loathing, especially given some of the programming to which we are already subjected daily. I am happy to note that, according to Magnus Linklater, it was not the view of a majority of the conference that anything like that would happen if broadcasting were devolved.
  Mr. Salmond: I am certain that it is not the view of the Secretary of State that devolved broadcasting would be kailyard broadcasting, but I seem to remember a speech by the Minister for Education and Industry, Scottish Office, at the Edinburgh festival last year, in which he forcefully advanced that argument. Although I do not recall his using that exact phrase, he argued that broadcasting would somehow be diminished if it were devolved.
  Ms Cunningham: As I understand it, the Secretary of State for Culture, Media and Sport has in the past made similar comments, which have generated some criticism. That is the not the view held by the majority of the broadcasters of Scotland. They are confident that they would cope well if there were devolved broadcasting in Scotland. Given that confidence and the new cultural and political imperatives brought by the new Scottish Parliament, it is puzzling that in no circumstances is the devolution of broadcasting to be countenanced.
  Rapid changes are taking place in broadcasting; in particular, there is the imminent arrival of digital television. Those changes have already provoked major adjustments to the ownership and control of the Scottish media—a matter in which the Scottish Parliament will have no real say in future. In the amendments, we are trying to look at the matter in the spirit of devolution, which is difficult for those of us who want more than that, but it is what we are trying to do. The truth is that, ultimately, the framework for broadcasting is set by

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  politicians. We desire at least to create a framework for Scotland for what will happen and not only for what cannot happen.
  We propose that there should be exceptions to the reservation in schedule 5 so that scheduling and finance, in so far as they relate to services in Scotland—for example, responsibility for BBC Scotland and its services within Scotland—are devolved to a broadcasting council for Scotland, whereas the BBC generally remains responsible for UK services. Equally, the Scottish Parliament would have powers over a Scottish ITC equivalent to the powers currently exercised by the Westminster Parliament over the ITC.
  It would have been easier by far make a straightforward exception to the reservation of broadcasting as a whole, but I do not for a single minute pretend that every part of the Bill is necessarily straightforward. Amendments Nos. 98 to 100 make it clear that we are trying to confine the issue to those functions that relate particularly to Scotland and will not encroach on wider UK powers. Amendment No. 98, which deals with the appointment of a national governor, is another amendment which would restore the position to that stated in the White Paper. Amendment No. 101 is clear: it deals with the licence fee income raised in Scotland and, as I have already referred to it, I shall not spend any more time on it. I commend the amendments to the Committee. I ask hon. Members to consider the reality of the situation that will face us and to accept that the logic of devolution of broadcasting cannot be argued against.
  Mrs. Maria Fyfe: I rise to speak in support of amendment No. 93, which stands in my name and those of my hon. Friends. When I tabled the amendment, I was thinking not about the BBC, but about the relationship between the Equal Opportunities Commission and the Scottish Parliament. The simplest way in which to bring the EOC's activities in Scotland under the scrutiny of the Scottish Parliament would be to include the EOC on the list of cross-border public bodies; however, it has not been included on that list. Clause 83, which relates to cross-border public bodies, states that such a body is one that has
  "functions exercisable in or as regards Scotland which do not relate to reserved matters."
  However, all aspects of the Sex Discrimination Act 1975 are reserved, so the EOC does not fall within the definition as currently set out on the face of the Bill. If the words,
  "which do not relate to reserved matters"
  were deleted, the EOC could legitimately fall within that category.
  If the EOC is not deemed to be a cross-border public body, the Scottish Parliament will have no power in relation to it. Clause 23 states that the Scottish Parliament
  "may require any person … to attend its proceedings for the purpose of giving evidence"
  relating to devolved matters. However, it continues:
  "That power is not exercisable in relation to … a person discharging functions of any body whose functions relate only to reserved matters".
  In addition, clause 107, when read alongside clause 106, makes it clear that the EOC will not be required to lay its annual report before the Scottish Parliament. All that
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  ought to be cleared up, because we must make it clear what we shall do regarding the EOC in respect of all the matters that are devolved, such as housing, education and careers, to name but a few.
  In addition to concerns about the EOC, I feel a particular concern about disability discrimination. Enable has pointed out that the Government have appointed a task force to make recommendations for a UK-wide disability rights commission to enforce disabled people's rights under the legislation. The Bill as drafted would appear to prevent the Scottish Parliament from having any powers in relation to that prospective commission, yet many of the Scottish Parliament's activities—social work, education, housing, health, and so on—will be important to disabled people. Those are my reasons for tabling the amendment and I hope to hear a constructive reply from my hon. Friend the Minister.
  Mr. Godman: I have a couple of questions for my right hon. Friend the Secretary of State relating to what the hon. Member for Perth (Ms Cunningham) said. I do not sympathise greatly with what she said, but several concerns about broadcasting in Scotland have been voiced to me. I hope that the Parliament and the broadcasting authorities can quickly establish a modus vivendi that enables them both to deal with such concerns.
  Mr. Jack Gerson, the thriller writer who has written a number radio scripts, has spoken to me about his worries about the BBC and STV following the setting up of the Edinburgh Parliament. He told me recently that the drama departments of Scottish Television and the BBC were showing less interest in Scottish writers and Scottish drama. I hope that that will not be the case when there is a Scottish Parliament.
  6 pm
  Have there been any discussions—albeit we are at an early stage—about a dedicated channel for the Parliament? That could easily be achieved. Such a channel would be a boon for those in the highlands and islands and others who live a long way from Edinburgh. I hope that all the broadcasting authorities will have ready access to the Parliament. A modus vivendi must be established as early as possible to deal with some of the concerns that have been voiced about the growing remoteness of the broadcasting authorities from drama and documentaries in Scotland.
  Mr. Wallace: May I say how pleasant it is to see you in the Chair, Mr. Winterton, for this important debate? I should like to make some points on cross-border public bodies before moving on to some of the issues of broadcasting that have been raised. The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) raised some important points about equal opportunities. Looking at the provisional selection of amendments by the Chairman of Ways and Means, we should have plenty of opportunity to go back to that issue in more detail later. I apologise to the hon. Lady if I do not deal with it in this speech.
  The Government have made efforts to enable some cross-border public bodies that also deal with reserved matters to have responsibilities for non-reserved matters. However, there is no proposal to exempt the BBC and STV from the reservation. I echo what the hon. Member for Perth (Ms Cunningham) said, because there has been

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  an expectation that senior representatives of the BBC will be brought before the Scottish Parliament. If possible, that should not be a request, because I suspect that they would be able to spot the difference between a request and a requirement if they wanted to wriggle out of it.
  The Scottish Law Commission is in the list in the draft order that has been placed in the Library. Will the chairman and members of that commission be appointed jointly by the Secretary of State for Scotland and the Lord Advocate, or will it be a matter for the Scottish Parliament? I accept that there will be occasions when the Scottish Law Commission may be asked to produce a joint report with the Law Commission for England and Wales or to advise on rules that relate to reserved matters, but there was an expectation that appointments to it would fall within the competence of the Scottish Parliament.
  I understand that the social security commissioners are appointed by the Lord Chancellor on the advice of the Lord Advocate. What will the position be in that case? Will the Scottish Court Service still have responsibility for making provision for the administrative arrangements of the social security commissioners, even though social security will not be a devolved matter? Some clarification would be welcome.
  Mr. Dewar: Really?
  Mr. Wallace: The Committee would welcome clarification. The Secretary of State laughs, but I am sure that he agrees that it is better that the issue should be clarified now than at some time after 2000. We do not want a stushie between the Scottish Court Service and Westminster on who will pick up the tab.
  There was some disappointment about the fact that schedule 5 has a blanket reservation on broadcasting. I am not betraying any confidences on how the Scottish Constitutional Convention reached its agreement on broadcasting. That was one of the last matters to be agreed. Hon. Members who were members of the convention may remember that, at one of the later meetings, it was agreed that all matters that fell within the responsibility of the Secretary of State for Scotland should be devolved. That was fine, until someone reported at the next meeting that the Secretary of State had no responsibilities for broadcasting—hence the blanket reservation.
  With more consideration, more flexibility could have been shown on some issues. Some clarification of the position on Gaelic broadcasting would be helpful. Our amendment No. 413 would make an exemption from reservation with regard to
  "The promotion and funding of Gaelic broadcasting in Scotland."
  In a letter to my hon. Friend the Member for Argyll and Bute (Mrs. Michie), the Gaelic Broadcasting Committee suggested that
  "the Scottish Parliament would control the funding of the Gaelic Broadcasting Committee".
  I would welcome clarification on whether that will be the case. The reservation covers
  "The subject-matters of the Broadcasting Act 1990 and the Broadcasting Act 1996."
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  The Gaelic Television Committee, which subsequently became the Gaelic Broadcasting Committee, has its statutory basis in those Acts. Section 183(1) of the 1990 Act says that the Secretary of State
  "shall, for each subsequent financial year,"—
  from 1992–93 onwards—
  "pay to the Commission such amount as he may, with the approval of the Treasury, determine to be appropriate for the purposes of this section."
  Schedule 19 to that Act says that
  "the Committee shall prepare a general report of their proceedings during that year and transmit it to the Commission."
  It further says:
  "The Commission shall send a copy of each annual report received by them in accordance with his paragraph to the Secretary of State who shall lay copies of it before each House of Parliament."
  It would be odd if something that is so much a part of Scottish culture were removed from the remit of the Scottish Parliament. I hope that there will be some acknowledgement of the role of Gaelic broadcasting and the fact that it would be appropriate for the Scottish Parliament to have a role. The budget in 1991–92 was £9.5 million, whereas it is £8.5 million in 1998–99. If there were no Scottish parliamentary input into that, there might be a fear that the sum would decrease further.
  More generally, we are talking of the arts, sport, heritage, tourism and film as devolved matters, while broadcasting is not. I am not in favour of a separate Scottish broadcasting corporation; I do not think that it would make sense and I do not think that Scotland's viewing population wants it. We should look to areas in which there may be scope for devolved powers, such as in local television. The advance of technology in telecommunications allows greater provision of local television. Such provision would not interfere with wavebands or national broadcasting organisations.
  The Institute of Local Television has said:
  "By applying the principle of subsidiarity to the allocation of broadcast frequency channels and cable channels a coherent view can be adopted by the Scottish Parliament for the introduction of digital broadcasting services in the best interests of Scotland, to enhance local economic and cultural diversities".
  There could be such provision at a Scottish level.
  I would like to think that someone could continually press Channel 5 to ensure that its coverage reaches the many parts of Scotland which are without coverage at the moment, particularly as it is broadcasting Scotland's away games in the qualifying stages of the European nations championship. There is considerable resentment in many parts of Scotland, including my constituency, about not being able to receive Channel 5. It would be very welcome if the Parliament could do something to encourage Channel 5 to extend its coverage.
  My hon. Friends and I propose that the appointment of the Scottish governor of the BBC and the Scottish member of the ITC should be a matter for the Scottish Parliament. The Scottish Parliament should also at least have the discretion to require the BBC and the ITC to lay their annual reports before it, as they have to before the Westminster Parliament. That small matter might seem narrow procedurally, but it would establish some chain of accountability between those important broadcasting organisations and the Scottish Parliament.
  Mr. Dalyell: I do not want to be pedantic, but when the hon. and learned Gentleman says that the Scottish

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  Parliament should appoint the governor of the BBC, does he mean the Scottish Executive or the Parliament as a whole?
  Mr. Wallace: Our amendment says that the appointment of a national governor for Scotland of the BBC and of the Scottish member of the ITC should be an exception from reservation. It would be a matter of whether Parliament approved or the Scottish Executive nominated. As the Bill stands, nothing can be done. We are trying to put the matter within the realms of the responsibility of the Parliament and the Scottish Executive, which is answerable to the Parliament. The amendment's intent is to improve accountability.
  From experience of meeting Scottish broadcasters, I know that there is a great deal of enthusiasm for the approaching Scottish Parliament. They see opportunities, not least in the broadcasting of the Parliament. My expectation and hope is that the effects of having a Parliament again in Scotland will go far beyond politics to stimulate arts, culture and broadcasting in Scotland. I think that the Secretary of State said that when he intervened on the hon. Member for Perth. As much of the debate is about devolution in the BBC as it is about devolution in the United Kingdom. Anything that can be done to stimulate, encourage or prod London and the BBC to go down the devolutionary road would be very welcome.
  Some of us remember the sheer insensitivity of those in London when they sought to broadcast a full "Panorama" interview with the Prime Minister only a few days before Scottish local elections. The matter was not only about the fact that the BBC did that, but that it did not see anything wrong in doing so and could not understand why people in Scotland might think that such a move upset the normal rules and balance of broadcasting before an election.
  Five years ago, without consultation, the BBC removed resources from Scotland and centralised them in London, which caused quite a row at the time. Only last month, the Financial Times reported that John Birt is to put before governors a proposal
  "to place large parts of its resources directorate—which includes all studios and technicians—into a wholly owned commercial subsidiary.
  BBC staff unions … protested at an earlier version of the plan on the grounds that it would encourage privatisation of the BBC resources directorate".
  The concern is that such a resource will be even further removed from any accountability to the Scottish Parliament. If the move were to lead to privatisation, there would be no separate Scottish privatisation. We have seen how separately privatised Scottish utility companies have been able to go from strength to strength, whereas some other privatisations in which no separate Scottish company was established have meant that Scotland has often had to bear the brunt of rationalisation, when decision making, senior technicians and senior management have been moved out of Scotland.
  Looking further forward, there is an argument for ensuring greater appreciation in the BBC of the need to decentralise. That could be helped along the way by making the appointments described in the amendment the
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  responsibility of the Scottish Parliament or the Scottish Executive and by, very simply, asking the BBC and the ITC to lay their annual reports before the Parliament. I ask the Secretary of State to consider that; it does not ask very much. Doing that might ring bells in London that things have changed and that people must be sensitive to a Scottish dimension. I hope that broadcasters and particularly the BBC rise to the challenge of devolution. They have a vested interest in its success. I very much hope that this debate and proper, fair consideration of the amendments will stimulate the BBC, particularly in London, to wake up to what is happening north of the border.
  6.15 pm
  Mr. Michael Connarty: It is a special delight to see you, Mr. Winterton, in the Chair. I know that you are the chairman of the United Kingdom-wide all-party media group and will therefore no doubt pay particular attention to some of this debate.
  The metaphor "elephants in the courtroom" is certainly a new one on me—but then lawyers, who are so abundant in this place, probably recognise it. I thought of other little phrases that trip off the tongue, such as "bull in a china shop" and "snake in the grass"—the Scottish National party involvement in the debate made that jump to mind.
  The debate is not about devolution. For those who have tabled the amendments, it never has been. SNP Members have softened their tone tonight, but they have not done so in public debates—nor have they in trying to give influence to the group named by the hon. Member for Perth (Ms Cunningham), A Voice for Scotland, which is quite clearly a voice for separate media in Scotland, separate broadcasting in Scotland and separate regulation and control of media and broadcasting in Scotland. That is the quite clear message that SNP Members put out in debates that I have had with them in public, on television and in private discussions. This debate is about separation of broadcasting and control of that separate broadcasting.
  Ms Roseanna Cunningham: Will the hon. Gentleman give way?
  Mr. Connarty: Not at this particular moment. I will let the hon. Lady in later.
  Ms Cunningham rose—
  The Temporary Chairman (Mr. Nicholas Winterton): Order. The hon. Member for Falkirk, East (Mr. Connarty) is not giving way. I am grateful to the hon. Lady for resuming her seat.
  Mr. Connarty: So am I. I will allow her in later, so she can hold her wheesht at this moment.
  I heard mention of what is in fact the Department for Culture, Media and Sport. It may have been the Department of National Heritage when, as the hon. Member for Perth thought, it made some unhelpful comments. Although I am a parliamentary private secretary for that Department, I am speaking not with a brief from it but as a Back Bencher and a Scot.
  I am not precious about either of the Parliaments. It is quite clear that the people who are leading the debate are precious about a separate Parliament in Scotland and

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  therefore do not necessarily hold in any value the contribution of this Parliament to the questions raised by the hon. Member for Perth. Broadcasting is very much based on regulation on a European basis and will move quickly in the satellite and digital era into a world debate. That is the context in which we should be thinking—not about shrinking the debate into a Scottish debate as if, somehow, broadcasting can be controlled by some sort of border network of electronics that would prevent anything coming from anywhere else. I see the hon. Member for Perth pulling a face, but the debate is in that context for many people. They think that they can have control over the BBC in Scotland and the other media, such as the Scottish Media Group, and somehow make them bring out programmes that they find culturally and politically acceptable. That is the undercurrent of the debate and the political drive for the debate for many of the people in the Scottish National party.
  It is wrong of those people to have that as an aspiration or to think that anyone in the media shares it. A few names were mentioned. One that is normally to the fore is that of George Kerevan, who speaks for that party. I believe that he is one of its vice-chairs, with responsibility for such matters. He makes it clear that the debate is all about having more Scottish programmes and developing the Scottish culture, as if that could not be done by the broadcasting media at the moment. In fact, I think that it is being done very well.
  The hon. Lady made a point about Scottish newspapers, saying that their editions in Scotland are somehow acceptable, whereas other broadcast media programmes are not acceptable. I think that that was a demonstration of "Panorama paranoia", because one particular programme heated up the debate slightly in the pre-election days and was then seen as a touchstone for what could or could not be done.
  The other point that the hon. Lady made, which I thought was particularly inept, was the concept that the BBC funding review in 2001 would be better debated in a Scottish Parliament in which Scottish Members of Parliament would contribute as the people taking the lead and making the controlling decisions.
  That reminded me why it is important to send United Kingdom parliamentarians elected in Scotland down here to talk, debate and contribute on that and other matters at a UK level. If the right hon. Member for Huntingdon (Mr. Major) had been in the Chamber he might have agreed about that, although he does not want them to talk about matters to do with English local authorities, for example. The broadcasting point would be debated at the right level, in a UK-wide framework in relation to European regulation and European involvement in the control, regulation and development of the media—a context in which, as I am sure that you, Mr. Winterton, know, it will probably be debated more than ever.
  A comment that I found rather weak was the idea that broadcasters "could cope well" with devolved broadcasting. What a strange phrase for someone who aspires to have an independent Scotland—that under devolved broadcasting it could "cope well".
  Everyone in the media to whom I have spoken, and everyone who has responded in the discussions that I have been involved in, has been talking about a blossoming of broadcasting in Scotland at this moment under the present regulation. They have been saying, and I agree with them,
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  that with a devolved Parliament the amount of interest in and impetus for the Scottish culture will be such an enormous fillip to their efforts that broadcasting will blossom.
  The hon. and learned Member for Orkney and Shetland (Mr. Wallace), the leader of the Scottish Liberals, was saying how digital and local production would, we hope, blossom. Everyone I talked to saw that as being possible. Many parts of Scotland with digital channels would be able to broadcast and develop their own cultural base.
  The Dundonians will come back into their own, and the people from Ayrshire, from the north and the islands—
  Mr. McAllion: What do you mean, "Come back?"
  Mr. Connarty: I have every confidence—but we shall have to learn how to understand. At first it would be just about as difficult to learn how to understand the Gaelic as to understand a true Dundonian accent. I know that.
  Broadcasting in Scotland could blossom in all those respects in local areas. I am very much a supporter of local radio, and in the future, it is to be hoped, local television broadcasting will be added. That can all be done in the present context of UK regulation. The present controllers are not holding that back.
  At one of the debates in which the listeners and viewers consumers panel held an open forum in Stirling, I debated with Mr. Kerevan and a representative of the Liberal Democrats—a Mr. Sullivan, I believe—who seemed to be taking a line similar to that of the Scottish nationalists, talking about a separate broadcasting regulation set-up. All the people were there from the media and the present controller of BBC Scotland was supportive of our position rather than that of the people from A Voice for Scotland.
  In the early days, when the subject was debated and discussed, it was admitted that that might have been possible. I hear the White Paper quoted again and again to the effect that it might have been possible or even sensible to devolve regulation or some part of regulation. But when we looked at the idea in more depth it was clear that it would have been a narrowing of the base of Scottish broadcasting and therefore inappropriate.
  The people from the Scottish Media Group, who now own a cross-media group of both written and broadcast media in Scotland, were also of the opinion that the present regulation situation, the present relationship, which is in the powers the Secretary of State has at this moment, which will be devolved, and the things that will remain as reserved, are the appropriate context in which they wish to develop. They see that as no barrier to making and selling programmes both in Scotland and outside Scotland. Therefore, it is a backward step to try to take any of that over the border and somehow shrink it into a Scottish Parliament context.
  On the question of finance, the contributions from the BBC were interesting. The BBC believes that with its spare income—that is, the income that it does not spend on its own Scottish network—it can buy in network programmes, but that if the programmes that it buys in through the BBC network at this moment had to be bought on the market, it could not buy them in with its present income from the licence fee in Scotland.
  The BBC would therefore have to reduce the programmes that it offers the people of Scotland if it had to be self-sufficient outwith the BBC network as it stands at the moment, and had a separate charter and licence collection.

  1109
  Whether people like it or not—personally, I am not a great follower of soaps—in percentage terms there is probably just as much interest in the population of Scotland as there is elsewhere in what goes on in "Coronation Street". My hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) is not in the Chamber, but I know that he ensures that all the programmes are taped. He has not missed a part of "Coronation Street" since it started when he was a boy, he tells me. He has it taped so that he can watch it at the weekend.
  Mr. Godman: The interest in the soaps is to be found throughout these islands. May I remind my hon. Friend that at the recent Irish election, an independent candidate in County Kerry won election to the Dail on his campaign for greater access to BBC and ITV programmes, especially "Coronation Street".
  Mr. Connarty: I understand and sympathise with that. I do not follow the programmes, but I know that most people know where Albert square is.
  Mr. Godman: Who is he kidding?
  Mr. Connarty: I used to follow—
  The Temporary Chairman: Order. the hon. Gentleman is going a bit wide of the amendment. I hope that he will take no more time in responding to that intervention.
  Mr. Connarty:The intervention stands on its own, Mr. Winterton. People want to see the programmes on the network. They do not necessarily want to watch programmes made in Scotland about Scotland. That is not to say that they are resistant to those programmes or do not value the contribution made by the Scottish media and culture to Scotland, but Scotland exists within the UK and within Europe—and it has a big international world view. Scotland sees itself not as a nation that wants to be shrunk but as a nation that wants to be expanded.
  Unfortunately, the proposal smacks of trying to reduce broadcasting and the other media in Scotland to something controllable. I think that that is the agenda. There is a spectrum. Accountability has been talked about, and I think that we have that. It lies here in the UK Parliament.
  I believe that the controller of one of the broadcasting organisations said that if invitations were issued, not only would his organisation accept, but it would be pushing to be heard by the Committees and Sub-Committees of the Scottish Parliament. That is correct. The organisations want to broadcast what they have to offer.
  The spectrum starts with accountability, then moves over to regulation. Regulation is not necessarily being discussed or put forward now, because it does not stand up, but it is the aim of the Scottish National party. The Liberal point of view—having control of who is appointed—still worries me because we would take that out of the context of a UK broadcasting network and take it into a Scottish Parliament.
  What happens to the people who are down here who see the remit as a United Kingdom remit and then have to see it given just to the Scottish Parliament? That would
  1110
  begin to create the very fracture that the right hon. Member for Huntingdon warned us about. That scares me in its political context. It is about generating separation and conflict and about generating English and Scottish nationalism—even in the context of a devolved Parliament. That worries me.
  It is a question of control. The amendments are motivated mainly by the wish to control the broadcasting media and to control what it puts out to people. It is an attempt to grab the minds of the people and to use the media to foment in them a sense of separation and nationalism that would benefit only those who follow the separatist view. It is the beginning of a very dangerous move—one which I hope the Secretary of State will resist. I am sure he will do so this evening.
  6.30 pm
  Mr. Jenkin: We have listened to an interesting debate about whether there should be further devolution in broadcasting and other matters than is provided for in the Bill. I shall return to the comments of the hon. Member for Falkirk, East (Mr. Connarty).
  In moving the amendment, the hon. Member for Perth (Ms Cunningham) referred mainly to clause 83 and to cross-border bodies. Clause 83—one of three that deal with such bodies—provides for cross-border bodies as set out in the draft order the Secretary of State has most helpfully provided for the debate. It includes such august bodies as the British Library Board, a lot of obscure ones and controversial bodies such as the Meat and Livestock Commission and meat hygiene appeals tribunals. Matters arising from those bodies are subject to devolution to the Scottish Parliament, raising questions about the coherence of UK policy. That is an issue we have not yet gone into.
  I should say that amendment No. 426 is merely a clarifying amendment to which I shall not refer at any length.
  The draft order contains an interesting assurance on behalf of the Government. It states:
  "The Government envisage however that the Scottish Parliament will want to continue most such arrangements in the light of the advantages of sharing knowledge and expertise on a UK or GB basis and of the greater efficiency in the use of resources."
  That expectation seems to be confounded by today's debate. The amendments set out to challenge not just whether the bodies should continue to be administered on a joint UK basis but whether bodies that have interests in reserved powers—notably the BBC—should continue on a UK basis.
  The hon. Member for Perth expressed disappointment that paragraph 2.11 of the White Paper has not, in her view, been fulfilled. I am afraid that the hon. Lady is simply making mischief. The operative word in paragraph 2.11 is "invite". At no point does the White Paper raise any expectation that the Scottish Parliament will hold over any body any obligation that has solely to do with reserved powers. That is clear, and I want to put it on the record that we will support the Secretary of State on this matter. In our attempt to create a stable settlement between the Scottish Parliament and the Westminster Parliament, we cannot argue on the basis of fantasy or on the basis of what the hon. Lady would like to have had in the White Paper.
  I wish to refer to the substance of the amendments about broadcasting. Many matters of concern to Scottish Members of Parliament will be replicated in the Scottish

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  Parliament. As I listened to discussions on the degree of devolution within the BBC or the insensitivity of the BBC in London to Scottish issues, I reflected on the fact that here we have, in miniature, the same debate that we are having about the administration and accountability of the UK Government.
  The more the Scottish BBC has had delegated to it, the less the BBC in London has been involved with Scottish issues. A consequence of that is that the BBC in London is likely to become less sensitive to Scottish needs. That will drive the demand that the Scottish BBC should be more accountable to the new Scottish Parliament. That seems to be the road down which we are going.
  The amendment tabled by the hon. Member for Perth and, to some extent, the amendments tabled by the Liberal Democrats, which suggest that the BBC and broadcasting as a whole should, to some extent, be answerable to the Scottish Parliament, are, in view of the shape and intent of the Bill, entirely logical. They are an extrapolation of the Bill that many will regard as only half a Bill. The hon. Member for Perth said that the amendments were tabled in the spirit of the Bill—the spirit of devolution. Her game is obvious: she finished by talking about ownership and control. Those may well become issues of concern to the Scottish Parliament.
  It is difficult to imagine how the Westminster Parliament will block its ears to demands from the Scottish Parliament for a say over some of these issues. It will be a cheese-paring operation. The Parliament will begin by wanting a say over the appointment of the governor, then it will want a say over appointments to the Independent Television Commission, but that will not satisfy the frustrations that the hon. Member for Perth and others will continue to express.
  The Government have tried to reduce the question of devolution to a simple yes-no question, but the amendments graphically demonstrate that devolution is a matter of degree. The argument about the degree of devolution has started even before the Bill has become an Act. Now that Scotland is to have control over so much of its affairs, why should it not have a greater say on broadcasting?
  I have some idea what the Secretary of State will say. I can hear him argue that it would not be right for the Scottish Parliament to have the power to alter legislation governing broadcasting and its regulation. I can hear him say that this is not because of a lack of faith in the Parliament or in Scottish broadcasters, but because the single UK market and the regulatory regime will be difficult to break up without creating inefficiency, which would harm the interests of Scottish viewers and listeners. It is a rational case.
  The Secretary of State will warn, no doubt, of additional costs to Scottish broadcasters if, for example, a Scottish regulatory authority were to take a different view from that in England. Producers of television programmes would effectively have to work to two different codes if their programmes were, as is commonly the case, shown in England and Scotland.
  Mr. Connarty: I am enjoying the hon. Gentleman's star gazing, but what do he and his party think?
  Mr. Jenkin: We have tabled a probing amendment and we are witnessing the beginnings of a tussle that will not end with the passing of the clause and the Bill.
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  I expect that the Secretary of State will explain how everything about British broadcasting works very well for Scotland at the moment and that there is plenty of talent. No doubt he will argue that devolution will give a fillip to Scottish broadcasting. He will say that quality production in Scotland is already capable of succeeding in the UK market and that maintaining the common UK market will aid progress, whereas fragmentation would hinder it. That will be the burden of the Government's case.
  Does not the Secretary of State think that fragmentation will also hinder progress in policies on fishing or agriculture, for example? The hon. Member for Falkirk, East said that broadcasting was becoming a global business, but that applies to many matters—the environment, for example—that will be devolved to the Scottish Parliament. Why do not the arguments about extra costs and inefficiency apply to all the bodies that are listed in the draft order and to many of the functions that are being devolved?
  This debate has shown that the arguments that the Government have deployed to advance the case of devolution will be used by those who want further devolution. Broadcasting, like many other issues, will quickly become a bone of contention for the new Parliament. Stability will be most difficult to achieve.
  Mr. McAllion: Earlier, the right hon. Member for Huntingdon (Mr. Major) warned the Committee—such was his concern about the constitutional implications of the Bill and such was his outrage at the lack of time that had been allocated to debate it—that we were all doomed, constitutionally speaking. I note that his concern and outrage were such that he has now found something far more important to do than to stay in the Chamber to listen to the debates—he has gone away to do something that he regards as far more worthy of his precious time. We can judge his earlier speech by his absence now—it is symptomatic of what is wrong with the Tory party and why it is not represented in Scotland.
  I speak in support of amendment No. 93, which I tabled with my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) and others. Like her, I received a letter from Enable, the Scottish Society for the Mentally Handicapped, supporting the amendment. It said that the Scottish Parliament must have powers and responsibilities in relation to cross-border bodies such as the Equal Opportunities Commission and the disability rights commission that is to be set up. It pointed out that it would be anomalous that the Scottish Parliament should have responsibilities for social work, housing, education and health, which directly affect people with disabilities, but no formal power over the Equal Opportunities Commission or the disability rights commission.
  My hon. Friend the Member for Maryhill will be delighted to know that I also received a letter from the Dundee Trades Union Council supporting the amendments that she tabled on equal opportunities and on gender equality. I hope that she will remember that Dundee expects her to argue strongly for gender equality and that she will press the amendments to a Division if necessary. I note that my right hon. Friend the Secretary of State seems to have become alarmed at the prospect of Dundee once again raising its ugly head.
  There is no uniformity of views within or across parties on the role of broadcasting and its relationship to the Scottish Parliament. The hon. Member for North Essex

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  (Mr. Jenkin) accused the hon. Member for Perth (Ms Cunningham) of fantasising about the White Paper. I hope that the hon. Lady's life is more exciting than that and that she does not have to fantasise about White Papers on constitutional change. It was an unfair barb.
  Mr. Godman: She is a lawyer.
  Mr. McAllion: Perhaps lawyers do fantasise about these things, but my right hon. Friend the Secretary of State is also a lawyer, and I am sure that he would refute such a suggestion.
  My recollection of the White Paper is that it recognises that cross-border bodies such as the BBC and the Independent Television Commission will continue to be significant to the economic and social life of Scotland, and so will be likely to be of interest to the Scottish Parliament. I hope that hon. Members from all parties will agree that broadcasting will be a matter of direct interest to those who are elected to the Scottish Parliament—it would be nonsense to suggest otherwise.
  Clause 83 will provide the Scottish Parliament with a number of limited powers in relation to cross-border bodies. For example, bodies that are required to lay reports before the UK Parliament will also be required to lay them before the Scottish Parliament. Will my right hon. Friend the Secretary of State make it clear whether that requirement will be laid on the BBC and ITC? Similarly, there will be consultation about Scottish appointments to cross-border bodies, but will the BBC and ITC be required to consult the Scottish Parliament about such appointments?
  6.45 pm
  The Scottish Parliament will not have the power to require people to give evidence or submit documents, which I believe is a grave weakness. The Select Committee on Scottish Affairs, of which I am a member, recently required—it did not invite—the Scottish Arts Council to give evidence to it. Such was the reception that the council received at the meeting that I am sure that some bodies would rather not appear before a Select Committee of the Scottish Parliament—if they had the choice—because of the grilling that they might be subjected to. The fact that the Scottish Parliament will not have much greater powers over broadcasting is, I believe, a serious weakness.
  Some of my hon. Friends have spoken of kailyard broadcasting, which I think is an insult. I tell them that the Scottish Parliament is being treated like a kailyard institution, as it will have no rights to summon representatives from one of the most important industries in Scotland—it will not be able to question the people who are responsible for broadcasting on the expenditure of Scottish taxpayers' and licence holders' money. That will be an anomaly, and it should not be allowed to happen.
  The hon. and learned Member for Orkney and Shetland (Mr. Wallace), who is no longer present, recollected that the Scottish Constitutional Convention executive had agreed that the powers of a Scottish Parliament should be exactly the same as those of the Secretary of State for Scotland—the convention realised only subsequently that those powers did not include broadcasting.
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  My recollection is that, in appendix 1 of the convention's final document—I think it was called "Scotland's Right, Scotland's Parliament"—broadcasting is clearly listed as one of the Parliament's functions. That was agreed by the Labour party, the Scottish Liberal Democrats, the Scottish Trades Union Congress, the women's organisations and the Churches—by everyone who took part in the convention's debates. We need an explanation of why what we agreed in the convention will not be implemented by the Bill.
  I was recently sent the book, "Devolution and the Scotland Parliament"—I assume that other hon. Members were also sent it—written by two respected constitutional lawyers, C. M. G. Himsworth, who is a solicitor and reader in law at Edinburgh university, and C. R. Munro, who is professor of constitutional law at Edinburgh university. Hon. Members who are not lawyers or constitutional experts should take their views seriously—I accept that my right hon. Friend the Secretary of State is a lawyer and a constitutional expert, but he is perhaps not as learned as these Edinburgh university academics. [Interruption.] Well, perhaps he is as learned; I do not know.
  The authors argue that it is not self-evident that the laws of Scotland and England should not differ on broadcasting. They do not believe that it is essential to have a unitary broadcasting authority vested in the United Kingdom Parliament. They say that there is nothing wrong with the idea that the Scottish Parliament could enact legislation on broadcasting that is different from the legislation that applies in the rest of the United Kingdom. Their views should not be as cavalierly cast aside as some hon. Members have suggested.
  People who do not want the Scottish Parliament to have power over broadcasting argue, for example, that there should not be double accountability—that the BBC and the ITC cannot be accountable to both the United Kingdom Parliament and the Scottish Parliament. They argue that such double accountability would lead to confusion and would be unfair to the BBC and ITC.
  On the other side of that coin, is it right that the Scottish Parliament should have no accountability whatever for broadcasting in Scotland? That cannot be a serious argument. We all recognise that, once the powers have been devolved to the Scottish Parliament, the role of the Secretary of State and the Scottish Office in the United Kingdom Parliament will, by necessity, be diminished.
  The Secretary of State's influence over broadcasting policy and in the Cabinet generally will be equally diminished at Westminster, so it is essential that the Scottish Parliament has a role, to ensure that the Scottish arm of broadcasting is subject to the same accountability as under the present unitary system. We will not have a unitary system when the Scottish Parliament is up and running: we will have two Parliaments running in tandem, and it is important that they should both be able to hold to account those who are responsible for broadcasting.
  Mr. Connarty: My hon. Friend knows that I respect his views on these matters, but it seems to me that he is suggesting that he agrees with those who argue that Members of this Parliament who represent Scottish constituencies should be given less weight, and that their responsibility, powers and respect in Westminster should be diminished. I am extremely worried by that theory.

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  If responsibility for broadcasting stays here, with United Kingdom Members of Parliament elected for Scottish constituencies, surely they should have the same weight as they have now.
  Mr. McAllion: They cannot have. The Secretary of State for Scotland is responsible for the budget of the Scottish Office and for all the powers that it exercises, but, after devolution, he will lose that responsibility, which will transfer to the Scottish Parliament. By definition, he will carry less weight in the Cabinet. Indeed, it has been argued that there could be only one constitutional spokesman for Scotland, Wales and Northern Ireland after the devolved bodies are set up.
  It is natural in those circumstances that the Scottish Parliament should be given powers over broadcasting. Otherwise, a large industry in Scotland would not be subject to proper democratic scrutiny. Those of us who worked in the Scottish Constitutional Convention intended the Scottish Parliament to be responsible for that scrutiny. We cannot say in 1996 that it is essential that broadcasting be the responsibility of the Scottish Parliament and then say in 1998 that we did not really mean it. We should honour the commitment that we gave.
  My hon. Friend the Member for Falkirk, East (Mr. Connarty) raised the prospect of the Scottish Parliament trying to control broadcasters in Scotland. That is not what anyone is calling for. We want to replicate the arm's-length relationship with broadcasters that the United Kingdom Parliament has. No one suggests that the Department for Culture, Media and Sport controls the BBC, the ITC or The Sun. In fact, some might argue that The Sun controls the Department. It is a false argument to suggest that because the Scottish Parliament wants some powers over broadcasting, it wants to control it completely. It wants to subject it to democratic scrutiny, and that is a legitimate aspiration.
  I take offence when people say that there is a danger of parochialism if broadcasting is overseen by people elected in Scotland by Scottish voters. They suggest that it will be kailyard broadcasting; that the Scots cannot be trusted to look after these weighty affairs; and that a Scottish "Coronation Street" or "EastEnders" would be of poor quality and no one would want to see it.
  The Scots are every bit as capable of holding broadcasting to account as anyone in this Parliament. Members of Parliament who represent Scottish constituencies will be in no way better than Members of the Scottish Parliament representing the same constituencies.
  Mrs. Fyfe: I am a bit concerned about my hon. Friend's line of thought. I am not aware of anyone—among Labour Members, at least—making such a claim. In fact, it would be absurd. BBC Scotland produces excellent programmes, some of which have achieved worldwide renown.
  Mr. McAllion: I agree 100 per cent. that my hon. Friend would never make such an assertion, but unfortunately there are some who would argue in those terms. It strikes me that there is a metropolitan tendency that, for some people, is unavoidable in the Westminster Parliament. They think that if it is not done in the London region it cannot be good enough and that the regions outside London are, by definition, less sophisticated. That is insulting and should be resisted by every Member of Parliament.
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  The idea of devolution is that government can be carried on in every corner of this island just as effectively as it can be carried on here in London. Indeed, the whole argument behind devolution in the first place is that government can be conducted more effectively in that way.
  British broadcasting is already over-centralised. I recently came across the statistic that only 3 per cent. of what is carried by the BBC network is from Scotland, although Scotland has 17 per cent. of the network's audience. That is not good enough: BBC Scotland is doing well, but not well enough, and more Scottish programmes should be on the BBC network, so that they can be watched throughout the United Kingdom. It would help towards that end if the Scottish Parliament had powers over broadcasting.
  My hon. Friend the Secretary of State is screwing up his face. I do not know what that means. Perhaps he wants me to shut up and sit down.
  Mr. Hawkins: I have been listening carefully to the hon. Gentleman. The influence of Scotland on national broadcasting goes well beyond programmes that are commissioned and made in Scotland. When James Naughtie is on an opinion-forming political programme, the Scots have a real influence over national British politics.
  Mr. McAllion: If the hon. Gentleman is saying that the only way in which Scots can influence national politics is to leave Scotland, that is a very strange argument. I am glad to hear that he is following my argument closely. He must be the only Member who is.
  Mrs. Margaret Ewing: James Naughtie is a former constituent of mine, having resided in Keith for a considerable time.
  Does the hon. Gentleman recognise that reporting what happens in the Scottish Parliament is important not only within Scotland and that we must look outwards and ensure that the broadcasting facilities take the messages that come from that Parliament into the international community? Those messages should not necessarily have to be sieved through the procedures of London state broadcasting.
  Mr. McAllion: The hon. Lady makes an interesting point. One of the big issues will be the way in which the broadcasting authorities deal with the Scottish Parliament. The United Kingdom Parliament is ultimately responsible for the BBC and the Independent Television Commission, and can exercise influence over those who decide how parliamentary business is broadcast.
  As I understand it, it is suggested not only that the Scottish Parliament should have no influence over how it should be broadcast but that this Parliament should decide what the coverage should be. That would be a matter of great concern for me, because I believe that the Scottish Parliament should be treated equally.
  I hope that the BBC and ITV in Scotland, and the other Scottish media, will treat the Scottish Parliament with the same respect and interest that are accorded to this Parliament. Again and again, we come back in these debates to the old story that Westminster wants to send the message that the Scottish Parliament is in some sense

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  inferior and that its proceedings should not be covered to the exclusion of our proceedings here. I do not agree with that.
  Mr. Connarty: I wish that my hon. Friend had carried on his logic, so that I could have followed him in the quantum leap that he made, suggesting that if the Scottish Parliament makes broadcasting more accountable to it, we in Scotland will, by some process or other—osmosis, perhaps—end up being able to sell more of our programmes and producing more than 3 per cent. of the BBC network output in Scotland. I am worried by the idea that he believes that politicians have a right to interfere in the process of creativity in broadcasting. He seems to think that giving the Scottish Parliament accountability will make the programmes more acceptable to the network. I do not know how that could happen.
  Mr. McAllion: As I mentioned, the Scottish Arts Council appeared before the Select Committee on Scottish Affairs. Some artists from Scotland appeared before the Committee this morning, including Mr. David MacLennan of Wildcat Stage Productions and Mr. John McGrath of Freeway Films. They said that they were delighted that, for the first time in 30 years, elected politicians would become involved in the politics of art and culture in Scotland. They thought that that would give a much higher profile to their arguments and hold an unelected quango to account, because elected politicians could ask the quango members why they had taken certain decisions.
  The BBC in Scotland should be subjected to more democratic scrutiny, and that is more likely to be done in a Scottish Parliament than here. This body does not have the mechanisms for holding BBC Scotland to account. The Select Committee is more likely to be concerned about the BBC as a whole and its leadership down here in London than with Scotland. The fact that the network has only a 3 per cent. Scottish output is not a big issue for this Parliament. It would be a major issue for the Scottish Parliament and would lead to much improved argument and debate on the issues and, hopefully, the BBC in Scotland would start to perform much better.
  We have already agreed that the Scottish Parliament should have responsibility for the arts, heritage, sports, tourism and film. Why can we not agree that it should also have responsibility for broadcasting? The BBC has written to hon. Members—it wrote to me, so I assume it wrote to every other hon. Member—to point out that it invests more in the cultural life of Scotland than the Scottish Arts Council. We are happy for the Arts Council, the arts, theatre, opera and ballet to be subject to the scrutiny of the Scottish Parliament. Why on earth can we not be happy for broadcasting, which is much bigger, to be subject to its scrutiny? It does not seem sensible.
  7 pm
  The summary sent to us by BBC Scotland tells us how well it is doing. Across Scotland, it has 10 centres and 1,000 staff. It brings in £157 million in licence fee income, has invested a total of £83 million recently in its programmes and has 670 hours of television programmes specifically for viewers in Scotland and 920 hours for the
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  United Kingdom radio networks. Why on earth can we not say that the Scottish Parliament has a clear role to hold to account a body that is so important and has such a big impact on life in Scotland and to ask about the way in which it exercises its responsibility?
  My right hon. Friend the Secretary of State asked whether we wanted a separate Scottish BBC. No one is arguing for that, although I would certainly not be averse to a devolved Scottish BBC. We are arguing for accountability. Those people who operate and spend the money in Scottish broadcasting should be held to account, and the Scottish Parliament should not be excluded from the role of holding them to account. In fact, it is much better suited to holding such bodies in Scotland to account than the Westminster Parliament. That is not my merely my view, but that of the Scottish Constitutional Convention and when it drew up the blueprint for a Scottish Parliament it certainly expected that to happen.
  The tabloid argument that people in Scotland are happy to watch "Crossroads", "Coronation Street" or "EastEnders" is a complete red herring. No one suggests that anyone in Scotland should be deprived of any programme on the BBC network. I see some of my hon. Friends are laughing, but one of our hon. Friends argued that earlier.
  Mr. Godman: My hon. Friend is kidding.
  Mr. McAllion: I do not watch any of those programmes anyway. No one is denying anyone access to the BBC UK network. We are saying that BBC Scotland should be accountable. Clearly, that must be the case.
  The hon. and learned Member for Orkney and Shetland mentioned the insensitivity of the BBC hierarchy in relation to the party political broadcast put out in Scotland immediately before the election. I could cite other examples. My hon. Friend the Member for Dundee, West (Mr. Ross) will confirm that the BBC has taken away resources and manpower from stations in Dundee. Who holds it to account for that? We are merely the two local Members of Parliament. I would rather have a powerful Broadcasting Committee in the Scottish Parliament, which could summon the controller in Scotland and ask questions, such as why this office is being closed or that reporter taken away, or why certain investments were being reduced. That is what should be happening, but it will not happen in this Parliament. It should happen in a Scottish Parliament.
  What about listed events? Because of Sky Television and the tendency nowadays to auction to the highest bidder coverage of sporting events, we have had to list a number of major events that cannot be put out to contract or to the highest bidder, including the Scottish cup final. The Scottish Parliament would be much more likely to defend major Scottish events than would the Westminster Parliament. Therefore, I plead with my hon. Friends not to dismiss entirely the idea that the Scottish Parliament should have a major role in monitoring and overseeing broadcasting in Scotland. Throughout the debates in the convention, we always intended that that should be the case, and the Government should not be backing out now.
  Mr. Hawkins: The hon. Gentleman mentioned listed sporting events, in which I have taken a big interest, along with a number of his hon. Friends. Does he agree that

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  one thing on which there has been agreement between the previous and the new Governments is the importance of listed events? The Secretary of State for Culture, Media and Sport has set up a new panel, which has accepted that there should be listed events. The only issue is which events should be listed. While I agree that national sporting events, both in Scotland and the rest of the United Kingdom, are of vital importance, I suggest that that Cabinet Minister's decision to accept the principle of listed events, which we set up, does not support the hon. Member's argument.
  Mr. McAllion: That all depends on the balance of power inside the panel set up to defend the listed events and whether it regards the Scottish cup final, or indeed the Scottish junior cup final, as a priority. The hon. Gentleman is probably grateful for the fact that the England-West Indies Test series is not a listed event and he does not have to watch it, unless he has Sky Television.
  This is a serious issue. Specifically Scottish events are far more likely to be defended by a Parliament based in Scotland than by a Parliament down here which is dominated by English Members, and rightly so because of the size of the country. That is a simple point, and I hope that the my hon. Friend the Minister will take it on board.
  Broadcasting was intended to be a responsibility of the Scottish Parliament. At some stage, a decision was taken to reverse that intention. I do not know why the decision was taken, what consultation was carried out beforehand or the arguments for it. I hope that my right hon. Friend the Secretary of State will make those matters clear when he replies to the debate.
  Mr. Donald Gorrie: First, I reaffirm that the Liberal Democrats fully support the amendment of the hon. Member for Glasgow, Maryhill (Mrs. Fyfe), which would ensure that the Scottish Parliament controlled equal opportunities and which will reappear at a later stage. We also support many of the arguments of the hon. Member for Dundee, East (Mr. McAllion), which is not unusual.
  What is unusual is that I thought that the speech by the hon. Member for North Essex (Mr. Jenkin) contained a lot of good sense. As other hon. Members and I have often criticised the Conservative contribution to these debates, it seems only fair to say that, although I did not agree with all of it, it was constructive and on the right wave length, if that is the right expression in this debate. I hope that by complimenting the hon. Gentleman on it, I will not ruin his political career.
  We support the first of the amendments tabled by the Scottish National party. It is regrettable that Scottish politics is such that because that party has proposed it, some hon. Members—certainly some Labour Members—feel that they have to oppose it. The Scottish nationalists may not have got all the right answers, but we agree that there must be some sort of say for the Scottish Parliament in broadcasting. It is not realistic for the Scottish Parliament to be precluded from having any opportunity to debate and discuss broadcasting and to call people before it for consultation.
  The line taken by the hon. Member for Falkirk, East (Mr. Connarty) that if the Scottish Parliament had some say in broadcasting it would diminish this Parliament,
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  is not correct. That is the faulty argument, often put up by the Conservatives, that sovereignty is indivisible. We can cheerfully have two or three different bodies—I am sure that the European Parliament discusses such things—with some input into the control of broadcasting.
  The Liberal Democrats certainly do not want political control, censorship and all that sort of thing, but we think that it is reasonable to say that democratically elected Members of the Scottish Parliament could make a contribution on the subject of broadcasting, which impinges on so many other things that that Parliament will control—for example, education, the arts, sport and Gaelic. It would be ridiculous if the Scottish Parliament was promoting some considerable change in education to which broadcasting could contribute, but was not allowed to tell the broadcasters that certain types of programme would be a great help. What if the Parliament wanted to promote the arts? As the hon. Member for Dundee, East said, Scottish broadcasting puts in much more money than the Government via the Scottish Arts Council. It would be ridiculous if, for example, the broadcasting people did not give some great festival in Scotland adequate treatment, but the Scottish Parliament could not discuss with them how they could do more.
  We have concentrated on ITV and the BBC during the debate, but there have been great developments in local television and radio, and in new technologies, which I do not understand. Other hon. Members must have been asked for their views by television and radio stations that they have never heard of. I have no idea whether anyone watches or listens to their programmes, but such organisations are multiplying, so not allowing the Scottish Parliament to discuss the conduct of the local radio station in Auchtermuchty, if one exists, is ridiculous.
  The hon. Member for Falkirk, East was worried about political control. We should turn the argument round: all of us worry about the control exercised by media moguls such as Mr. Murdoch, and it is possible that broadcasting in Scotland might be seriously influenced by a tycoon who was thought by most Members of the Scottish Parliament to have had an adverse effect on events in Scotland.
  The Scottish Parliament must be able to defend itself against the political tyranny of a media tycoon. Our amendments address that point modestly, and the Government should accept them. We suggest that the Scottish Parliament should discuss the annual reports of the BBC and ITV. Specifically, the Scottish Parliament should have a say on Gaelic broadcasting and the appointment of BBC governors in Scotland.
  Our amendments and those tabled by the Scottish National party put down a marker and send a message to the broadcasting centralisers in London. The arts world in particular is over-centralised. I meet London critics who come up to the Edinburgh festival and think that it is great to get out of London for a week or two. Unless an artist appears in London, he does not appear at all so far as they are concerned. Such over-centralisation must be challenged. If the Government refuse to accept the amendments, they will be sending the message, "London rules broadcasting, OK!", which is wrong.
  In the previous debate, the people who said that we had not been given enough time to debate earth shattering issues did not push them to a vote. I am a newcomer to

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  the House, and I found that incomprehensible. I hope that the hon. Member for Perth (Ms Cunningham) will press the amendments to a vote.
  Mr. Malcolm Chisholm: I support amendment No. 93, which was spoken to by my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) and deals with the Equal Opportunities Commission. If it is rejected on the ground that it would catch other bodies, I hope that my right hon. Friend the Secretary of State will take alternative action to deal with the commission's unique circumstances.
  Before the White Paper was published, there was a big debate about the EOC's position. We accept that the commission will be a reserved body, because of its employment remit in particular, but, apart from its law enforcement functions, it works proactively with several organisations in devolved areas. Devolved matters are the key to issues of equality. Therefore, it is vital that the EOC has a locus in relation to the Scottish Parliament, and that objective would be met if the EOC were designated a cross-border body.
  Paragraph 2.10 of the White Paper states:
  "The Scottish Parliament will have the power to require submission of reports and the presentation of oral evidence on the activities of such bodies".
  Such bodies will be accountable to the Parliament, which is particularly appropriate as we are approaching the second stage of the EOC review, and it is likely that the Scottish office of the EOC will have far greater autonomy. Making the EOC a cross-border body would also help to ensure that equality issues are taken account of by the Scottish Parliament, although other amendments will address that point.
  I assume that the EOC is one of the bodies dealt with by paragraph 2.11 of the White Paper, to which the hon. Member for Perth (Ms Cunningham) referred, and that it is not necessary to include those bodies in the Bill, simply because the Scottish Parliament can only invite them to submit reports.
  We will miss an opportunity if we do not recognise the unique status of the EOC. If our amendment is unsuitable, I hope that other action will be taken to achieve its aims.
  7.15 pm
  Mr. Dalyell: As the tail-end Charlie of the debate, I hope that the Committee will forgive me for being a little bewildered as to what all the fuss is about. Wild horses would not stop Members of the Scottish Parliament approaching the broadcasting authorities. It is not in the nature of Members of Parliament to feel so restrained, and I should be astonished if anyone at Queen Margaret drive or anywhere else refused to heed representations.
  I understand from the press that the current proposal differs from the original convention agreement. I am curious to know by what alchemy that happened. I look forward with curiosity to hearing the explanation.
  Ms Roseanna Cunningham: Does the hon. Gentleman accept that we are concerned not about whether Mr. John McCormick would accept an invitation to speak to the Scottish Parliament, but about the very different matter of whether Mr. John Birt would accept such an invitation?
  Mr. Dalyell: Mr. John Birt is a civil man, and if he were asked in a civil way, I am sure that he would accept.
  1122
  These matters should remain informal, unless there is another agenda—I acquit the hon. Lady and her hon. Friends of subscribing to it—under which the Parliament would control broadcasting and the media. She shakes her head vigorously. As long as such control is not the agenda, I do not see the problem.
  Ms Cunningham: Does the hon. Gentleman accept that this Parliament can summon Mr. John Birt to appear, and that the Scottish Parliament will be unable to do that? I accept that a wonderful measure of good will might see us through, but he has frequently pointed out that invitations might be refused. The Westminster Parliament can require attendance, but the Scottish Parliament will be unable to do anything about a refusal.
  Mr. Dalyell: I do not want to extend the discussion, because we have entered the grey area of concordats. I should not trespass into subjects about which I know little. I should just register the fact that there will be great difficulties over predatory pricing, but that, too, is a grey area.
  Clause 83(5)(b) provides that subordinate legislation will detail cross-border public bodies. When will such a statutory instrument be introduced, and what consultation is being carried out on its terms, not only in Scotland, but in England? The Law Society wants that question asked, and I hope that an answer will be forthcoming.
  Mr. Dewar: I have listened to the debate with considerable interest, and have been somewhat entertained as well. I do not know about Auchtermuchty local radio, but I feel that I should spring to the defence of Auchtermuchty, which—if I remember rightly—produced The Proclaimers and Jimmy Shand. Probably, in terms of the clapometer of public opinion, it has made a large contribution to Scottish culture. [Interruption.] I recognise that The Proclaimers have many interesting connections. If the hon. Member for Moray (Mrs. Ewing) writes to me, we will consider these matters with all proper care.
  I enjoyed the performance of the hon. Member for Banff and Buchan (Mr. Salmond). I am sorry that he has left the Chamber, because he is becoming a tremendous facilitator. I note that, if he thinks that his hon. Friend the Member for Perth (Ms Cunningham) is not speaking clearly enough, he repeats her question so that it can be explained again. That is an interesting tactic on the part of the leader of the pack, and I enjoy watching it.
  Let me make a fundamental point. We are trying to bring about a stable division of responsibilities between Westminster and the Scottish Parliament. My hon. Friend the Member for Dundee, East (Mr. McAllion) has said that that will turn the Scottish Parliament into a second-class Parliament—an inferior Parliament, which will be patronised. I do not agree. Some responsibilities will remain at Westminster, for what strike us as good reasons; others will go to the Scottish Parliament.
  It is perfectly fair for people to argue that the division of responsibilities should be readjusted, but, following a devolutionary settlement, there will always be some matters that are not within the remit of the Scottish Parliament and others that are. That is not a mark of disrespect, or the expression of a lack of trust. It is a question of how we achieve the breakdown in a way that has a strength and an internal logic that will serve our constitution well.

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  I accept that there is always room for legitimate argument. I am familiar with the point made by my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe), who has a long track record—I hope that that does not sound like a sinister threat to her future—of pursuing the issue, and who has a perfectly arguable case. I take the view that one of the essential elements of the split to which I have referred is our wish to create a level playing field in the United Kingdom. That level playing field can be defined in a number of ways.
  I do not think that anyone who believes in the devolution settlement would argue that company law in Scotland should be different from company law in England. Few would argue that there should be different labour laws north and south of the border. Obviously, the important financial services sector in Scotland would be enormously disadvantaged if financial services regulation differed north and south of the border. That is common sense. On balance, we have concluded that equal opportunities legislation should be on a British basis.
  That does not mean that Scotland does not have an active interest in such matters; after all, we are talking about a regulatory framework. I hope that the real role of the Scottish Parliament will be to ensure that we follow best practice in Scotland, and that, in the many areas of practical politics that the Parliament will control—education, housing, law reform, and so forth—we are mindful of the need to live up to what we are trying to achieve in terms of equal opportunities. In the next few weeks, we are likely to engage in some interesting debates about the practical aspect of that.
  The fact that there will not be an immediate transfer of power in relation to the regulatory mechanism does not shut us out of the field of equal opportunities. To assume otherwise is to take too defeatist a view, although I recognise and respect the energy with which the point has been put.
  Mrs. Fyfe: We shall debate equal opportunities in general at a later stage, but I should like my right hon. Friend to clarify the role of the Equal Opportunities Commission in relation to the Scottish Parliament and its devolved powers. Would it act as an advisory body if the Parliament wished to proceed with legislation relating to equal opportunities in housing or training, for instance—a subject that was definitely within its remit?
  Mr. Dewar: It is slightly puzzling—although I understand why it happens—that, because something has not been devolved, it is sometimes assumed that a Chinese wall has been erected and communication must stop. That is not true. It should not be thought that the EOC will not be interested in what is happening in Scotland, and will not go to Scotland to look and learn, and, perhaps, teach and encourage. Of course that process will continue, as it should. Scottish legislation will have to take account of the framework that the EOC constructed. There will be a continuing dialogue, which I welcome.
  Mr. Welsh: May I ask a straightforward question? If the devolved Scottish Parliament wished to take evidence or gain information from the broadcasting media, and the media refused, what could it do, apart from saying, "Pretty please"?
  Mr. Dewar: Although the hon. Gentleman is entitled to present such a doomsday scenario, I think that extremely
  1124
  unlikely. If it did happen, it would create a difficulty that would make the policy completely unproductive. I believe that, thus slighted, the Select Committee in the Scottish Parliament would think that its luck was in: it would probably gain more notice and more leverage. That, however, may be a cynical view.
  One point that was important to the hon. Member for Perth was tackled very fairly by the hon. Member for North Essex (Mr. Jenkin). I am not in a partisan mood tonight, and I listened carefully to what the hon. Lady had to say. Moreover, I listened to the reprise, which resulted from a request by the hon. Member for Banff and Buchan that the hon. Lady restate her position.
  I entirely understand that the hon. Lady does not like what is in the White Paper, and she is entitled to argue her case; but I am not being difficult when I say that I fail to comprehend on what basis she argues that we have retreated from what is in the White Paper, or that we have betrayed the spirit of the White Paper. We have translated exactly what is in paragraph 2.11—observing the distinction between that and paragraph 2.10—to the Bill. It may be wrong, but I do not understand how it can be suggested that we are guilty of in-and-out running—that, to put it in colloquial terms, we have ratted. In that regard, I think that I am at one with the vast majority of hon. Members.
  In paragraph 2.10, we refer to public bodies that deal with United Kingdom matters but also with devolved areas of responsibility. We make it clear that the Scottish Parliament, in those circumstances, would have the power to require the submission of reports and the presentation of oral evidence. We go on to make a clear distinction. That will not be the position for the other United Kingdom and Great Britain bodies that will be operating entirely in a reserved area. The Scottish Parliament will be able to invite the submission of reports and the presentation of oral evidence from those bodies.
  The hon. Lady will say—indeed, I have heard her say it many times—that this is a betrayal, a tragic mistake or a lost opportunity. She can use any phrase she likes, but it is certainly not a retreat from the White Paper. I hope that she will not go around saying, in Scotland and elsewhere—on the basis of evidence that no one else can understand—that there has been a betrayal.
  Mr. Dalyell: I am the last person in the world who ought to ask this question, but it was clear that the Scottish Constitutional Convention felt that responsibility for broadcasting should lie with the Scottish Parliament. There has been a change, and I am curious to know why.
  Mr. Dewar: My hon. Friend's curiosity is famous, and it can be a very dangerous and damaging experience to be exposed to it, so I do not want that to happen to me. The answer to his question is, quite simply, in the logic of the point that I have just been making—that we reached the conclusion that broadcasting was part of the regulatory framework, and that it was best that it should be left on a Westminster basis.
  Mrs. Ewing: Will the Secretary of State give way?
  Mr. Dewar: I really must make some progress.
  Mrs. Ewing: What did you mean by "we"?
  7.30 pm
  Mr. Dewar: May I make a little progress? No doubt the hon. Lady will get in later if she wants to.
  It seemed to me that it was best that broadcasting was organised on a Great Britain basis. We are moving into very interesting areas of technological development. I am not sure to what extent satellites and the digital revolution observe the boundary between Scotland and England. In an age when I am told that one of the great improvements to the quality of my life will be that I shall be able to switch on 40 different television channels in my house—I feel exhausted just thinking about it—I am not sure that it makes much sense to break out of the regulatory structure of the country as a whole. The decision was taken on that basis.
  It is difficult for people outside the House to follow this argument, because there is not much to devolve in broadcasting. There is an interesting and important public debate about how we can put a Scottish face on the broadcasting that is received in Scotland, and about whether we can build on the excellence of Scottish broadcasting to encourage cultural life, encourage expertise and bring back the Scottish diaspora of the broadcasting world. In all those respects, devolution gives great opportunities and great grounds for optimism.
  However, in terms of statutory power—the legislative power that is at the heart of the Scottish Parliament—there is very little that could be devolved. Even the BBC would be extremely difficult to devolve, because, as I said in an intervention, it is a creature not of statute but of royal charter. Therefore, in effect, we are discussing very little.
  That is not to underestimate, belittle or sweep to one side the importance of broadcasting as a cultural force, as a medium for the exchange of information, or as a way of giving people a picture of the world and giving the world a picture of Scotland. All the issues that we are discussing should be discussed; it is simply that they do not necessarily depend on the legalistic argument about the regulatory mechanism.
  I do not agree—although it is arguable—that it is advantageous or important for matters concerning the maintenance of fairness and balance in programming to be handed to politicians or be directly influenced or controlled by them. I take the view that, in most of these areas, politicians—for good reasons, irrespective of party—have put in buffer organisations. We say that we do not want to be a country where, if we do not like what we see on our television set, we get on to the controller of that television channel, and say, "I am the Minister and that had bloomin' well better not happen again." It seems to me that, by doing so, one threatens democracy and essential freedoms that we all understand. The role of politicians is to set the regulatory framework—hold the ring, so to speak—and allow broadcasters to use their imagination, verve and innovative powers to produce the programming we all want.
  There is an important difference of approach between those who have supported the amendments in the group before us. My hon. Friend the Member for Dundee, East made it clear that he did not want a separate Scottish BBC. He wanted scrutiny by the Scottish Parliament of what the BBC was doing. Of course, the
  1126
  hon. Member for Perth wants something very different—she wants separate Scottish broadcasting. She wants, to use an odd phrase, to repatriate the licence fees in Scotland. Presumably the Scottish BBC would then live on its own resources and on the excellence of what it can earn in addition to those resources, by selling its programmes abroad.
  Those are two totally different approaches to the problem, and it is important for us to try to understand which we are going for. My view is that, if one did devolve, one would almost certainly do what my hon. Friend the Member for Dundee, East proposes, but he should not underestimate this Parliament's ability to influence events, to deal with the realities and to encourage and promote broadcasting in Scotland.
  The hon. Member for Perth, in an interesting and startling juxtaposition, said that all sorts of things could happen in the field of broadcasting. She said that there would be not a single word from the Scottish Parliament, but that no doubt it would debate the issues. Of course it will debate the issues if it considers that those issues are relevant to it, but I do not think that we need to follow her down the road of suggesting that we want to divide, and build a boundary between, broadcasting in different parts of the United Kingdom. If we wanted to do that, it would require a great deal of discussion, thought and preparation.
  I know that many friends of mine in the BBC and in other parts of the broadcasting industry would wonder about such a separation. They would worry about what would happen if they relied on Scottish licence fee income. Transmission costs in Scotland are very much heavier than in some other parts of the United Kingdom. If they were not spread over the network, they would become a specific charge.
  Scotland is first class at making top-class drama, and has produced many distinguished contributions to the national network, but it costs the same to make a programme for an audience of 5 million or of 60 million. One would need to rely on the programme being bought by the big channels south of the border, but there would be no guarantee of that. Therefore, there are many uncertainties and unknowns if one follows the hon. Member for Perth down that route.
  Nevertheless, my main contention is that we must accept that it is better to leave the regulations on a British basis, but that we should do all we can to encourage and promote excellence of production and of operation for broadcasting in Scotland. Of course there will be a big debate. One gets into trouble by mentioning it, because people immediately think that one is running down Scottish broadcasting. However, anyone who takes a cursory interest in these matters knows that there will be such a debate. It does not depend on whether the matter is formally devolved in terms of schedule 5 or not. The argument will take place about what is right for the viewing public, and perhaps for those who are producing for the viewing public.
  Many people think that we should opt out of 9 o'clock and 10 o'clock national news bulletins and produce our own in Scotland. Others fear that it would be a regressive step, which we should not take. I am not trying to pass judgment, but that debate will continue. The real debate is about how we organise, promote and innovate within

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  the existing regulatory framework. I am confident—very hopeful—that we shall be able to persuade, for example, the BBC that devolution is also a matter for it: that devolution within the BBC is a matter of prime importance, which it must take very seriously.
  I did attend the seminar the other day. I was glad that Sir Christopher Bland was there, and that people from other parts of the network were there to listen and, I hope, to think about the consequences of what is happening and how the BBC, in terms of its charter, its aspirations and its great traditions, can respond, reflect and service the new confidence in Scotland and the broadcasting industry in Scotland.
  I should like to think that devolution will give a big boost to the possibility of bringing to fruition the scheme to put a new headquarters building on Pacific quay in Glasgow, moving the headquarters from Queen Margaret drive and expanding the production facilities in a way that will be advantageous to broadcasting in Scotland.
  Production facilities may be made available to independent producers. A great deal is happening there. I know of many people of talent who are returning to Scotland because they are attracted to the buzz, the movement and the excitement of the changes that will follow the constitutional reforms that I hope the House and this Parliament will agree in the next few months.
  It is much more important to ensure that we do a good job in those terms than to get hooked up on a technical argument about breaking the regulatory framework of the United Kingdom without doing much to aid the really important cause of better broadcasting—better servicing of the viewing and listening public. I look forward with immense confidence, because I have a great deal of faith in the ability of the Scottish broadcasting fraternity to respond.
  I hold to the view that, in a sense, the split is not as fundamental as some people have made out. A great deal will happen in the weeks ahead which I hope will be helpful in setting the pattern and making it clear that Scotland has an increasingly important and independent role to play—in a non-political sense—within the framework of United Kingdom broadcasting. The Government have made proposals for strengthening the link between the Scottish Parliament and broadcasters. The BBC, the Independent Television Commission, the Radio Authority and the Broadcasting Standards Council should remain under reserved matters in schedule 5, which means that formal accountability will remain at Westminster.
  The draft executive devolution order requires consultation with Scottish Ministers in connection with the appointment of the Scottish member of the ITC, and we propose similar provisions for appointments to the Broadcasting Standards Council and the Radio Authority. That will require some adjustment to the powers of appointment to those bodies, because there is currently no separate provision for a Scottish member. That will be a new and considerable influence, which, under present arrangements, is not within the power of the Secretary of State. It will be a matter for the Scottish Executive and, ultimately, the Parliament.
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  There is much happening, and I think that those broadcasting bodies will lay their reports before the Scottish Parliament. Discussions on those matters are continuing, and we may later be able to report on them.
  Mr. Godman: As always, I am listening carefully to my right hon. Friend. I agree that the overwhelming majority of the people I know in Queen Margaret drive are excited about the prospects of political devolution and its implications for broadcasting. I am concerned about the BBC hierarchy in London, which for years has sought to centralise the BBC. I hope that it will take on board what my right hon. Friend has said.
  Mr. Dewar: There has always been tension within the BBC over how it uses its resources. To be fair, it has been under increasing pressure, perhaps because of the reluctance of politicians to increase the licence fee or to look at other forms of financial support. We appreciate the difficulties, but I agree with my hon. Friend: we must persuade not just the BBC but many other broadcasters that they have a responsibility to respond to the challenges of devolution. There are signs of that happening.
  I sometimes meet people whom I have not seen in Scotland for some years, and I say, "What are you doing here?" The reply is, "I have just got a job as the new Scottish political correspondent, a job that has just been created." People in the commissioning business tell me that they are getting increased budgets and that they will be doing more business, hopefully, with independent Scottish production units in Scottish broadcasting.
  The BBC is governed by royal charter, not by statute, and the Government intend that the appointment of the national governor for Scotland will be made after full consultation with Scottish Ministers. Those are important safeguards. When we compare the powers of the Secretary of State on those matters with what will be provided for the Scottish Parliament, it is clear that the cupboard is anything but empty and that considerable and welcome changes are to be introduced.
  I appreciate that long speeches are not necessarily right, so I shall quickly deal with some of the issues that were raised in the debate. The hon. and learned Member for Orkney and Shetland (Mr. Wallace) asked about local television. Independent cable operators are controlled by the ITC. As I have said, we intend to strengthen the Scottish input to that body by ensuring that one of its members will represent Scotland. The ITC has a Scottish office, and takes an appreciated interest in what is happening.
  My hon. Friend the Member for Greenock and Inverclyde (Mr. Godman) asked about a dedicated channel for Parliament. There have been no specific discussions on that, but there is much contact at the moment with the broadcasting authorities about how the new Parliament building will be serviced, and how a media centre or some such facility that will be adequate for the undoubted interest can be created. No doubt we shall look at such matters in due course.

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  7.45 pm
  The question about the Scottish Law Commission was an interesting one. Perhaps it would be infra dig to say that it was produced like a rabbit out of a hat, but it is important.
  The Scottish Law Commission was included in the draft order because it will continue to have functions that will affect United Kingdom Ministers and the law that relates to reserved matters. The contact is multi-faceted because law reform proposals in the domestic law of Scotland are bound to have a significant knock-on effect. Under current arrangements, the appointment of the chair and members of the commission are matters for the Secretary of State. We want to look at that, and I entirely agree that it is an important matter in the context of a body that is central to Scottish law.
  The topic of the Social Security and Child Support Commissioners was even more unexpected as a subject for discussion. Of course social security is a reserved matter, and it will remain outwith the remit of the Scottish Parliament. It will be the preserve—I think that that is the appropriate word—of the Lord Chancellor. There will be provision for proper consultation, which will be achieved by means of the executive devolution order. The draft order was published on 5 February. It is another interesting interface for which reasonably proper and sensible provision has been made. It is clear that the debate will continue for a long time.
  Mr. Wallace: The Secretary of State seems to be coming to the end of his speech. Will he answer some of the questions about Gaelic broadcasting and funding?
  Mr. Dewar: I have taken some advice about that and it seems that the amendment on it is not needed. We would not have opposed it if its intention had not already been achieved. The Government's grant to the Gaelic Broadcasting Committee comes from the Scottish block, and decisions on the allocation of the fund are matters for the committee. As the Scottish block will be under the control of the Scottish Executive and, ultimately, the Scottish Parliament, that can be varied.
  Mr. Dalyell: I asked about clause 83(5). There would be subordinate legislation detailing cross-border public bodies. I think that the Minister has the answer.
  Mr. Dewar: I do not want to be a smart alick, but I have to say that my advisers are not there to prompt my hon. Friend. The working draft of the Cross-Border Public Bodies (Specification) Order 1999 was published yesterday, and I am sure that it can be made available to my hon. Friend. I shall check, and if there is any doubt, I am sure that we can resolve it by conversation.
  There is provision in the draft executive devolution order for Government funding for Gaelic broadcasting to be the responsibility of the Scottish Executive within a regulatory framework, but the matter falls to the Scottish Executive. It will be open to Scottish Ministers, subject to the agreement of the Parliament, to vary the annual allocation of funds to the Gaelic Broadcasting Committee.
  1130
  We do not need to make further provision. If there is better advice, or if some substantial worry is drawn to the attention of the hon. and learned Member for Orkney and Shetland, he can in turn draw it to my attention. My advice is that he would be safe to let the matter drop, in the knowledge that his purpose has been well met in the existing arrangements.
  I do not doubt that there will be a long argument and debate, but I am somewhat consoled by the fact that it will not be tonight, as we have only 11 minutes left on this group of amendments. I do not take a defeatist view of the debate—in fact, the very opposite. No group in Scottish life has more to gain from the changes—apart, perhaps, from politicians—or will get greater satisfaction out of the arrangements.
  The Scottish people will not be forgotten. They are the masters at the end of the day, as the Conservative party knows to its cost.
  Mr. Jenkin: The right hon. Gentleman is so easily amused.
  Mr. Dewar: I take it from the hon. Gentleman's tone that he is not amused, which gives me some considerable satisfaction. However, we can discuss this on another occasion.
  I cannot recommend the amendments to the House. I am sure that we will have much to celebrate in Scottish broadcasting in the years that lie ahead.
  Ms Roseanna Cunningham: The Secretary of State surprised me with his final remarks—I think not. I draw to his attention the arrival in the Chamber of my hon. Friend the Member for Banff and Buchan (Mr. Salmond), who the right hon. Gentleman appears to think has come to ensure that I say precisely what he would have me say. I have known my hon. Friend for some 20 years and he has never yet succeeded in achieving the aim that the Secretary of State fondly imagines him to have. Perhaps the right hon. Gentleman is right, and my hon. Friend's appearance in the Chamber is part of his continued attempt to achieve that control. However, I say to the assembled masses here that, if he has not succeeded in the past 20 years, he is certainly not going to succeed in the next 20 years. He will certainly not succeed tonight.
  The fact is that I, my hon. Friend the Member for Banff and Buchan and my other hon. Friends agree because we agree, not because we are told what we must or must not think. This may surprise members of other political parties, but members of my party are able to come to some agreement. My hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Morgan) is away on a parliamentary trip—
  Mr. Desmond Swayne: Where has he gone?
  Ms Cunningham: My hon. Friend is in Japan with the Select Committee on Trade and Industry. I am sure that he is having a wonderful time, but not as wonderful a time as we are having.
  I want briefly to refer to the aspects of the amendments that relate to clause 83. Although the overall intention behind the amendments relates to the devolution of broadcasting, some other issues have been raised. I note

  1131
  what has been said about amendment No. 93, which is not an SNP amendment. I support the remarks about the Equal Opportunities Commission, and I look forward to the debate that we will undoubtedly have on another occasion.
  Although the comments on amendment No. 93 related to the EOC, they also expressed the same underlying concern about the clause that I expressed in relation to broadcasting. I do not know whether the Secretary of State wants to accept it, or whether he wants to continue looking puzzled, but the truth is that there is concern about what all this ultimately will mean.
  I hear what the right hon. Gentleman says about paragraph 2.10 of the White Paper. However, paragraph 2.11 has not been translated into the Bill. The Secretary of State is shaking his head. He is clearly trying to tell me that it does not need to be in the Bill. In that case, its inclusion in the White Paper was misdirection, which is a pity.
  Our amendments are about the definition contained in clause 83. We envisage anomalies arising from that. It is all very well to say that, with good will, matters will work out—the truth is that invitations can be politely, graciously but frequently declined. We all decline invitations on occasion.
  I am astonished that the debate about the devolution of broadcasting is seen as a threat to democracy. I have already quoted a number of prominent broadcasters who support our concept. I hope, and have every expectation, that Scottish broadcasting will thrive in the coming years.
  I want to quote someone who is as well known to the Secretary of State as the other people I mentioned earlier. I refer to Nigel Smith, whom the hon. Member for Falkirk, East (Mr. Connarty) may think is a wild-eyed separatist, along with all the other people he thinks are wild-eyed separatists. In fact, this particular wild-eyed separatist is on the Labour party vetting committee for Scottish Parliament candidates. He is also a former member of the BBC Scottish broadcasting council, and chairman of Scotland Forward.
  In a letter, Nigel Smith gives a list of issues that a Scottish Parliament could debate, but over which it would have no related powers. I recognise that some of the issues have been raised by hon. Members, but Nigel Smith's list includes Channel 5 coverage in Scotland, the sale of BBC transmitters in Scotland, cross-media takeovers and the BBC licence in Scotland. Those are all issues that Nigel Smith thinks are important. He believes not only that the Scottish Parliament should be able to debate them, but that it should have the power to do something about them.
  Nigel Smith is hardly someone whom the Government would regard as a star-gazing, wild-eyed revolutionary. If they did, he would be surprised to hear it. I have already referred to the comments of the hon. Member for Falkirk, East and his attack on "Voice for Scotland", which he claimed was following a separatist agenda. I am not sure to whom he was referring. Perhaps it was Pat Chalmers, who I understand was a Liberal Democrat councillor. I am sure that he would be surprised to discover that he was thought to be a wild-eyed separatist. Equally, Ruth Wishart would be surprised to discover that, in the eyes of the hon. Gentleman, she is a wild-eyed separatist.
  Mr. Connarty rose—
  Ms Cunningham: I have only three minutes left, so I will not give way to the hon. Gentleman.
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  It was Ruth Wishart who provided me with the newspaper analogy that the hon. Gentleman seemed to find so threatening. Perhaps he should direct his concerns and fears to that eminent person, who is undoubtedly well known to the hon. Gentleman.
  Nigel Smith's letter was written to the Secretary of State for Culture, Media and Sport. He directly referred to the existing arrangements as indirect, diffuse and bound up with Scotland's small share in British broadcasting. His view is:
  "If … Devolution is to breathe new life into Scottish affairs some care should be taken to see that vitality is properly reflected in the most important medium of the Age"—
  broadcasting.
  It was daft to claim that we would not get the soaps in Scotland. People who suggest that should get a grip. I am happy to go on record that my preferred soap is "EastEnders". I make absolutely sure that it is taped if I am unable to watch it, as I do not want to miss it. However, it is a trivialisation of the debate to use those terms.
  Nor is the debate about control—it is about having powers equivalent to those that Westminster currently has. Frankly, if it is so bad for the Scottish Parliament to have those powers, why is it acceptable for Westminster to have them? I quote Nigel Smith on that matter. He said:
  "This appeal should not be misrepresented as an argument for controlling broadcasting."
  As I said, Nigel Smith is busy helping the Labour party to vet potential candidates for the Scottish Parliament. I therefore think that his views on the matter are very instructive and useful to share. I thank him.
  I am grateful also to the hon. Member for Dundee, East (Mr. McAllion) for his useful contribution in explaining the position of the constitutional convention. He is an example of the cross-party support for our amendment.
  The international context is important, and we need more programming in Scotland that reflects Scottish interests in overseas matters. I specifically commend "Eorpa" on meeting that need week after week. It is one of the best factual programmes on Scottish television—in Gaelic, but subtitled for the rest of us who watch it avidly. It is another programme that I tape and ensure—
  It being Eight o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [23 February], put forthwith the Question already proposed from the Chair.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 42, Noes 287.

  Division No. 190]

  [8 pm

  AYES

  Allan, Richard

  Cunningham, Ms Roseanna (Perth)

  Baker, Norman

  Ballard, Mrs Jackie

  Ewing, Mrs Margaret

  Beggs, Roy

  Fearn, Ronnie

  Beith, Rt Hon A J

  Foster, Don (Bath)

  Brake, Tom

  George, Andrew (St Ives)

  Brand, Dr Peter

  Gorrie, Donald

  Burnett, John

  Hancock, Mike

  Burstow, Paul

  Harris, Dr Evan

  Cable, Dr Vincent

  Heath, David (Somerton & Frome)

  Campbell, Menzies (NE Fife)

  Hughes, Simon (Southwark N)

  Chidgey, David

  Jones, Nigel (Cheltenham)

  Cotter, Brian

  Kirkwood, Archy

  1133

  Livsey, Richard

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

  Llwyd, Elfyn

  Stunell, Andrew

  Michie, Mrs Ray (Argyll & Bute)

  Tyler, Paul

  Moore, Michael

  Walker, Cecil

  Oaten, Mark

  Wallace, James

  Öpik, Lembit

  Webb, Steve

  Rendel, David

  Willis, Phil

  Russell, Bob (Colchester)

  Tellers for the Ayes:

  Salmond, Alex

  Mr. Andrew Welsh and

  Sanders, Adrian

  Mr. John Swinney.

  NOES

  Abbott, Ms Diane

  Dalyell, Tam

  Ainger, Nick

  Darvill, Keith

  Ainsworth, Robert (Cov'try NE)

  Davey, Valerie (Bristol W)

  Allen, Graham

  Davidson, Ian

  Anderson, Donald (Swansea E)

  Davies, Rt Hon Denzil (Llanelli)

  Anderson, Janet (Rossendale)

  Davies, Geraint (Croydon C)

  Ashton, Joe

  Davies, Rt Hon Ron (Caerphilly)

  Austin, John

  Davis, Terry (B'ham Hodge H)

  Battle, John

  Dawson, Hilton

  Bayley, Hugh

  Dean, Mrs Janet

  Beard, Nigel

  Denham, John

  Beckett, Rt Hon Mrs Margaret

  Dewar, Rt Hon Donald

  Begg, Miss Anne

  Dismore, Andrew

  Benn, Rt Hon Tony

  Dobbin, Jim

  Bennett, Andrew F

  Donohoe, Brian H

  Benton, Joe

  Doran, Frank

  Bermingham, Gerald

  Dowd, Jim

  Betts, Clive

  Drew, David

  Blackman, Liz

  Drown, Ms Julia

  Blears, Ms Hazel

  Dunwoody, Mrs Gwyneth

  Blizzard, Bob

  Edwards, Huw

  Boateng, Paul

  Efford, Clive

  Bradley, Keith (Withington)

  Ellman, Mrs Louise

  Bradley, Peter (The Wrekin)

  Ennis, Jeff

  Bradshaw, Ben

  Field, Rt Hon Frank

  Brinton, Mrs Helen

  Fisher, Mark

  Brown, Rt Hon Nick (Newcastle E)

  Fitzpatrick, Jim

  Buck, Ms Karen

  Fitzsimons, Lorna

  Burden, Richard

  Flint, Caroline

  Burgon, Colin

  Flynn, Paul

  Butler, Mrs Christine

  Follett, Barbara

  Byers, Stephen

  Foster, Rt Hon Derek

  Campbell, Alan (Tynemouth)

  Foster, Michael Jabez (Hastings)

  Campbell, Mrs Anne (C'bridge)

  Foster, Michael J (Worcester)

  Campbell, Ronnie (Blyth V)

  Foulkes, George

  Campbell—Savours, Dale

  Fyfe, Maria

  Cann, Jamie

  Galbraith, Sam

  Caplin, Ivor

  Galloway, George

  Casale, Roger

  Gardiner, Barry

  Chapman, Ben (Wirral S)

  George, Bruce (Walsall S)

  Chaytor, David

  Gerrard, Neil

  Chisholm, Malcolm

  Gibson, Dr Ian

  Church, Ms Judith

  Gilroy, Mrs Linda

  Clark, Paul (Gillingham)

  Godman, Norman A

  Clarke, Eric (Midlothian)

  Godsiff, Roger

  Clarke, Rt Hon Tom (Coatbridge)

  Goggins, Paul

  Clarke, Tony (Northampton S)

  Golding, Mrs Llin

  Clelland, David

  Gordon, Mrs Eileen

  Coffey, Ms Ann

  Griffiths, Win (Bridgend)

  Cohen, Harry

  Grogan, John

  Colman, Tony

  Gunnell, John

  Connarty, Michael

  Hain, Peter

  Cook, Frank (Stockton N)

  Hall, Mike (Weaver Vale)

  Cooper, Yvette

  Hall, Patrick (Bedford)

  Corbett, Robin

  Hanson, David

  Corston, Ms Jean

  Heal, Mrs Sylvia

  Cousins, Jim

  Healey, John

  Cranston, Ross

  Henderson, Ivan (Harwich)

  Crausby, David

  Heppell, John

  Cryer, Mrs Ann (Keighley)

  Hesford, Stephen

  Cryer, John (Hornchurch)

  Hinchliffe, David

  Cunliffe, Lawrence

  Hodge, Ms Margaret

  Cunningham, Jim (Cov'try S)

  Hoey, Kate

  1134

  Hoon, Geoffrey

  Murphy, Denis (Wansbeck)

  Hope, Phil

  Murphy, Jim (Eastwood)

  Hopkins, Kelvin

  O'Brien, Bill (Normanton)

  Howarth, Alan (Newport E)

  O'Hara, Eddie

  Howarth, George (Knowsley N)

  Olner, Bill

  Hughes, Ms Beverley (Stretford)

  Organ, Mrs Diana

  Hurst, Alan

  Palmer, Dr Nick

  Hutton, John

  Pendry, Tom

  Iddon, Dr Brian

  Perham, Ms Linda

  Jackson, Ms Glenda (Hampstead)

  Pickthall, Colin

  Jackson, Helen (Hillsborough)

  Pike, Peter L

  Jamieson, David

  Plaskitt, James

  Jenkins, Brian

  Pollard, Kerry

  Johnson, Alan (Hull W & Hessle)

  Pope, Greg

  Johnson, Miss Melanie (Welwyn Hatfield)

  Pound, Stephen

  Powell, Sir Raymond

  Jones, Barry (Alyn & Deeside)

  Prentice, Gordon (Pendle)

  Jones, Helen (Warrington N)

  Primarolo, Dawn

  Jones, Dr Lynne (Selly Oak)

  Purchase, Ken

  Jones, Martyn (Clwyd S)

  Quin, Ms Joyce

  Jowell, Ms Tessa

  Quinn, Lawrie

  Keeble, Ms Sally

  Rammell, Bill

  Keen, Alan (Feltham & Heston)

  Reid, Dr John (Hamilton N)

  Kelly, Ms Ruth

  Robertson, Rt Hon George (Hamilton S)

  Kemp, Fraser

  Kennedy, Jane (Wavertree)

  Rogers, Allan

  Kidney, David

  Rooker, Jeff

  Kilfoyle, Peter

  Rooney, Terry

  King, Andy (Rugby & Kenilworth)

  Ross, Ernie (Dundee W)

  Ladyman, Dr Stephen

  Roy, Frank

  Lawrence, Ms Jackie

  Ruane, Chris

  Lepper, David

  Salter, Martin

  Leslie, Christopher

  Sawford, Phil

  Levitt, Tom

  Sedgemore, Brian

  Lewis, Ivan (Bury S)

  Sheerman, Barry

  Lewis, Terry (Worsley)

  Sheldon, Rt Hon Robert

  Linton, Martin

  Short, Rt Hon Clare

  Livingstone, Ken

  Simpson, Alan (Nottingham S)

  Lloyd, Tony (Manchester C)

  Singh, Marsha

  Lock, David

  Skinner, Dennis

  Love, Andrew

  Smith, Rt Hon Andrew (Oxford E)

  McAllion, John

  Smith, John (Glamorgan)

  McAvoy, Thomas

  Smith, Llew (Blaenau Gwent)

  McCabe, Steve

  Snape, Peter

  McCafferty, Ms Chris

  Soley, Clive

  McDonagh, Siobhain

  Squire, Ms Rachel

  Macdonald, Calum

  Starkey, Dr Phyllis

  McFall, John

  Stevenson, George

  McGuire, Mrs Anne

  Stewart, Ian (Eccles)

  McKenna, Mrs Rosemary

  Stinchcombe, Paul

  Mackinlay, Andrew

  Stott, Roger

  McLeish, Henry

  Strang, Rt Hon Dr Gavin

  McNamara, Kevin

  Straw, Rt Hon Jack

  McNulty, Tony

  Stringer, Graham

  MacShane, Denis

  Sutcliffe, Gerry

  Mactaggart, Fiona

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  McWilliam, John

  Mahon, Mrs Alice

  Taylor, David (NW Leics)

  Mallaber, Judy

  Thomas, Gareth (Clwyd W)

  Mandelson, Peter

  Thomas, Gareth R (Harrow W)

  Marsden, Gordon (Blackpool S)

  Tipping, Paddy

  Marshall, David (Shettleston)

  Touhig, Don

  Marshall, Jim (Leicester S)

  Trickett, Jon

  Martlew, Eric

  Truswell, Paul

  Michael, Alun

  Turner, Dennis (Wolverh'ton SE)

  Michie, Bill (Shef'ld Heeley)

  Turner, Dr George (NW Norfolk)

  Milburn, Alan

  Twigg, Derek (Halton)

  Mitchell, Austin

  Vis, Dr Rudi

  Moonie, Dr Lewis

  Walley, Ms Joan

  Moran, Ms Margaret

  Ward, Ms Claire

  Morgan, Ms Julie (Cardiff N)

  Wareing, Robert N

  Morley, Elliot

  Watts, David

  Morris, Ms Estelle (B'ham Yardley)

  Whitehead, Dr Alan

  Morris, Rt Hon John (Aberavon)

  Wicks, Malcolm

  Mudie, George

  Williams, Rt Hon Alan (Swansea W)

  Mullin, Chris

  1135

  Williams, Alan W (E Carmarthen)

  Worthington, Tony

  Williams, Mrs Betty (Conwy)

  Wray, James

  Wilson, Brian

  Wright, Anthony D (Gt Yarmouth)

  Winnick, David

  Wright, Dr Tony (Cannock)

  Winterton, Ms Rosie (Doncaster C)

  Wyatt, Derek

  Wise, Audrey

  Tellers for the Noes:

  Wood, Mike

  Ms Bridget Prentice and

  Woolas, Phil

  Mr. Kevin Hughes.

  Question accordingly negatived.
  THE CHAIRMAN then proceeded to put forthwith the Question necessary for the disposal of the business to be concluded at that hour.
  Clause 83 ordered to stand part of the Bill.

Clause 84

  POWER TO ADAPT CROSS-BORDER PUBLIC BODIES
  Dr. Liam Fox: I beg to move amendment No. 461, in page 38, leave out lines 32 to 35.
  The Chairman of Ways and Means (Sir Alan Haselhurst): With this, it will be convenient to discuss the following amendments: No. 463, in page 39, line 7, at end add
  'and it has been passed by an affirmative resolution of both Houses of Parliament'.
  No. 428, in clause 85, page 39, line 31, leave out 'has' and insert
  'and such other persons or bodies as the Parliament may determine have'.
  No. 462, page 39, line 31, at end add
  'and it has been passed by an affirmative resolution of both Houses of Parliament'.
  Dr. Fox: In his long and winding winding-up speech, the Secretary of State referred to the cross-border public bodies specification paper made available to hon. Members a couple of days ago, a paper whose naive optimism shines through. It talks about the Government envisaging that the Scottish Parliament will want to continue these arrangements. It
  is very optimistic, to the extent that one would have to have powers well in excess of those of Mystic Meg to be able to predict anything of the sort.
  8.15 pm
  Clauses 83 to 85 give power to the part of the White Paper that deals with the statutory right to consultation. I want to know from the Minister what one or two of the terms in this part mean, which is why we have tabled these probing amendments.
  I should like the Minister to give us the plain person's plain English guide to what "subordinate" actually means in clause 84 and how it relates to other clauses, especially clause 101(8). Everything seems to hinge on there being agreement. Clause 84(1)(a) is most extraordinary. It refers to
  "enabling powers to be exercised or requiring duties to be performed by the Scottish Ministers instead of by a Minister of the Crown, or by the one or by the other, or by both jointly or by either with the agreement of or after consultation with the other".
  1136
  Thus the provisions in paragraph (a) gradually become watered down. They remind me of what a friend of mine said after a particularly bad night. She said that she was never going to drink again;, well, not during the day; well, not in the morning, except for white wine—before she had a bloody Mary before breakfast. Paragraph (a) waters down the provision, but amendment No. 461 would delete that paragraph.
  I am looking forward to hearing what the Minister has to say. Can subordinate legislation
  "make provision in relation to a cross-border public body"
  by agreement or after consultation? Does "after consultation" mean that even if no agreement is reached, it can all go ahead anyway? Does it mean that under subordinate legislation the Parliament can do exactly what it wants?
  Amendment No. 462 deals with perhaps the most interesting aspect of the matter. We want to ensure that there will be sufficient scrutiny by the House, so we wish the Bill to state that no subordinate legislation shall be made under the clause unless the cross-border public body concerned has been consulted and an affirmative resolution has been passed by both Houses. That would give the House sufficient power to protect the future of the cross-border bodies and would prevent the ping-pong and recipe for friction that are all too apparent in the clause.
  I especially look forward to the Minister defining exactly what "subordinate" means in the clause so that, as the Secretary of State said at the outset, we can avoid the worst-case scenario in which we get into utterly unnecessary scraps about the future of these bodies once the Parliament is up and running.
  Mr. Dalyell: Clause 84(3) requires the cross-border body concerned to be consulted before subordinate legislation is made to adapt it under the clause. What form is this consultation going to take?
  Mr. McLeish: Before speaking specifically to the amendments, I should like to take up and deal with the points made by the hon. Member for Woodspring (Dr. Fox). First, the notes on clauses contain an explanation of the various subsections. Secondly, we anticipate coming back on Report with some technical amendments that will clarify and simplify some of the issues raised. Thirdly, in an attempt to be courteous and helpful, I will send a letter to the hon. Gentleman about the raft of clauses that deal with subordinate legislation, giving an insight into how they are constructed and hang together and what the impact will be on, for example, consultation. I hope that that is helpful.
  Dr. Fox: Apart from writing to me, will the Minister make the letter available to all parties, and will he ensure that copies are available in the Library for the benefit of all right hon. and hon. Members?
  Mr. McLeish: I apologise for that oversight. Copies will be sent to the spokespersons of the parties and to right hon. and hon. Members who have attended our proceedings and taken an active interest in them.
  The amendments relate to important considerations dealing with subordinate legislation. In the context of amendments Nos. 461, 463, 428 and 462, clauses 84 and

  1137
  85 are essential elements of the provision which the Bill makes to implement the proposals in the White Paper for dealing with those public bodies that are concerned with both devolved and reserved matters. These are the cross-border public bodies that we have been talking about.
  Amendment No. 461 would delete an essential part of clause 84—that which enables ministerial powers and duties to be exercised in a way appropriate to the body concerned, either by transferring them to the Scottish Ministers or providing that they will be exercised jointly, after consultation or with agreement. The amendment would entrench the position under clause 83 whereby the functions are exercisable only by a Minister of the Crown, albeit with a requirement to have consulted the Scottish Minister in certain cases. For some bodies, that position might be appropriate, but for many it is only right that the Scottish Ministers should exercise appropriate control.
  It would, for example, make sense that a Scottish Minister should alone be able to exercise a power of direction in relation to devolved matters in or as regards Scotland. The bodies are, after all, concerned with devolved matters for which the Scottish Executive will be accountable. Of course, if we fail to make provision for a fair and equitable reallocation of powers in the way provided for by clause 84, it will make it all the more likely that the Scottish Parliament will decide to legislate to set up a separate body. It seems to be far more sensible and efficient instead to create the conditions under which cross-border bodies can continue to serve both United Kingdom and Scottish Ministers.
  I hope that in the light of that explanation the hon. Gentleman will agree that his amendment would introduce an undesirable rigidity into the arrangements that can be made for enabling these public bodies to continue to operate on a cross-border basis, and that he will withdraw the amendment.
  Dr. Fox: Subsection (1)(a) reads:
  "either with the agreement of or after consultation with the other".
  Does "after consultation" mean that if no agreement is reached, powers can still be taken under subordinate legislation to go ahead, even if one side or party is unwilling that that should be so?
  Mr. McLeish: We intend to have consultation and, we hope, agreement. We are talking of cross-border public bodies as defined in the relevant clauses. We hope that agreement will always be the result. If not, the procedures that are provided by the Bill in the light of failure to agree would be set in motion. Such procedures are contained in other clauses. It is important to recognise that we are talking about subordinate legislation in both houses. We are talking also about agreement with the principal parties concerned. If we talk about a cross-border public body, we talk also about reserved and devolved matters involving the same body. Therefore, the responsibilities of Holyrood and those of Westminster would proceed on the basis that I have outlined.
  Amendments Nos. 463 and 462 are similar in effect. They would require subordinate legislation under clauses 84 and 85 to be subject to affirmative resolution of both Houses of Parliament. First, I should assure the hon.
  1138
  Gentleman that I fully share his concern that there should be adequate scrutiny of any subordinate legislation that is made under clauses 84 and 85. However, I contend that amendments Nos. 482 and 483 would be unnecessarily restrictive. As for clause 101, any order made under clause 84 must be laid both in this Parliament and in the Scottish Parliament. In terms of clause 102, these powers are open powers, which means, among other things, that the order may be subject to affirmative or negative procedure.
  In practice, we think that the subject matter of these orders will often not require debate. It is surely not being suggested that, for example, where the order is concerned only with a power to certify the accounts of a particular body, it should be subject to affirmative procedure. We certainly do not think that it would be appropriate to make every such order subject to affirmative procedure, as amendment No. 463 would do.
  Again, we are talking about flexibility and considering the specific issue that will be the subject of subordinate legislation. I think that flowing from that would be a decision taken by both Houses on the procedures to be adopted. In the light of what I have said, I ask the hon. Gentleman not to press amendments Nos. 482 and 483.
  I move on to amendment No. 428. We are putting in place provisions to enable public bodies to continue to operate on a cross-border basis, but we must take account of the fact, that where matters are not reserved, the Scottish Parliament will be able to legislate to provide that such a body should no longer exercise its functions in relation to devolved matters in or as regards Scotland. Most probably, this would be in the context of a decision to set up separate Scottish arrangements. Clause 85 enables the practical consequences of such a decision to be dealt with, by enabling the transfer of appropriate property.
  Again, it is all about flexibility being built into the future. The current settlement on cross-border public bodies could change. The proposed facility will allow both Parliaments closely to examine the distribution of the powers and responsibilities and allow sensible decisions to be made in the light of what is happening around the bodies concerned.
  The clause imposes a requirement for the body concerned to be consulted before an order is made, and that is absolutely right. Amendment No. 428 would, in addition, require prior consultation with other persons to be determined by the Scottish Parliament. Presumably the hon. Gentleman would want the United Kingdom Parliament to have a similar role. However, in the Government's view such additional requirements are unnecessary. As I have said, the procedure for subordinate legislation under the clause requires agreement between the UK Government and the Scottish Executive, and orders will be laid before both Parliaments. That surely will be enough to ensure that all those with a legitimate interests will be aware of what is proposed. I cannot see the point of the additional mechanism that would be imposed by the amendment.

  1139
  In the light of those comments, I hope that the hon. Gentleman will agree that amendment No. 428 is unnecessary and that he will not press it.
  Mr. Dalyell: What is my hon. Friend's answer to my question on subsection (3)?
  Mr. McLeish: I have answered the point. The question is about subordinate legislation, and we are talking about a process where subordinate legislation will be processed by both Houses. It is clearly the position that no action can be taken until the cross-border public body has been consulted on the changes that are envisaged. The process will ensure consultation between the body and the Parliament. It allows for discussions, if necessary, between the Scottish Executive and Westminster Ministers, and from there would flow the appropriate legislation to enact that which was being suggested. It will be a comprehensive process of consultation. Again, this is reflected in other parts of the Bill, and the Committee will remember our discussions on various other procedures affecting the change from Westminster to Holyrood.
  Dr. Fox: I find myself somewhat disconcerted and almost speechless given the Minister's new-found flexibility. In almost his opening sentence, he agreed with the Opposition that the current descriptions and explanations of "subordinate" are virtually incomprehensible as they are written. We are glad to be told by the Minister that the Government will require to bring technical amendments before the House of Commons so that the provisions can become understandable. That information is gratefully received by those of us who are not lawyers, who thought that we simply could not understand the Bill.
  I welcome the Minister's plan to write to all Members who have taken an interest in these matters, to set out explanations of how the Government will proceed. That having been said, I have reservations about references to subordinate legislation remaining in the Bill, but on this occasion we shall give the Minister the benefit of the doubt. I look forward to his explanations. No doubt we can return to these matters at a later stage. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Question proposed, That the clause stand part of the Bill.
  Mr. Dalyell: I know that you will rule me out, Sir Alan, if what I am about to say is out of order. I tell my hon. Friend the Minister immediately that I do not expect a full answer.
  With all this laying of orders it would seem to be assumed that there will be available to the Scottish Parliament the expertise that we often take for granted of the Clerks of the House of Commons. I do not know whether this is the right moment to ask the question, but are there proposals for seconding members of the expert Clerks Department? We are talking of refined expertise. Certainly, 20 years ago there was a good deal of controversy about this. I do not know the answer to the question. If my hon. Friend says, "I shall give you the answer but not on clause 84", I would take that as acceptable.
  1140
  In parenthesis, there is the question of transferring the expertise of a Fees Office. I shall not stray out of order but I am wondering about these practical matters.
  Mr. McLeish: I am tempted to say that the transfer of the Fees Office or some equivalent might rank higher in the priorities of some hon. Members. I should like to give my hon. Friend this simple reassurance. We are establishing a serious Parliament in Edinburgh. Through our civil servants, we receive some of the best advice available and we have set up a committee of the consultative steering group to look at technical procedures. My hon. Friend can be absolutely assured that we intend to provide a professional operation at Holyrood from day one, which means that we will need to look at all the issues he mentioned. I have no reason to doubt that expert advice will be available in Edinburgh at the appropriate time. We have it available in this House and it will be available in Holyrood.
  Question put and agreed to.
  Clause 84 ordered to stand part of the Bill.

Clause 85

  POWER TO TRANSFER PROPERTY OF CROSS-BORDER PUBLIC — BODIES
  Question proposed, That the clause stand part of the Bill.
  8.30 pm
  Mr. Dalyell: I have a small point, which comes from the Law Society of Scotland. It is concerned about clause 85(5) and wants an amendment ensuring that the obligation to consult on subordinate legislation affecting cross-border public bodies will be adequate and not limited to the body concerned. The reason is that the Law Society is of the view that wide consultation on proposals to make subordinate legislation is necessary, especially in relation to cross-border bodies. Does the Minister have any reflections on that request?
  Mr. McLeish: The Law Society has made some constructive points, but, again, I give my hon. Friend the assurance that those points are covered. There is already consultation with the cross-border public body affected, but wider consultation will invariably happen, because we shall be dealing with two serious orders that have to be processed through Holyrood and Westminster. In that process, there will be wider consultation than is envisaged in the direct consultation between the cross-border public body and the two Parliaments.
  Question put and agreed to.
  Clause 85 ordered to stand part of the Bill.

Clause 86

  MALADMINISTRATION
  Mr. Gorrie: I beg to move amendment No. 410, in page 39, line 34, leave out 'to its members'.
  The Chairman: With this, it will be convenient to discuss amendment No. 411, in page 40, line 4, at end add—
  '(4A) The Parliament may, by subordinate legislation, alter the list of authorities within its investigatory jurisdiction in so far as it relates to matters which are not reserved.'.
  Mr. Gorrie: The purpose of the amendment is quite clear: it is designed to make it simpler and more tidy for the Scottish Parliament to set up its ombuds-system.
  As it stands, the Bill suggests that provision should be made for the
  "investigation of relevant complaints made to its members".
  As I understand it, the system at Westminster is that all requests for investigation to the ombudsman have to go through a Member of Parliament. In the case of local government, it stated that any request had to go through a local councillor, but the system was changed to ensure that requests could go direct. We are suggesting that, in the case of the Scottish Parliament, any form of application can be used, so that people can go direct to the ombudsperson, or to their Scottish Member of Parliament, or to their Westminster Member of Parliament, or to their European Member of Parliament, or to a local councillor.
  In that way, people will not be put off or confused about which of the different people they should approach. Some members of the public will not distinguish between powers held at Holyrood—or Glasgow—and powers held here at Westminster. There is confusion among hon. Members of this House, so there is bound to be greater confusion among members of the public. It is much tidier if any route can be used.
  Mr. Godman: Would it not make better sense to allow the Scottish Parliament itself to determine how complaints should be brought to an ombudsman?
  Mr. Gorrie: Our amendment would allow that to happen. We suggest removing the words "to its members", so that the clause would read:
  "The Parliament shall make provision for the investigation of relevant complaints made … in respect of any action taken".
  It would then be up to the Parliament to set out the precise system. Under the Bill as it stands, people would have to contact their Member of the Scottish Parliament.
  An additional issue is that in the Scottish Parliament, there will not be the same degree of ownership, if I may call it that, of a complaint by the constituency Member. That is because there will also be the list Members, many of whom will be well-known in the area and who may be approached by the public to pursue a case. We think that our suggestion is extremely constructive and would help to speed matters along the way.
  Mr. Oliver Heald: The local government ombudsman is able to take complaints direct from the public. Is that the model that the hon. Gentleman prefers and is proposing that the Scottish Parliament should use?
  Mr. Gorrie: We accept the point made by the hon. Member for Greenock and Inverclyde (Mr. Godman) that
  1142
  it would be up to the Parliament to determine the precise arrangements, but we have no objection to an individual citizen being able to contact the ombudsperson directly, if that is what is decided.
  As I understand it, the view in ombuds-circles is that it would be more helpful if people were able to go direct to the ombudsman, rather than having to go through their Member of Parliament, so we think that that is a good route. However, our main point is that the Bill is too prescriptive: it should be open to the Scottish Parliament to decide what system it wants to use and we should not prescribe that complaints should have to go through a Member of that Parliament.
  Amendment No. 411 merely suggests that the Scottish Parliament should be able to alter fairly easily the list of duties covered by the ombudsperson, so that if new duties emerge, there will be no great difficulty in adding to the list. We feel that our amendments are helpful and uncontroversial, and I am happy to commend them to the Committee.
  Mr. Heald: It is a curious aspect of the Bill that some matters are left so vague, and that is certainly true in respect of the ombudsman for Scotland.
  As hon. Members will know from their own experience dealing with the Parliamentary Commissioner for Administration, the local government ombudsman and the health ombudsman, there is already a good deal of overlap between the jurisdiction of the various authorities that have been established. One of my concerns, which prompts the first of my questions to the Minister, is to ask what is going to happen in respect of the various Scottish authorities which are already covered by the parliamentary commissioner, for example, the Scottish Environment Protection Agency, Scottish Homes, the Scottish medical practices committee, Scottish Natural Heritage, the Scottish tourist board and the Sports Council for Scotland? It is not clear from the wording of clause 86(1) whether those bodies come under the terms of the clause and are bodies which act
  "on behalf of … a member of the Scottish Executive".
  I should be grateful if the Minister could explain what will happen to the various authorities under the new arrangements. He may say that the Government want to leave a good deal of discretion to the Scottish Parliament. What would be the legal effect of the clause without the amendment? Would the Parliament be able to take on the responsibility of having its own commissioner for those important bodies in Scotland?
  My second question is whether it is possible for the job done by the health ombudsman for the United Kingdom to be severed so that the Scottish part of the job is dealt with by the Scottish ombudsman. Is that the Government's proposal?
  Thirdly, what about the functions of the various other authorities that have responsibilities similar to those of the ombudsman? Fourthly, will it be possible for a Scottish ombudsman to take over a range of responsibilities for various authorities in Scotland, or will scrutiny in an area of devolved responsibility be dealt with by the UK Parliament?
  Finally, the Scottish Parliament may take responsibility for tourism in Scotland. Two of the reserved matters in the Bill are the subject matter of the Timeshare Act 1992 and the Package Travel, Holidays and Tours Regulations

  1143
  1992, which are central to tourism. What would happen if the Scottish tourist board were dealt with by the Parliament, but the UK ombudsman dealt with scrutiny of the Scottish tourist board?
  Mr. Dalyell: I shall treasure the collective suggested by the hon. Member for Edinburgh, West (Mr. Gorrie) of ombuds-circles. I like the idea of moving in ombuds-circles.
  Mr. Menzies Campbell: An alternative to crop circles.
  Mr. Dalyell: Maybe, but we all have a problem. Come the Scottish Parliament, what about our surgeries? Endless people will come to us as at present. When they turn up, it is difficult to say, "That has nothing to do with me, go to your Member of the Scottish Parliament."
  Mrs. Anne McGuire: That happens anyway.
  Mr. Dalyell: It will be a difficult situation for all of us.
  Mr. Godman: I have some sympathy for the amendments, but if the avenue along which complaints are made is widened, how will the ombudsman—or ombudswoman, presumably—deal with vexatious or ridiculous complaints? Constituents currently bring complaints for the parliamentary ombudsman to their Member of Parliament. That is not a bad system. Not so long ago, I had occasion to forward a complaint to the parliamentary ombudsman—I think that it was Mr. Reid at the time—from a pregnant 17-year-old girl who was given no help by the Department of Social Security. Local social workers had also achieved nothing on her behalf. The Department had acted very badly towards her. I forwarded her complaint to Mr. Reid. The then Secretary of State for Social Security, Mr. Tony Newton, came to the Dispatch Box to apologise to my constituent through me.
  The fact that a Member of Parliament can forward a complaint carries some weight. The Member of Parliament might have to tell the constituent that their complaint is not one of maladministration. We may have to be more delicate than to say that it is a vexatious complaint, but it really should not be taken to the ombudsman.
  Mr. Heald: Does the hon. Gentleman agree that the system is well understood? Someone who has a complaint about a public body goes to their Member of Parliament. They both know that the threat of reference to the ombudsman is powerful. Would it not be wrong if confusion crept into the system, with different ombudsmen for different matters? Is not the definition of an ombuds-circle what happens if someone goes to their Member of Parliament, is referred to the Westminster ombudsman and is then told that the matter is one for the Scottish ombudsman, so it goes to the Member of the Scottish Parliament, who sends it to the Scottish ombudsman, who in turn says that it is a matter for the health ombudsman?
  Mr. Godman: The hon. Gentleman is now referring to this circle. With the creation of a number of ombudsmen
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  and ombudswomen, the public are gradually becoming aware of the spheres of responsibility of respective administrators.
  My concern is that the amendment takes away the involvement of a Member of Parliament. On the matter of a local authority ombudsman, it is reasonable enough to argue, as many of us did, that local authority tenants, for example, sometimes found difficulty in complaining about the local authority housing department to the local councillor who may well have been a member of the housing committee. In all conscience, I believe that, given my experience of the workings of the system—not the circle—the hon. Member for Edinburgh, West (Mr. Gorrie) ought to withdraw his amendment.
  8.45 pm
  Mr. Wallace: This is a matter of practicality. I do not know whether the hon. Gentleman is standing for the Scottish Parliament. Assuming that he is not and he is a Westminster Member, would he say to a constituent who came to him with a complaint and who wanted to go to the ombudsman—given that the hon. Gentleman immediately identifies that the matter is within the Scottish Parliament's jurisdiction—"Sorry, I cannot take this complaint to an ombudsman. Go and find your MSP"? The same would apply if the hon. Gentleman received the complaint by correspondence. Would not he be creating an extra layer of correspondence?
  Mr. Godman: Not at all. People come along to our surgeries every day with complaints about housing, and we have to say that it is not our responsibility but the responsibility of their local councillor. Similarly, if people come along with concerns about social work matters, we have to say, "This is a matter for your councillor." If someone came to me with a complaint of maladministration and I thought that his or her complaint would be best dealt with by my local MSP, I would advise them to go to their MSP's next surgery. The matter would be the MSP's responsibility, not mine.
  Mr. Ernie Ross: The hon. and learned Member for Orkney and Shetland (Mr. Wallace) clearly wants to defend his hon. Friend the Member for Edinburgh, West (Mr. Gorrie), but he is not thinking clearly. He knows that, at the minute, if one of the constituents of my hon. Friend the Member for Greenock and Inverclyde (Mr. Godman) wanted him to pass a complaint to the local authority ombudsman, my hon. Friend could not do so. He would have to see a councillor, who would send it on. That is the way that it works.
  Mr. Godman: That regulation was of course changed not so long ago, and I agreed with that change. There were times when the local councillor might have been involved directly in the decision making against which the complaint was being made. That does not happen with Members of Parliament, unless they are Ministers. I do not see the problem that the hon. and learned Member for Orkney and Shetland (Mr. Wallace) raised about referring a complaint made in a Westminster Member's surgery to a Member of the Scottish Parliament.
  There is good sense in a Member of Parliament channelling the complaint to the ombudsman. I have made a number of such complaints. In most cases,

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  the ombudsman has said that they were not cases of maladministration. However, I have given the example of the young pregnant girl who was treated very callously by the local social security department, which forced Mr. Tony Newton—who was only too willing to do so—to apologise to her at the Dispatch Box. He was a first-class Cabinet Minister, despite being a Conservative. He also wrote to me saying that he agreed with the ombudsman finding against his Department. That is a powerful tool that is used by Members of Parliament on behalf of their constituents. We should leave clause 86 as it is, yet allow for the Parliament to decide in the course of time to modify the system if it wishes. I like the idea of a Member of Parliament being involved in such complaints.
  Mr. McAllion: I had not intended to intervene in the debate, but a certain confusion is evident on the part of everyone who has taken part so far. I think that we have all agreed that it is wrong that councillors, for example, should have to refer complaints against the council to the local government ombudsman, because there is an obvious conflict of interests when councillors complain against their own council.
  However, exactly the same applies to Members of this Parliament as applies to Members of the Scottish Parliament. The complaint may be against a Housing Minister or a Health Minister in the Scottish Parliament, and that person may be a Labour Minister. If one's local Member of the Scottish Parliament happens to be Labour too, do we not see a conflict of interests? A Labour Member of the Scottish Parliament would have to put forward a complaint against a Labour Minister in a Labour Government in the Scottish Parliament. The same conflict of interest arises there as arises now with councils.
  Therefore, there is an element of confusion. I would have no objection to taking the phrase "to its members" out of the clause, because that would leave the Scottish Parliament to draw up its own code of guidance about how the right could be exercised by individuals throughout Scotland.
  In the modern age, we always have to beware of the party system. We must remember that this Parliament is dominated by the party system. The Scottish Parliament is likely to be less so; none the less, it will still be evident—
  Mr. Heald: Was the possibility that the hon. Gentleman had in mind that in a regional list system, if someone who was No. 1 on the list misbehaved, he might be No. 9 next time?
  Mr. McAllion: To be No. 9 in a list would be a big step up for me. The lesson applies both ways. It is not only list Members to whom pressure can be applied. Pressure can also be applied to Members who stand in constituencies, and that is done most effectively, I can assure the hon. Gentleman.
  My point is serious. If members of the public have the right to complain against an Executive in Parliament, the road for making the complaint should not lie solely through the Members of that Parliament, because the party
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  system will come into play and there will be pressure on Members not to further the complaint if to do so would work to the detriment of their party. I am speaking not about the Labour party alone, but about whichever party happens to be in power at the time.
  This is an interesting debate. I would like to hear why we should not open up the ways in which people can complain about the activities of Ministers in Parliament, because I am in favour of individuals having the maximum right to complain about Governments.
  Mr. Davidson: My hon. Friend the Member for Dundee, East (Mr. McAllion) does himself and his colleagues something of an injustice when he says that most Members would have reservations about sending something to the ombudsman if it might embarrass their party. The ombudsman is empowered to deal not with policy matters, but only with maladministration, and the overwhelming majority of Members would completely disregard the party loyalty of the Minister involved when deciding whether to put forward a particular case.
  Nobody seriously believes that any Minister directly, himself or herself, does all the administration on individual social security or housing cases, or on anything else, so I do not believe that problems would be put directly at the door of individual Ministers, as my hon. Friend suggested.
  However, I still have reservations about what is being proposed, because I worry that if a complaints procedure is open to all and sundry, it leaves the system open to what are described as vexatious litigants. I have several constituents who come to me at the moment wanting matters to be pursued with the ombudsman—or the ombudsperson, or even ombuds-circles, to coin a phrase.
  Mrs. Eleanor Laing rose—
  Mr. Davidson: Let me give my examples, and then I shall let the hon. Lady intervene.
  One lady is especially upset because the Benefits Agency does not provide additional benefit for people with dogs. She believes that a supplementary payment should be made to those with dogs. I have tried to indicate to her that this is a policy matter, and not an administration matter; it seems clear to me that the elected Member of Parliament has a responsibility to cut such matters out of the system.
  Similarly, a lady told me that she wanted to see her referendum paper. She wanted to know where it was, and she believed that the fact that she was not allowed to see it was an example of maladministration which she wanted pursued. That sort of thing could easily clutter up the entire system unnecessarily.
  Another constituent asked me how she knew that I had been elected. It is a good point, which has had me somewhat confused. I explained that she could write to the returning officer, but she had done so. He had written back, but she asked how the returning officer knew that I had been elected. How did she know that the votes cast were cast for me? How did she know that the counters counted the votes correctly? I can see this being an issue that would take up considerable time of the ombudsman, whatever system was used. It would clog up the system. We should leave the system as it is and look to see how the matter progresses in future.
  Mrs. Laing: I would like to ask the Minister whether he is taking seriously the new vocabulary being used

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  during our discussions on the Bill. We are quite used to the idea of an ombudsman—it is the title given to someone who looks at alleged maladministration. The word comes from German. [HON. MEMBERS: "Swedish."] Members of the Scottish National party say it comes from Swedish. It is from that sort of language.
  Mr. John Swinney: European?
  Mrs. Laing: European, but not Latin-based—that is the point I am making. It has been brought into our language and accepted.
  Is it not taking gender balance too far to start talking about ombudspersons? I do not know the Swedish word for woman, but if one was going to be perfect about it, one would have to have an ombudsfrau rather than an ombudsman. The whole point about an ombudsman is that it is not a man or a woman—it is someone who carries out a certain duty. I suppose that Labour Members would like twinned ombudspersons, so that if there were one ombudsman, there would have to be one ombudsfrau. If they want to use that system in the Parliament, they must want it to be used in all aspects of public life. It is nonsense.
  Mr. Desmond Swayne: The point about the gender balance is to engender a new politics of consensus, but we all know how bogus that is. Indeed, Mr. Martin, you will remember that, only three weeks ago, when we had the debate on the Foreign Secretary's diary secretary, the worst offenders in terms of the most disgraceful politics were the new Labour women.
  The First Deputy Chairman of Ways and Means (Mr. Michael J. Martin): Order. The hon. Lady must not pursue that matter. I hope that the hon. Gentleman in future will not draw the Chair into his arguments.
  Mrs. Laing: I will not pursue that matter.
  The serious point is that, once again, we have considerable confusion. The hon. Member for Dundee, East (Mr. McAllion) said that people would be confused about which ombudsman to go to, and about which cases go to which ombudsman. One will not know to whom to complain—the Member of Parliament, the Member of the Scottish Parliament, the Member of the European Parliament or the local government representative.
  Moreover, the duties that Members of Parliament currently carry out for all their constituents will be discharged either by themselves, MSPs or someone else. That highlights the fact that Members of Parliament representing Scottish constituencies at Westminster will not have a full job when half their work is done by MSPs.
  Mr. McLeish: I shall first comment on the points that the hon. Member for North-East Hertfordshire (Mr. Heald) raised on how the various bodies will be affected by the advent of the Scottish Parliament. Conservative Front Benchers always want to make life more difficult than it will actually be. We should return to the first principles that we have talked through in our consideration of various clauses. There are reserved bodies and cross-border bodies, and we are now specifically talking about investigations into maladministration in parliamentary activities. It should be
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  obvious that such a wide range of bodies that will be accountable to the Holyrood Parliament will fall into the three categories that I have mentioned.
  The important point about commissioners is that the Scottish Parliament will be able to establish a body responsible for examining maladministration. It will be able to develop the roles of the health service and local authority ombudsmen—the specifics will be taken care of in that instance.
  9 pm
  Hon. Members have asked about the practicalities of the relationships between MSPs and Westminster Members of Parliament. Again, that will inevitably work itself out with experience—that has happened with local councils just as, before local government reorganisation in Scotland, it happened with regional and district councils. I never had any problems sorting out where responsibilities lay and, given the common sense of the participants, I do not foresee problems arising when the new system is established.
  Mr. Dominic Grieve: As I know from experience, people bring local government matters to the surgeries of Members of Parliament, partly because they believe, perhaps mistakenly, that Members of Parliament have extra clout to deal with the problem because, ultimately, they can go to the top of the particular tree that is directing administration. When the Scottish Parliament is established, however, Westminster Members of Parliament will have no remit in certain matters—Members of Parliament representing Scottish constituencies will not have the clout to deal with those matters. That will give rise to some confusion.
  Mr. McLeish: I appreciate the hon. Gentleman's point—he has made some good arguments in the debate. Arrangements must be worked out in practice. When the Scottish Parliament is established, there will still be councillors and Members of the Westminster Parliament, as well as constituency MSPs and list system MSPs. I have no doubt that that will work out—there is no reason why it should not. Every time local government has been reorganised, problems have arisen because the participants have had to deal with different problems.
  As to clout, many of my constituents mistakenly believe that their Member of Parliament can open doors and wave a magic wand. Sometimes the timing of the Member of Parliament's involvement can seem to do that, but I am sure that it has more to do with due process than with my efforts. I believe, in good faith, that the systems will work and that there will be clarity. Custom and practice will work matters out in each of the Scottish constituencies.
  I shall deal with the more narrowly focused amendments. I cannot accept amendments Nos. 410 and 411, although I sympathise with the points that hon. Members made about them. The Bill imposes a duty on the Parliament to make provision for the investigation of certain complaints made to MSPs of maladministration by the Scottish Administration. That parallels the arrangements that apply to complaints made through Members of the House of Commons.
  The provision does not preclude the Scottish Parliament from making arrangements for complaints received via other routes to be investigated. That should properly be

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  left to the Scottish Parliament to consider. [Interruption.] The hon. Member for Edinburgh, West (Mr. Gorrie) seems to be saying that the amendments would do that, but I shall explain in a minute that there will be a minimum statutory requirement for the Parliament. I hope that the Parliament will be able to stay with that, or indeed to develop it in the spirit of the amendments.
  The Scottish Parliament may indeed think it right that its arrangements for the investigation of complaints of maladministration should enable members of the public to make complaints directly to a Scottish ombudsman, or to whatever office or body the Parliament sets in place. There is nothing in the Bill to prevent that.
  On the other hand, the discipline of providing only for the investigation of complaints made to Members has its advantages. That arrangement has worked well here: it ensures that Members of Parliament are aware of their constituents' problems and are regularly informed about the actions of Departments. It also gives us a chance, where appropriate, to resolve the complaints ourselves without the need for a formal investigation by the Parliamentary Commissioner for Administration.
  There is often a frustration in the community that complaints have to be processed through the Member of Parliament. That said, we have heard comments about vexatious or trivial complaints, and the filter often acts as a discipline. There are arguments for and against, but the main point is that the Parliament should be able to deal with a complaint and take it further if it wishes, or stick with the statutory requirement if it does not.
  I am sure that hon. Members agree that it is important for any arrangements for the investigation of maladministration by the Scottish Administration to be effective and efficient. The provision in the Bill should go some way towards ensuring that, but the clause lays down only the minimum statutory requirement. I would expect the Scottish Parliament to want to build on that requirement to develop a system appropriate to Scottish circumstances.
  Indeed, that system could be better than the one that currently operates at Westminster. In developing its system, the Parliament must have regard, among other matters, to the Parliamentary Commissioner Act 1967, but it is important that the detailed arrangements should be left for the Parliament to consider.
  I am afraid that, again, the Government cannot accept amendment No. 411. The clause places a duty on the Parliament to make provision for the investigation of certain complaints of maladministration arising from the action of the Scottish Administration. It does not refer specifically to the investigation of complaints made against other bodies or authorities.
  The Bill sets out the Parliament's minimum duty. I am certain that the Parliament will want to consider what other bodies it should make provision for. The United Kingdom ombudsman currently investigates complaints against a range of bodies, including bodies wholly concerned with matters that are to be devolved. The Scottish Parliament will be able to provide for complaints about such bodies in future.
  I think it appropriate, however, to allow the Scottish Parliament to make its own arrangements. There is no need for amendment No. 411, as the Bill gives the
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  Parliament the desired flexibility to make arrangements for the investigation of complaints against other bodies. I hope that, with that clarification, the hon. Member for Edinburgh, West will withdraw the amendment.
  Mr. Gorrie: I am obliged to the Minister for his explanation. If the Bill means what he says it means, that is satisfactory from our point of view and we will not press the matter to a vote. My hon. Friends are more concerned to vote on judicial circles than on ombudsman circles. I therefore beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 86 ordered to stand part of the Bill.
  Clauses 87 to 88 ordered to stand part of the Bill.

Clause 89

  APPOINTMENT AND REMOVAL OF JUDGES
  Mr. Menzies Campbell: I beg to move amendment No. 266, in clause 89, page 40, line 35, after '(1)', insert 'Subject to subsection (3)'.
  The First Deputy Chairman: With this, it will be convenient to discuss the following: Amendment No. 26, in page 40, line 35, leave out 'continue to'.
  Amendment No. 27, in page 40, line 36, after 'appointment', insert 'or removal'.
  Amendment No. 267, in page 40, leave out from beginning of line 38 to end of line 1 on page 41 and insert—
  '(2) Subject to subsection (3) below, the First Minister shall recommend to Her Majesty the appointment of a person as—

  (a) a judge of the Court of Session (other than the Lord President or the Lord Justice Clerk); or

  (b) a sheriff principal or sheriff.

  (3) The Prime Minister shall not make any recommendation to Her Majesty under subsection (1) nor shall the First Minister make any recommendation to Her Majesty under subsection (2), unless the nominee has been recommended to the Prime Minister or First Minister by the Judicial Services Commission for Scotland.
  (4) The Judicial Services Commission for Scotland shall be constituted and have the powers and functions set out in Schedule (The Judicial Services Commission for Scotland.)'.
  Amendment No. 429, in page 40, line 39, leave out from 'been' to end of line 40 and insert
  'included in a list, submitted by the First Minister to the Prime Minister, of persons suitably qualified and experienced to hold either of the offices specified in subsection (1) above.
  (2A) Before submitting the list specified in subsection (2) above, the First Minister shall consult the Lord President of the Court of Session, the Lord Justice Clerk, the Secretary of State for Scotland, the Lord Advocate and the Advocate General for Scotland'.
  Amendment No. 28, in page 40, line 40, at end insert—
  '(2A) The Prime Minister shall not recommend to Her Majesty the removal of any person from the office of Lord President of the Court of Session or Lord Justice Clerk unless the First Minister advises that such a recommendation should be made.
  (2B) The First Minister shall not give such advice unless the Parliament has resolved that the Lord President or Lord Justice Clerk should be removed from office and the number of members voting in favour of the resolution is not less than three—quarters of the total number of seats for members of the Parliament.'.
  Amendment No. 29, in page 40, line 44, leave out 'or'.

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  Amendment No. 30, in page 41, line 1, at end insert
  ',or
  (c) the Chairman of the Scottish Land Court.'.
  Amendment No. 430, in page 41, line 1, at end insert:—
  '(3A) Before making any recommendation to Her Majesty in relation to an appointment specified in subsection (3), the First Minister shall consult the Lord President of the Court of Session, the Lord Justice Clerk, the Secretary of State for Scotland, the Lord Advocate and the Advocate General for Scotland.
  (3B) Before making any recommendation to Her Majesty in relation to the appointment of a sheriff the First Minister shall also consult the Sheriffs Principal'.
  Amendment No. 31, in page 41, line 2, after 'Session' insert
  'other than the Lord President or Lord Justice Clerk.'.
  Amendment No. 431, in page 41, line 2, after 'Session', insert 'Sheriff Principal or Sheriff'.
  Amendment No. 432, in page 41, line 3, at end insert—
  '(4A) The First Minister shall make such a recommendation if, and only if, the Lord President of the Court of Session and the Lord Justice Clerk have undertaken, of their own accord or at the request of the First Minister, an investigation in the fitness for the office of the judge, sheriff principal or sheriff, as the case may be, and have reported in writing to the First Minister, together with a statement of their reasons, that the judge, sheriff principal or sheriff is unfit for office by reason of inability, neglect of duty or misbehaviour.
  (4B) When an investigation under subsection (4B) above is into the fitness for the office of either the Lord President of the Court of Session or the Lord Justice Clerk, such investigation shall be carried out by the other and by two additional judges of the Court of Session nominated by the First Minister.
  (4C) The First Minister shall make such a recommendation if, and only if, a Resolution approving of the proposed removal of the judge, sheriff principal or sheriff, as the case may be, has been approved by both Houses of Parliament.'.
  Amendment No. 32, in page 41, line 4, at end insert—
  '(a) he receives a report from the Lord President and the Lord Justice Clerk that the judge is unfit for office by reason of inability, neglect of duty or misbehaviour, and
  (b)'.
  Amendment No. 33, in page 41, line 7, leave out 'two—thirds' and insert 'three quarters.'.
  New schedule 1—'The Judicial Services Commission for Scotland—
  —(1) There shall be a Judicial Services Commission for Scotland consisting of—

  (i) a lay President;

  (ii) three judges, including at least one from an intermediate court, elected by the judges by such method as a Scottish Act of Parliament shall prescribe;

  (iii) two persons who have regularly exercised rights of audience in the superior courts for not less than 15 years; and

  (iv) five lay members, who are broadly representative of the community;

  (2) The Judicial Services Commission may act notwithstanding any vacancy in its membership;
  (3) the members of the Judicial Services Commission (other than judicial members) shall be appointed by the First Minister after consultation with the Lord President and the Lord Justice Clerk;
  (4) The lay members shall be selected by the First Minister from a list of names submitted by the Commissioner for Public Appointments;
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  (5) If either the Lord President or the Lord Justice Clerk expresses dissent from a proposed appointment, the fact of the dissent shall be published if the Prime Minister or First Minister proceeds to make a recommendation to Her Majesty;
  (6) The members of the Judicial Services Commission shall be appointed for such terms (being not less than 5 years) as a Scottish Act of Parliament may prescribe;
  (7) No person may be appointed for a term which would expire after that person has attained the age of 70 years;
  (8) A member of the Judicial Services Commission shall cease to hold office—

  (i) upon the expiry of the term of appointment (which, subject to sub—paragraph (7), may be renewed); or

  (ii) if the member ceases to have the qualifications necessary for appointment; or

  (iii) on receipt by the First Minister of a letter of resignation from the member; or

  (iv) in the case of a judicial member, if the member is removed from office; or

  (v) in the case of a non-judicial member, if the member is removed from office by the Commissioner for Public Appointments.

  (9) The Judicial Services Commission shall, in nominating persons for appointment to judicial office, adopt procedures for the identification of candidates so as to ensure, so far as practicable, that adequate numbers of candidates of both sexes and from diverse racial, religious and social backgrounds are considered for appointment; and
  (10) The Commission may do anything which is calculated to facilitate or is conducive or incidental to the discharge of any of its functions.'
  Mr. Campbell: It will be clear to hon. Members who have examined this group of amendments that to understand fully the effect of what is proposed, one must read amendment No. 266 together with amendment No. 267 and new schedule 1. As will be obvious, amendment No. 266 is a paving amendment.
  Perhaps I should begin by declaring an interest, as I am a member of the Faculty of Advocates from which, by convention, appointments to the Court of Session bench are made. I still practise rather sporadically, but it is right that I should declare an interest.
  The amendments and the new schedule are designed to institute a judicial services commission for Scotland to appoint judges. It may be worth having regard for a moment or two to the precise terms of clause 89. Subsection (1) provides for the United Kingdom Prime Minister
  "to recommend to Her Majesty the appointment of a person as Lord President of the Court of Session or Lord Justice Clerk."
  Those are the two most senior appointments in Scotland. The holders of those appointments occupy the chair of the first division, in the case of the Lord President, and the chair of the second division, in the case of the Lord Justice Clerk, in the Court of Session.
  Clause 89(2) provides that
  "The Prime Minister shall not recommend to Her Majesty the appointment of any person who has not been nominated by the First Minister for such appointment."
  Of course, the First Minister is the First Minister in the Scottish Parliament. Subsection (3) provides:
  "It is for the First Minister to recommend to Her Majesty the appointment of a person as … a judge of the Court of Session (other than the Lord President or the Lord Justice Clerk) or … a sheriff principal or a sheriff."

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  Subsection (4) provides for the removal from office of any judge, whether the Lord President, the Lord Justice Clerk or a judge appointed to the Court of Session, on the recommendation of the First Minister.
  Subsection (5) provides that
  "The First Minister shall make such a recommendation if (and only if) the Parliament resolves that the judge in question should be removed from office and the number of members voting in favour of the resolution is not less than two-thirds of the total number of seats for members of the Parliament."
  As I pointed out, the purpose of the amendments and the new schedule is to provide a judicial services commission for Scotland. I claim consistency, if that be a merit in these matters, as a private Member's Bill that I introduced in February 1992 contained similar provisions. As was inevitable, that Bill made no further progress, but it embodied provisions that were substantially the same as those that I urge the Minister to accept this evening.
  Why do I seek to establish a judicial services commission for Scotland through these amendments? It is right that some of the mystique that attaches itself to the appointment of judges should be removed. As matters stand, I understand that the Lord Advocate of the day determines a suitable candidate for appointment to the Court of Session and makes a nomination to the Secretary of State for Scotland, who makes a recommendation to her Majesty, who ultimately makes the appointment. None of that takes place in public and none of it is subject to the scrutiny of the public or anyone other than the Lord Advocate and the Secretary of State for Scotland.
  The mystique ought to be removed. There is more than a hint of the white smoke emerging—I think that it is from the Sistine chapel, although I cannot claim any great expertise in such matters—from the chimneys of Parliament house in the High street in Edinburgh, behind St. Giles. Therefore, it is right and proper that those matters should be subject to greater public scrutiny. There should be public accountability, because in accountability and scrutiny lies greater public confidence. The effect would be that all professional Scottish judges would be appointed only after consideration and nomination by the judicial services commission. Only stipendiary magistrates, who are professional judges but sit in the district courts, would be exempt from such consideration.
  These provisions do not come before the Committee with only the rather slight benefit of consistency that I have demonstrated in this matter. For the last 10—certainly for the last five—years of the Labour party's time in opposition, they enjoyed substantial support in the Labour party in Scotland. I know that he is now subject to the Trappist vow of silence that accompanies being a Whip, but I have often heard the hon. Member for Dumbarton (Mr. McFall) eloquently argue the case that I am making. If the Government seek consistency, they need look no further than him.
  The background is that it was believed that the Lord Chancellor was of a mind to make similar provision in England and Wales, but keen students of these matters noted that what was expected to appear to that effect in the manifesto of the Labour party did not ultimately feature in it. There has been some speculation about why, but it is clear that the Lord Chancellor has determined that
  1154
  there should be no such judicial commission for England and Wales. I do not think that that is a good argument for saying that we should not have one for Scotland. We are creating a different sort of Parliament, with a different sort of scrutiny and different roles and responsibilities. It would be correct and consistent with the Parliament's spirit to have a judicial services commission as proposed in the amendments.
  9.15 pm
  I do not need to say much to amplify the case for such a commission. Its make-up is set out in some detail in new schedule 1, of which paragraph 9 is the only element to which I wish to draw attention. It provides that the commission
  "shall, in nominating persons for appointment to judicial office, adopt procedures for the identification of candidates so as to ensure, so far as practicable, that adequate numbers of candidates of both sexes and from diverse racial, religious and social backgrounds are considered for appointment".
  That is a sensible provision. It does not seek to impose a quota or suggest that people without the requisite qualifications should be promoted to achieve a balance, but it lays on the commission a duty to seek to identify, so far as practicable, people of both sexes and from diverse racial, religious and social backgrounds. The judiciary in Scotland could be strengthened only if that approach were part of the mechanism by which professional judges in Scotland were appointed. I therefore have no hesitation in recommending the scheme contained in amendments Nos. 266 and 277 and new schedule 1 and inviting the Committee to accept it.
  Mr. Dalyell: Every constitutional theorist acknowledges that individual freedom is threatened when the balance between the judiciary, the legislature and the Executive is not equal. Clause 89 tips the balance against the judiciary and therefore against a bulwark of the rule of law. Is it the Government's view that clause 89(5) protects the judiciary from parliamentary or Executive interference? I hope for and expect a positive reply.
  The reason why the Prime Minister has the power to recommend the appointment. of the Lord President of the Court of Session and Lord Justice Clerk under clause 89(1) and not the other judges of the Court of Session requires clarification. Clause 89(3) fails to refer to the chairman of the Scottish land court and honorary sheriffs. Should not those offices be included?
  As for removals, the First Minister should be required to give reasons for the removal of a judge and to hold an independent parliamentary inquiry. Should there not be a statutory role in the process for the Lord President and the Lord Justice Clerk? Clause 89(4) apparently means that the Lord President and the Lord Justice Clerk can be removed through a truncated procedure. Is that appropriate in the context of judicial independence?
  The Judicial Pensions and Retirement Act 1993 provides a compulsory retirement age of 70 for judges of the Court of Session. No statutory provision exists for the removal from office of a judge of the Court of Session, but Lord Fraser of Tullybelton, writing in "The Laws of Scotland", suggests that such a removal would require an Act of Parliament. Sheriffs principal and sheriffs are required to retire at the age of 70 and can be removed

  1155
  from office only by an order from the Secretary of State following a report by the Lord President of the Court of Session and the Lord Justice Clerk.
  A number of points arise from my amendments, but I have the impression that the Committee is more interested in hearing the Government's response before the guillotine falls at 9.45 pm. Let me just say that the amendments were born out of a passionate concern that, in the media society in which we live, it is all too easy—[Interruption.] The Whip says that I must finish my speech quickly, so I shall put what I want to say succinctly. In this media society, it is all too easy for the tabloids, or indeed the broadsheets, to whip up hysteria against a supposedly fuddy-duddy judge who, perhaps, is too soft, in the public's estimation, on an unpopular category such as paedophiles. In certain cases, that judge may know a great deal more than the press, but could all too easily be the target of press campaigns for his removal.
  Against that background, it is extremely precious to our democracy and whole future that judges who make unpalatable decisions on the basis of knowledge should be given the benefit of the doubt. I, for one, am generally alarmed by the proposal for a two-thirds majority, which could be fairly easily stitched together in rather unpleasant circumstances.
  I hope that the Minister will give a positive reply, because this is a desperately important subject.
  Mr. Ancram: I, too, should declare an interest, as a member of the Faculty of Advocates, although I have not practised since 1979 and the chances of my doing so again in my current position are—I hope—reasonably remote.
  I rise with some diffidence because every time Conservative Members rise to speak, the Minister tells us that we are trying to make things more difficult. I assure him that we are not on this occasion and, indeed, that we do not normally do so.
  This is an important matter which arises from the change in the role of the judiciary resulting from this and other legislation. I think we all appreciate that the role of the judiciary will be changed by this Bill and by the Human Rights Bill, which the House is currently considering. The judiciary in Scotland and further afield will be required to take on new roles of a rather more constitutional nature. Their role in adjudicating on devolution issues will make new demands of judges in Scotland and beyond. Their role in determining the legality of Acts of the Scottish Parliament will obviously involve them in certain sensitive areas. In cases arising from the European convention on human rights, they may have to determine matters that raise profound questions of social policy, morality or religion. That obviously increases the scope for conflict between the courts and the Executive; it may introduce the prospect of disagreement at times between the courts and the Scottish Parliament.
  I sketch that background not because I envisage such conflict taking place but because it emphasises the need to ensure that the authority and independence of the judiciary are preserved. We are all trying to ensure public confidence in the independence and quality of the judiciary, and the confidence of the judiciary that they can operate independently.
  My concern about the way in which clause 89 is drafted is that it leaves the appointment of judges in the hands of a few people who may have a political motivation. I am
  1156
  not saying that they necessarily would, but the very fact that that could be the case may undermine the credibility of, and the confidence that the public might have in the independence of, the judiciary.
  I do not seek to follow the path taken by the hon. and learned Member for North-East Fife (Mr. Campbell). I have heard his views before and his idea is interesting, but I consider that it goes too far in trying to achieve the quality and independence that we are all seeking.
  However, on judicial appointments, we have tried in our amendments to broaden the consultation that will be required to achieve nominations. We believe that, by broadening it beyond the First Minister and the Lord Advocate to include the Lord President of the Court of Session, the Lord Justice Clerk, the Secretary of State for Scotland and the Lord Advocate and the Advocate General for Scotland, we are proposing a broader and more professional basis on which nominations can be made. Essentially, the amendments replicate that basis for the appointment of all judges in Scotland.
  We are also worried—I know that the judiciary would be, too—about the procedure for removing judges. As the hon. Member for Linlithgow (Mr. Dalyell) said, this is currently a matter of some uncertainty. There is a view that it would take an Act of Parliament to remove a judge. The Bill provides for such a removal to be brought about by a vote of two thirds of the total number of seats for Members of the Parliament. I share some reservations that, on occasions, such a vote could be stitched up.
  Therefore, in amendment No. 432, we seek to provide a broader system to operate before a removal can take place. The amendment says:
  "The First Minister shall make such a recommendation"—
  for removal—
  "if, and only if, the Lord President of the Court of Session and the Lord Justice Clerk have undertaken, of their own accord or at the request of the First Minister, an investigation in the fitness for the office of the judge, sheriff principal or sheriff, as the case may be, and have reported in writing to the First Minister, together with a statement of their reasons".
  That is important, as is the second part of that amendment, which sets out the need for a proper investigation.
  These amendments are tabled, in a very constructive spirit, to try to ensure that the judiciary, of which we are rightly proud in Scotland—I say that as a Scottish lawyer—maintain the integrity and the quality that have always been their hallmark. I believe that the amendments would improve the Bill and, although it is not for me to move them at the moment, I hope that the Government will give them due consideration.
  Mr. McLeish: I want to participate in the debate in the spirit in which the amendments have been tabled, because I share the concerns of the right hon. Member for Devizes (Mr. Ancram) about public confidence in, and the credibility of, the system. I should also like to reflect the comments of my hon. Friend the Member for Linlithgow (Mr. Dalyell) about balance and the need to ensure that there is no interference of the Executive with the judiciary. That is a very important point and I hope that some of my comments will reflect that concern.
  This is not the end of the journey for clause 89. I hope that, after I have finished speaking, the Committee will see that we shall return to this matter on Report. These are very important issues. We want to get these matters

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  right and I give the Committee an assurance that we are listening and are keen to consult to ensure that we get them right when the Parliament is established.
  First, I shall speak to amendments Nos. 26, 27, 28 and 31. I am most grateful to my hon. Friend the Member for Linlithgow for raising many points covered by the amendments. I listened carefully to what he said about them. Several most important issues underlie his proposals.
  I shall say a word about clause 89(1) as it stands. The role of the Prime Minister in recommending the appointment of the Lord President and the Lord Justice Clerk is of very long standing. Until now, the role has been non-statutory and we felt it appropriate to use the opportunity that is presented by the Bill to give formal recognition to a practice that Governments of all parties have operated since the beginning of the century.
  Amendments Nos. 26, 27, 28 and 31 would give the Prime Minister a new role in recommending the removal of a judge. The Prime Minister has no such role in the context of English judges, and in principle we see no case for such a role to be exercised solely in Scotland.
  9.30 pm
  In England, a judge may be removed from office on the address of both Houses of Parliament, although, as some hon. Members have said, the position is not crystal clear. The responsibility for recommending the removal of a judge should rest primarily with the First Minister who would have to seek the authority of the Scottish Parliament before making any recommendation to Her Majesty the Queen. Clause 89(5) means that a recommendation by the First Minister for the removal of a judge requires the support of two thirds of the Members of the Scottish Parliament. That is a weighty mechanism for determining whether a judge should be removed, and that is appropriate.
  Mr. Dalyell: Could not it be at least three quarters or, given the possibility of a coalition Government, more?
  Mr. McLeish: At this stage, we are happy with the two-thirds majority because it is a formidable obstacle, but I shall refer to my hon. Friend's question later.
  It is right that the decision should be taken by the Scottish Parliament. I would expect it to take a close and measured interest in such matters, consistent with the responsibility that we propose to place on it. We must provide a mechanism for dismissal, but we are debating a situation that we hope is unlikely to arise.
  Amendments Nos. 29 and 30 are unnecessary because section 1(2) of the Scottish Land Court Act 1993 already provides for the appointment of members of the land court, including the chairman, by Her Majesty the Queen on the recommendation of the Secretary of State for Scotland, whose function in that respect will be transferred to Scottish Ministers by clause 49.
  I shall now deal with amendment No. 32. It should be borne in mind that we are establishing a set of principles and a hurdle that the First Minister and the Parliament will have to overcome if a judge is to be dismissed. We are not writing the procedures because that will be a
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  matter for the Scottish Parliament. Any statement about the grounds of removal must be carefully crafted in the light of precedent and case law, to strike the appropriate balance between ensuring provision for the removal of judges who are unfit for office—however rare and unlikely that eventuality—and protecting members of the judiciary from removal on anything other than the ground of unfitness.
  The Bill safeguards judicial independence by the very fact that a two-thirds majority of Members of the Parliament will be required for a resolution to remove a judge. That will inevitably require a consensus on the reason for removing the judge. In view of the comments of my hon. Friend the Member for Linlithgow, I am prepared to consider making it clear that the ground on which the First Minister should make his recommendation should be unfitness for office. I should like to consider an amendment that is designed to achieve that and table it on Report.
  Mr. Dalyell: I thank my hon. Friend. That seems an excellent solution.
  Mr. McLeish: I accept that my hon. Friend appreciates that the Government take this matter seriously. I support the spirit of his amendment, but I ask him not to press it.
  Mr. Salmond: May I tempt the Minister to consider the nature of traditional appointments to the Privy Council? Is he aware that only two of the 109 members of its Judicial Commitee are women and that one of them is there because she is the Leader of the House? In the light of questions about traditional appointments, does the Minister think that that is satisfactory?
  Mr. McLeish: I should like to respond to the hon. Gentleman, but I fear that if I do I shall stray into another group of amendments.
  Amendment No. 33 requires that three quarters of Members of the Parliament would be required to vote in favour of a resolution to remove a judge. The proportion of two thirds that is suggested in the clause is a high threshold, and, in proposing that proportion, the Government recognise the seriousness of removing one of Her Majesty's judges from office. That is why we have not proposed a simple majority in the normal way but require a significant number of Members of the Parliament to be satisfied that the Executive's actions are justified and appropriate. In the circumstances, I invite my hon. Friend the Member for Linlithgow to agree that the point has been well made in the Government's proposals and that there is therefore no need for him to press his amendment.
  Amendments Nos. 266 and 267 and new schedule 1 would represent a fundamental change in our traditional arrangements. At this stage, we do not consider it appropriate to impose a scheme of this sort on the Scottish Parliament. The arguments in favour of some form of judicial appointments board have been advanced from time to time, but we do not believe that such ideas have yet been sufficiently discussed or that the Scotland Bill is the right vehicle to implement any such changes.
  I agree that it should be open to the Scottish Parliament to establish some form of Committee on judicial appointments, which could put forward names to the First

  1159
  Minister, but, again, I come back to the point that we should not seek to impose such a procedure by means of this Bill.
  I have made my comments in the spirit of understanding the hon. and learned Member for North-East Fife (Mr. Campbell) suggested, but, in view of the points that I made about consultation and discussion, about this Bill not being the most appropriate vehicle, about the Scottish Parliament being able to consider the matter and about nothing being ruled out, I hope that he will not press the amendment.
  Mr. Menzies Campbell: If the Minister is considering unfitness for office, I hope that he will take account of a recent case in another place, where the unfitness for office of a Scottish judge who had been removed from office arose in fairly sharp focus. There were questions about precisely what meaning should be ascribed to the words. I hope that the Minister will take note of their lordships' decision.
  From what the Minister has said, I feel that he is more open minded about my proposals than his original outright opposition would suggest. I have only one question—is it his view that a Committee of the sort to which he referred would be within the general competence of the Scottish Parliament, or would it require statutory provision? If the hon. Gentleman is able to give me a satisfactory answer to that, I may not feel compelled to press my amendment.
  Mr. McLeish: I am willing to give the assurance that the matter will be within the general competence of the Scottish Parliament. I take the hon. and learned Gentleman's point about unfitness within the context of the discussions we have had. We will be looking closely at the considerations that surround the unfitness issue. We want to get it right and there will be further consideration of the matter.
  I come finally to the amendments tabled by the right hon. Member for Devizes and his colleagues and will begin with amendments Nos. 429 and 430. Although there may very well be arguments for non-statutory consultation of the nature suggested, I do not feel that writing into the Bill such a complex series of exchanges will improve the quality of the final decisions. However, I am prepared to consider further whether there should be any additional provision for consultation by the First Minister before he makes recommendations for appointments. If any amendments are required, the Government will table them in time for Report.
  On amendment No. 431, there are already powers for removing a sheriff or sheriff principal in section 12 of the Sheriff Courts (Scotland) Act 1971. Under the general provisions of the Bill, those powers will pass to Scottish Ministers and the Scottish Parliament. I have no doubt that they will be exercised with appropriate care and I see no need to include anything in the Bill that would make any specific additional provision.
  I have dealt with the principles underlying amendment No. 432 in my response to the amendments tabled by my hon. Friend the Member for Linlithgow. In short, I do not consider that the Bill needs to set out the detailed procedures that may relate to the removal of a Court of Session judge. Neither could I accept any suggestion that Westminster should be involved in this process. It should be a matter for the Scottish Administration and it is not
  1160
  something which should be second guessed by Westminster. The amendment would be a quite inappropriate provision and it should be rejected. I have made it clear that I am prepared to consider an amendment that specifies the grounds on which any recommendation for removal of a Court of Session judge should be made.
  Mr. Dalyell: Will the Government draft an amendment along those lines?
  Mr. McLeish: I have assured right hon. and hon. Members that we will want to revisit on Report the points that have been raised in this debate. I have more than entered into the spirit of the occasion—there is substance in my response to some excellent and considered comments by hon. Members. I therefore hope that amendment No. 266 will be withdrawn in the sure knowledge that we will revisit the issue. That should go some way to satisfy the concerns that have been expressed.
  Mr. Menzies Campbell: In light of the Minister's comments about returning on Report to the removal issue, and on the Parliament's competence being adequate to allow it to create a committee to give advice on judicial appointments, I do not think that it would appropriate to press the amendment to a Division. On that basis, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 89 ordered to stand part of the Bill.
  Clauses 90 and 91 ordered to stand part of the Bill.

Schedule 6

  DEVOLUTION ISSUES
  Dr. Fox: I beg to move amendment No. 438, in schedule 6, page 79, line 20, leave out from 'Committee' to end of line 21.
  The First Deputy Chairman: With this, it will be convenient to discuss the following amendments: No. 443, in page 81, line 26, leave out 'require' and insert 'request'.
  No. 444, in page 81, line 28, at end insert—
  '(33A) Where a court or tribunal refers a devolution issue for determination in terms of paragraph 33 above, the person making the request for such a reference shall pay all legal expenses of any parties that subsequently take part in any proceedings before the Judicial Committee for the determination of the judicial issue referred.'.
  No. 445, in page 81, line 45, at end insert—
  '(6) The person making a reference in terms of paragraph 34 shall pay all legal expenses of any parties that subsequently take part in any proceedings before the Judicial Committee for the determination of the devolution issue referred.'.
  Dr. Fox: This debate will, of necessity, be a short one. We feel that schedule 6 is generally well drafted, although I should like briefly to deal with three matters. First, amendment No. 438 would dispense with any requirement for leave. We think that there is no reason why the final determination of devolution issues by Scottish courts should not be appealed against without leave to the Privy Council or the House of Lords. We are very keen to hear the Government's justification for that provision.

  1161
  Secondly, we have tabled amendment No. 443 in an attempt to preserve judicial discretion—which the Government are normally extremely keen on. We should be very interested to know why the Government will not accept the simple change that we have proposed in our rather short amendment.
  Finally, we have tabled amendments Nos. 444 and 445 in an attempt to recover the costs of those who become involved in expensive hearings on devolution issues through no fault of their own. Surely it is right that the financial burden should be placed on the budgets of those who do the referring. We think that the amendments would be a very logical, fair and simple tidying up of the Bill, placing the financial burden on those who seek to use the Bill's powers.
  I hope that the Minister will see fit to accept our amendments.
  Mr. Salmond: As the issue is the role of the Judicial Committee of the Privy Council, it is appropriate that we should spend a moment or two examining the nature of the current Judicial Committee. The Committee has 109 members: 63 from England, nine from Scotland, five from Northern Ireland, 14 from New Zealand, one from Australia, one from Barbados, one from the Cayman Islands, one from Jamaica and one from the West Indies. The average age of Committee members is 67, and only two of the Committee's 109 members are female. Of the politicians on the Committee, 11 are former Tory Ministers—led by the venerable Lord Hailsham, and four are current or former Labour Ministers. To my knowledge, there are no former Liberal Democrat or Scottish National party representatives on the Committee. We have difficulty in getting people appointed to such bodies, or so I have heard.
  I believe that the Judicial Committee of the Privy Council was an improvement on the House of Lords in arbitrating in disputes between the two Parliaments, but the complexion and nature of the Committee leave a great deal to be desired. Although only a panel of the Judicial Committee will be selected to serve in each arbitration, one could scarcely say that the Committee is politically representative of the population—it is certainly not representative in terms of gender.
  Mr. Wallace: Does the hon. Gentleman agree that when a panel is selected, it should at least include some people with judicial experience in Scotland?
  Mr. Salmond: Yes. The hon. and learned Gentleman has helped me, in that I was about to come to an alternative, which I hope we can discuss on Report. That alternative is a constitutional court of judicial appointments between the two Parliaments, such as exists between the Länder and the federal Government in Germany.
  I know that in the minute that remains to him, the Minister will be more than happy to respond in the co-operative nature of the Committee to the points that I have made.
  Mr. Dalyell: What research have the Government carried out on the projected increases in work for the
  1162
  courts and the Judicial Committee as a result of the Bill? What resources are to be made available to the Judicial Committee for devolution issues?
  Mr. McLeish: I cannot do justice to the concerns expressed. The kindest thing I can do is to write to the hon. Member for Woodspring (Dr. Fox), but we are rejecting the amendments. I shall also correspond with the hon. Member for Banff and Buchan (Mr. Salmond) about the composition of the Judicial Committee, numbers on the panel and the—
  It being a quarter to Ten o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [23 February], put forthwith the Question already proposed from the Chair.
  Amendment negatived.
  THE CHAIRMAN then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
  Schedule 6 agreed to.
  Clauses 92 and 93 ordered to stand part of the Bill.

Clause 94

  THE JUDICIAL COMMITTEE
  Question proposed, That the clause stand part of the Bill.
  Mr. Dalyell: The Law Society has a query. It is of the view that the number of Lords of Appeal in Ordinary and holders of high judicial office under the Appellate Jurisdiction Act 1876 should be increased to ensure that the court is adequately served. What is the Government's reply to the Law Society?
  Mr. McLeish: Of course, the court will be adequately served. I link this matter to the point that I should have made earlier about proper funding and resources being available. That will be the case.
  Question put and agreed to.
  Clause 94 ordered to stand part of the Bill.
  Clauses 95 to 98 ordered to stand part of the Bill.

Clause 99

  REGULATION OF TWEED AND ESK FISHERIES
  Question proposed, That the clause stand part of the Bill.
  Mr. Godman: Mention is made in clause 99(2) of the Salmon and Freshwater Fisheries Act 1975. May I plead that the Act be revised in the interests of ordinary anglers? At the moment, it favours the interests of riparian owners and very rich fishermen and women. Ordinary anglers from clubs across the country deserve better recognition, and the Act should be changed.
  Mr. A. J. Beith: As the Committee might not reach a later group of amendments that relates to clause 99, it is important to put it on the record at this stage that the clause reflects my many discussions with Lord Sewel and my earlier discussions with the late John Smith about how legislation affecting the River Tweed and its tributaries, especially the Till,

  1163
  could be amended. Those rivers are governed by Scottish law—Scottish law hitherto made by the Westminster Parliament—although they are in England. It would obviously not be right for criminal offences to be created or modified by the Parliament in Scotland without the consent of Westminster Members representing the areas affected. The same could apply on the other side of the country.
  The Government have chosen a course of action that is broadly a reasonable one, which is to require that an affirmative order must go through the House of Commons to effect such a change. The intervention of the hon. Member for Greenock and Inverclyde (Mr. Godman) reminds us of the passions that are raised by these issues; they certainly are in my constituency.
  An affirmative order might be extremely complex and raise some controversial issues, and it is important that it is widely discussed before a decision is made. Unless we are to have an amendment procedure that a later amendment suggests should be available, it would be a take-it-or-leave-it debate on an affirmative order on a complex piece of legislation affecting people's livelihoods. That is a worrying aspect of what is otherwise a sensible response by the Government.
  Mr. Godman: Does the right hon. Gentleman agree that fishing on the Tweed and the Tay would be helped enormously by the abolition of drift-net fishing that uses monofilament nets?
  Mr. Beith: No. All the scientific evidence is contrary to that view. Again, that is an illustration of the complexity of this matter and the passions that it arouses.
  I hope that the Minister recognises that slapping an order in front of either the Scottish Parliament or this Parliament would not be an adequate response.
  Mr. Salmond: Does the right hon. Gentleman accept that much of this aspect of fishing policy has been led, in terms of initiative, by another place, which has had more than a vested interest in many areas of policy?
  Mr. Beith: The hon. Gentleman further illustrates how many interests are involved in this issue. It will be possible under the procedures that are outlined for the Parliament in Scotland to take the initiative and bring forward new legislation, but it could not proceed without the consent of the House of Commons. My preference is for the House of Commons to be able to proceed by way of amendable order, as an improvement even on what the Government are proposing. I am grateful for the trouble that they have taken on this important matter.
  Mr. Connarty: Will my hon. Friend the Minister say specifically whether the Salmon and Freshwater Fisheries Act 1975 could be debated, discussed and amended in the Scottish Parliament, or would that have to be done in the House of Commons?
  Mr. McLeish: It is indeed a wide and diverse Bill. The 1975 Act can be amended within the competence of the Scottish Parliament. Important issues have been raised and I can understand the passion that they can arouse.
  The clause provides for the making of an Order in Council for regulating fishing for salmon, trout, eels and freshwater fish in the two cross-border rivers, the Tweed
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  and the Esk, thus enabling continuation of fisheries management of the whole rivers following the devolution of fisheries matters to Scotland. The Order in Council would be an affirmative instrument in both the Westminster and Scottish Parliaments.
  I take on board the issue of consultation. If the Scottish Parliament or the Westminster Parliament is moving on an issue, there should be maximum consultation with all concerned. I cannot give an assurance of what the Scottish Parliament will do, but I sincerely hope that consultation will be taken on board.
  The clause provides a means to ensure continuation of a coherent legislative framework for the two border rivers. This is considered necessary to ensure effective fisheries management for the river systems, including their tributaries, and also to take on board access difficulties.
  Mr. Grieve: I think that I understand correctly that any attempt at unilateral amendment by one Parliament, whether at Edinburgh or London, would be unsuccessful because it would be outside the scope of the legislation that we are passing.
  Mr. McLeish: We are making it clear that the spirit and substance of what is proposed lies with orders in both Parliaments. That requires some consultation with those affected. It is important, in a sensitive part of the United Kingdom, that that be the case.
  Mr. Godman: As a member of a fisherman's family, I would not want to see one drift-net fisherman lose his livelihood without substantial compensation. That has always been my view, in the House of Commons and before I became a Member.
  Mr. McLeish: My hon. Friend will appreciate that I do not want to become involved in the question of compensation. Suffice it to say I understand the comments that have been made. We are trying to provide a framework for a logical and coherent debate about the future of issues affecting both the Tweed and the Esk. I think that that is the best way forward. I commend the clause to the Committee.
  Question put and agreed to.
  Clause 99 ordered to stand part of the Bill.

Clause 100

  SUBORDINATE LEGISLATION: GENERAL
  Question proposed, That the clause stand part of the Bill.
  Mr. Dalyell: It is deeply unsatisfactory, although no one's fault, that, with six minutes to go, we are racing through such tricky minefields as clause 100, which deals with:
  "section 98—treatment of individuals as Scottish taxpayers for social security … purposes".

  1165
  The question of who is or is not a Scottish taxpayer is a difficult subject, and it is unsatisfactory that we should have to hurtle through all sorts of clauses in a quarter of an hour—
  The First Deputy Chairman: Order. Clause 100 does not relate to the matters that the hon. Gentleman is raising. It deals with the exercise of powers to make subordinate legislation under the Bill.
  Mr. Dalyell: I am referring to the notes that we have been given on subsection (5) of clause 100. These are the Government's own notes and I am giving as an example—
  The First Deputy Chairman of Ways and Means: Order. They may be the Government's own notes, but I am looking at the Bill before me. The hon. Gentleman mentioned social security, but the clause has nothing to do with social security—perhaps the Government's notes are mistaken. I rule that, according to the information I have, it has nothing to clause 100.
  Mr. Dalyell: If you refer to the volume entitled, "Scotland Bill: notes on all clauses and schedules (except schedule 5)", Mr. Martin, you will see that under the heading "Details of Provisions", in relation to clause 100(5) it states:
  "section 98—treatment of individuals as Scottish taxpayers for social security etc. purposes".
  I am simply saying that that subject is a minefield and, in normal circumstances, if this was a normal Committee stage, we would be asking some questions about that, because it is a mighty important subject.
  The First Deputy Chairman: I take the hon. Gentleman's point.
  Mr. McLeish: Clause 98 does in fact deal with social security and the matter of social security and the taxation base, but I can give my hon. Friend the assurance that it is a matter-of-fact approach to the tax-varying issues we have discussed. There is a link to social security for assessment, but it is very straightforward. Again, I am willing to write to my hon. Friend to make the implications clear.
  Question put and agreed to.
  Clause 100 ordered to stand part of the Bill.

Clause 101

  SUBORDINATE LEGISLATION: PROCEDURE
  Mr. Beith: I beg to move amendment No. 39, in page 44, line 23, after '29', insert '33,'.
  The First Deputy Chairman: With this, it will be convenient to discuss the following amendments: No. 38, in page 45, line 10, leave out '33'.
  No. 465, in page 44, line 29, at end add—
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  '(3A) Either House of Parliament or the Parliament shall have the power to amend a statutory instrument containing subordinate legislation under section 99, but no instrument shall be made as so amended without the consent of both Houses and of the Parliament.'.
  Mr. Beith: The purpose of amendments Nos. 39 and 38 is to move orders made under clause 33 from negative procedure to affirmative procedure. To stop a Bill going forward for Royal Assent, which is what clause 101 is about, is a serious matter and because it involves the Secretary of State forming a view or belief, he ought to be obliged to come before the House to explain his grounds and seek positive approval for that belief.
  Amendment No. 465 would give effect to the wish I expressed earlier that both Houses of Parliament and the Scottish Parliament should have the opportunity to propose amendments to legislation on complicated fisheries matters. There is ample precedent for that: for example, the census legislation allows such amendments to be moved, and I have moved such an amendment to that legislation. In reviewing the matter, we ought to consider allowing some more flexible procedure, given the complexity of the matters and the amount of technical dispute which they invite.
  Mr. Heald: I hope that I may make a speech yet, despite the circumstances. Clause 33 has been described as the governor-general clause, because it allows the Secretary of State to strike down laws that have been passed by the Scottish Parliament. In my view, it is doubtful whether primary legislation should be struck down by secondary legislation—it is an odd concept and it is not fundamentally democratic. However, one thing is sure: if he is going to do that, the Secretary of State should come to this House to explain why, and not try to put it through via the back door. It is interesting to note that, under the negative resolution procedure in this House, only three out of 738 instruments have been discussed in the past year.
  Mr. McLeish: I am certainly impressed by the hon. Gentleman's last comment. Amendments Nos. 38 and 39 would require orders under clause 33 to be subject to affirmative resolution procedure in both Houses of the Westminster Parliament. As the Bill is worded, such orders would be subject to negative resolution procedure in both Houses.
  Orders under clause 33 are likely to be short-lived. In the limited circumstances provided for in that clause, they would prevent a Bill from being submitted for Royal Assent and give the Scottish Parliament an opportunity to reconsider the Bill. If the Parliament does that and amends the offending provision, the order can be revoked and the Bill can proceed for Royal Assent.
  The Government have taken the view that there is no need to insist that such orders should require the approval of Parliament every time. Parliament will always have the opportunity to annul an order after it has been made.
  The orders under clause 33 would need to be made quickly, within the four-week period. That would also be necessary to avoid uncertainty. It would be difficult for an affirmative instrument to be drafted, laid, debated by both Houses of Parliament and made, all within the four

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  weeks allowed—even assuming that Parliament is sitting. That is why the negative procedure was chosen. I ask the Committee to reject the amendments.
  Mr. Beith: The Minister has not really answered my query—
  The First Deputy Chairman: Order. I am sorry to interrupt the right hon. Gentleman.
  It being Ten o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [23 February], put forthwith the Question already proposed from the Chair.
  Amendment negatived.
  THE CHAIRMAN then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
  Amendments made: No. 306, in page 44, line 23, after '29', insert ', 59'.
  No. 330, in page 44, line 29, after '29' insert ', 59'.
  No. 232, in page 44, line 39, leave out paragraph (c).
  No. 331, in page 45, line 11, leave out first 'to'.
  No. 308, in page 45, line 23, leave out '59'.—[Mr. McFall.]
  Clause 101, as amended, ordered to stand part of the Bill.
  Clauses 102 to 109 ordered to stand part of the Bill.
  It being after Ten o'clock, THE CHAIRMAN left the Chair to report progress and ask leave to sit again.
  To report progress and ask leave to sit again.—[Mr. McFall.]
  Committee report progress; to sit again tomorrow.

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

  REFERENDUM (LONDON)
  That the draft Greater London Authority (Referendum) Order 1998, which was laid before this House on 23rd February, be approved.—[Mr. McFall.]
  Question agreed to.

PETITION

  Human Rights Bill
  10.2 pm
  Mr. Laurence Robertson: I have the honour of presenting a petition from the members of the General Synod of the Church of England. The Human Rights Bill requires that Churches and other religious bodies be treated as public authorities when they perform public functions, such as the conducting of marriages and the running of Church schools. As the petition makes clear, because public authorities can be sued under the legislation for breaching the European convention, Churches and other religious bodies will be open to be sued in the secular courts on theological and moral issues.
  The petition argues that religious bodies should be free to arrange their internal affairs and organise their Church schools and religious charities in accordance with existing arrangements. It also argues that the House should retain the amendments passed in another place, which would help to prevent religious bodies from being successfully sued in the secular courts.
  The petition has been signed by 141 members of the General Synod, which is a quarter of the total membership. It includes the signatures of Philip Gore—a prominent lay member—and the Bishops of Manchester, Hull and Rochester. I am also authorised by the office of the Archbishop of Canterbury to say that he is concerned to ensure that the legislation cannot be used to require the Church to act in ways contrary to its religious principles and beliefs. There is also a great deal of concern about the issue among ordinary Church members. Their fear is that British courts could develop the law in a way that may restrict religious liberties.
  The petition ends:
  Wherefore your Petitioners pray that your honourable House will support the Human Rights Bill as amended in the House of Lords thus allowing a proper defence for religious bodies who could be pursued in the secular courts over what are essentially theological and moral issues.
  To lie upon the Table.

Synthetic Factor VIII (Tayside)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]
10.4 pm
Ms Roseanna Cunningham: I should say at the outset that I am aware that circumstances have changed since I applied for this debate last week. With the latitude of the House, and of necessity, the debate will have to range a little beyond what was originally intended.
I am also aware that the Under-Secretary of State for Scotland, the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) is medically qualified. I must concern myself with the fact that I shall spend the next 10 minutes or so talking about matters about which I rather suspect he knows infinitely more—at least in a medical sense—than I. With the agreement of the Under-Secretary, three other hon. Members hope to intervene briefly because they have particular constituency interests. I shall try to keep my remarks to a minimum in order to allow time for those speeches.
Haemophilia is a genetically inherited condition where the blood does not clot due to lack of clotting factor. It is treated by intravenous infusions of clotting agents. Hon. Members may be aware of factor VIII—that fraction of blood which enables blood clotting and forms an essential part of treatment to enable people with haemophilia to live as normal a life as possible.
Clotting factor proteins have traditionally been produced by pooling plasma from between 20,000 and 60,000 blood donations and separating the required factor. However, if any of the donations are infected with a blood-borne virus or prion, the entire pool could be affected and the virus passed on to the people receiving treatment. That has occurred in the not too distant past.
Approximately 1,200 people with haemophilia were infected with the human immunodeficiency virus—HIV—through NHS treatment, and, to date, approximately 700 people have died. In addition, 4,800 people with haemophilia were infected with the hepatitis C virus—HCV—through their NHS treatment. Those infections are believed to have taken place before 1986, when procedures were introduced to kill the viruses.
The HIV epidemic brought into sharp focus the vulnerability of the blood supply to infectious agents. That vulnerability was not only highlighted by HIV transmission through blood transfusion: it greatly accentuated the need for safer plasma derivatives. The HIV epidemic also witnessed the identification of the hepatitis C virus as a major agent responsible for non-A non-B hepatitis—a virus which has infected a very high percentage of people with haemophilia, and is associated with significant mortality and morbidity.
Those dangers prompted the use of a genetically engineered recombinant alternative to human plasma-derived factor VIII. Until now, certainly in Scotland, such treatment has been restricted to certain groups of patients such as children, previously untreated patients and those not already infected by serious blood-borne virus infections. I say "until now", but, in fact, as of Friday or Saturday, Tayside health board is providing synthetic factor VIII to adults.
The United Kingdom haemophilia centre directors' guidelines on treating haemophilia state that recombinant factor VIII is the treatment of choice for all patients with
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haemophilia A. Furthermore, concerns about the continued use of human plasma-derived products intensified due to the potential transmission of new-variant Creutzfeldt-Jakob disease through pooled, plasma-derived blood products.
That has been of great concern to patients still receiving human-derived factor VIII, many of whom have already endured similar periods of anxiety in the 1980s, when HIV and viral hepatitis emerged as major health threats for haemophilia patients being treated with human factor concentrates. In short, the arrival of CJD as a threat removed any justification there may have been for denying recombinant factor VIII to any person with haemophilia.
I sought the debate following an approach from a constituent of mine who, with constituents of my hon. Friend the Member for North Tayside (Mr. Swinney) and the hon. Member for Dundee, East (Mr. McAllion), took the courageous stand of refusing treatment unless and until the synthetic form of factor VIII was made available. That action speaks volumes for the strength of feeling among people with haemophilia.
On Friday, the Department of Health and the Scottish Office announced that certain blood products, including factor VIII, were to be banned, and I know that Tayside health board has now instructed consultants to make arrangements to offer recombinant factor VIII to all patients in Tayside, with immediate effect. I welcome that development, but my regret is that it was so long in coming that my constituent and others were forced to contemplate such drastic, life-threatening action.
As a small footnote, I add the fact that today I heard from a representative of the West of Scotland Haemophiliacs Society, who was informed of a mother in the Western Isles whose 11-year-old son was today refused recombinant factor VIII at Yorkhill hospital, which is within the remit of the Greater Glasgow health board. I therefore suspect that the position is not yet totally resolved throughout Scotland.
The Government's announcement does not end concerns about the availability of recombinant factor VIII. There remain many questions that need to be answered and many issues that need to be addressed. The press statement issued by the Scottish Office on Friday said that the Scottish National Blood Transfusion Service should be allowed to import plasma from non-United Kingdom sources to manufacture blood products.
Over the past few years, people with haemophilia have been forced to endure an inordinate amount of worry and suffering. Many, understandably, do not see why they should continue to risk their health by taking human plasma-derived factor VIII—wherever in the world that plasma has come from—when there is a risk-free synthetically produced alternative available.
The substantial cost of providing recombinant factor VIII therapy will inevitably result in a reduction in other services and initiatives for my constituents unless central funding for recombinant factor VIII is made available to assist health boards. Plasma-derived factor VIII concentrate production in Scotland is currently centrally resourced. If those products are now to be phased out, there must be scope for additional funding for the purchase of recombinant products.

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It is undeniable that recombinant factor VIII is more expensive to produce than that produced from human plasma, but I feel that that financial cost must be weighed in the balance against the real concerns of people with haemophilia.
The abolition or reduction of VAT on the product, or some other way around the problem with recombinant factor VIII, which is classified as a drug rather than a blood product, would be a major step towards easing the financial burden on health boards and on the Scottish Office. Today's papers carried reports that scientists at the Roslin institute have been successful in producing factor IX with low production costs—an indication, perhaps, that cheaper sources of synthetic factor VIII may not be far away.
Scotland has an enviable tradition of an integrated national approach to haemophilia care, with the aim of ensuring that all Scottish patients receive the same standard of care irrespective of where they live or which hospital they attend. Without Scottish Office support for continuing a consistent national approach, it is possible that recombinant factor VIII concentrate therapy for haemophilia may be funded by some health boards and not by others.
Patients and practitioners throughout the United Kingdom undoubtedly welcomed the announcement on Friday afternoon, but now they deserve speedy answers to three questions. How soon will recombinant factor VIII be made available to all with haemophilia? What funding mechanisms will be put in place so that health boards are not adversely affected? Is there any way in which recombinant factor VIII can be exempted from VAT, or VAT can be reduced, to lower the total cost?
10.13 pm
Mr. John Swinney: I congratulate my hon. Friend the Member for Perth (Ms Cunningham) on securing this debate, and thank her for the opportunity to make some brief remarks.
I was contacted over the past few weeks by John McAughey, a constituent from the village of Stanley in Perthshire. I would like to read an extract from a letter he sent to the haemophilia centre director at Dundee's Ninewells hospital:
"I am writing to inform you of my decision to refuse treatment of my Factor VIII deficiency with Liberate Factor VIII concentrate, or any other plasma derived product. I have deliberated long and hard before reaching this decision but I feel I have no other choice. I am no longer prepared to take risks with my life and I am tired of playing Russian roulette every time I treat a bleeding episode because the purity of derived products cannot be guaranteed."
That illustrates the deep anxiety of many individuals about the safety of the products they are using to treat a serious medical condition. I saw Mr. McAughey and his wife yesterday, and they were relieved to receive the news from the Dundee NHS trust that the recombinant factor VIII treatment was to be made available and funded by the trust.
That is welcome news, but they left with me a strong sense that their concern was not just for themselves, but for others suffering from haemophilia in other parts of Scotland and the United Kingdom who may not receive or have access to the same treatment under the current regulations and arrangements. Tonight is a welcome
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opportunity for the Minister to place some of the Government's views on the matter on the record, to clear up the anxiety that is clearly felt by some of our constituents, and clarify where the Government believe policy is going.
10.15 pm
Mr. John McAllion: I congratulate the hon. Member for Perth (Ms Cunningham) on securing this debate, and I thank her for allowing me the opportunity to make a brief intervention.
I confirm her account of events. My constituent was also one of those refusing treatment because he had been denied access to recombinant factor VIII. He contacted me about 10 days ago, and I immediately contacted Tayside health board. I was promised a written brief to update me on the situation. That had not arrived by the time I left for Westminster on Monday, but I was relieved—as was my constituent—that the money was found to make available the synthetic factor VIII for the treatment, as he had requested.
It is clear that, until Friday, that treatment was not available to adults in particular areas of Scotland—while in other areas it was available. There was an inconsistency in policy across Scotland in this respect.
It is also clear that Tayside health board was not making the treatment available to adults on the ground of cost. If we have a national health service—as the Government always claim—everyone living under that national health service should have equal access to treatment. That is something which the Government must clarify, and I hope that the Minister takes this opportunity to put at rest the minds of our constituents and to set out clearly the Government's policies.
10.17 pm
Mr. Anthony Steen: I thank the hon. Member for Perth (Ms Cunningham) for allowing me to intervene. My constituency is 650 miles south of Perth, but I have a similar problem with a constituent. I am grateful to her for allowing me one minute to raise the issue.
I congratulate the Minister and the Government on insisting that treatment be made available to all children under 16. I regret that I did not know that until this morning, because the press release was the first news we had. It would have been nice if that could have been announced in the House, rather than through the newspapers. Children under 16 will now be entitled to recombinant factor VIII—something for which I have campaigned for a long time. I have constituents with a seven-year-old child, Michael Ashley, who suffers from haemophilia. His parents will be delighted, as I am, by the announcement.
Could the Minister inform the House of the time scale that the South and West Devon health authority will be adopting in providing my constituent with recombinant factor VIII? Will he also confirm that extra funds will be made available for this treatment, so that other treatments are not prejudiced?
In his press release, the Secretary of State for Health said:
"I have decided that all health authorities must make arrangements to ensure that the synthetic version of Factor VIII, known as recombinant, is made available to those children under the age of 16 who are not already receiving it, and to new patients."

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I am much encouraged by that, and I hope that the Minister can reassure me that, although I am 650 miles south of Perth, the advantages that are available to people in Scotland will be also be available to people in Devon. Once again, I thank the hon. Member for Perth for her generosity in giving me this opportunity to speak.
10.19 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. Sam Galbraith): I, too, thank the hon. Member for Perth (Ms Cunningham) for bringing this important issue to the attention of the House. I recognise that it is not only a matter of great concern to the haemophiliac community in Tayside but part of a wider concern throughout Scotland.
We want to ensure that the safest possible treatment can be given to this vulnerable group of patients. I thought that the hon. Lady gave a splendid dissertation on the causes of haemophilia and its treatment—I give her nine out of 10 for it. I also thank my hon. Friend the Member for Dundee, East (Mr. McAllion) and the hon. Members for North Tayside (Mr. Swinney) and for Totnes (Mr. Steen) for their contributions.
Ministers in this and the previous Administrations have considered this matter extensively since recombinant factor VIII became available as a licensed product in 1993. Of course, I appreciate that interest in the provision of this drug—a product which is not derived from human plasma—has been heightened since last week's expert advice to the Government about the theoretical possibility of transmission of new variant Creutzfeldt-Jakob disease via blood products. I should add that nothing was banned other than the use of albumen as a stabiliser in products. We are awaiting the advice of the Committee on Safety of Medicines on individual products.
Scotland has a good story to tell on the provision of recombinant factor VIII, but, before I come to that, I want—in case any doubts were raised by last week's announcement about blood products and new variant CJD—to reaffirm the Government's commitment to Scotland's blood transfusion service and the excellent job it does in supplying Scotland with safe, high-quality blood and blood products.
The Scottish National Blood Transfusion Service has served Scotland for more than 50 years and continues to be at the forefront of excellence in health care delivery and new technology in its efforts to deliver a first-class service to Scotland's patients. I know that the blood transfusion service is fully committed not only to developing its service but to ensuring that it continues to enjoy the excellent record it has earned for the safety and high quality of its blood and blood products.
The service's record in this area is world class. A review has shown that, over the past five years in Scotland, no infection of HIV or hepatitis B or C has been detected as a result of a patient being transfused with blood or receiving a blood product. That is a truly impressive record, given that 1.25 million blood donations were collected, processed, tested and delivered to hospitals during that period.
Until recently, the factor VIII blood-clotting factor could be obtained only as a plasma-derived blood product and for many years has been one of the blood transfusion
1174
service's staple products, manufactured at its blood products plant, the protein fractionation centre. As the hon. Lady said, factor VIII is a concentrated blood product, which is made from the pooled donations of many thousands of donors. The heightened risk of one infected donor spreading disease in such a way is, as she said, obvious.
Again, I congratulate the blood transfusion service on the wonderful work that its staff have done over the years to refine and improve the safety of its plasma-derived factor VIII product—a fact which is too easily overshadowed by the terrible tragedy of infections such as hepatitis B and C and AIDS. The record of the current product that the service produces speaks for itself. There have been no reports of HIV infection since 1984, and no reports of hepatitis B or C since the current product was introduced in 1992. In considering these matters, we should not lose sight of that outstanding record.
Despite that excellent record, there is no denying that, with the recent appearance of recombinant factor VIII as a commercially produced drug, we have a product which may reassure many haemophiliacs and which many haemophilia clinicians have identified as their preferred treatment. I also know that the current theoretical risk of new variant CJD transmission in blood products has fuelled their wish to switch to the recombinant product as swiftly as possible.
Scotland has not been deaf to those concerns. In 1996, the Government recognised that provision needed to be made for the national health service in Scotland to begin the transition to purchasing recombinant factor VIII for its haemophilia A patients. In response to requests from the haemophiliac community and its clinicians, funding of £1.1 million was provided to all health boards in Scotland, including Tayside, to enable them to begin the process and to provide the recombinant product for the most vulnerable groups in the haemophiliac community, such as children. That has been happening for some years.
Having helped to kick-start the process, the Government have asked health boards to pursue the matter as part of their pursuance of health care strategies throughout Scotland. All funds for the treatment, as for others, have been devolved, and I know that the boards have been considering long and hard the priority that it should be given against the other competing demands on their budgets.
That is what the boards are there to do, and it is not for me to take decisions for them, but I want to tell them that they should do what is right by patients, for the enhancement of patient care. I am glad to say that, in my experience so far, they have had that overriding need in the forefront of their minds.
The Government were very encouraged last year when the health boards decided to establish a national consortium to advance the process on an integrated, equitable and fair basis throughout the country, with the consortium co-ordinating the provision of factor VIII in Scotland and helping boards to keep in step in their approach to the issue. My hon. Friend the Member for Dundee, East and the hon. Member for Perth mentioned that, as well.

1175
The consortium includes a number of health boards and representatives of the haemophilia directors—the clinicians who oversee haemophilia treatment in Scotland. Its key role is to advise on the priority that health boards should give to allocating from their funds provision for recombinant factor VIII and, in so doing, achieving an expansion of recombinant provision that maintains an equality of treatment for all patients. That point was raised by all the hon. Members who spoke in this debate.
The consortium has also recognised the concerns raised among haemophiliacs and their clinicians about new variant CJD, as illustrated by the cases presented by hon. Members tonight. I can confirm that it recently recommended to all health boards in Scotland that, in the light of those concerns, the extension of recombinant treatment in Scotland should be accelerated so that all health boards should offer recombinant factor VIII treatment to all their haemophilia A patients within the next year.
Health boards are still considering the matter, but both the consortium and the boards are clear about the importance of the key point: that the process must be pursued on an integrated national basis designed to ensure equity of health care throughout the country for Scottish patients, irrespective of where they live or which hospital they attend.
I can confirm that Tayside health board has already responded to the consortium's recommendations, and has agreed to offer the recombinant product immediately to all its haemophilia A patients still on plasma-derived factor VIII, including, of course, the constituents mentioned by hon. Members tonight.
1176
I hope that that allays hon. Members' concerns, and serves to demonstrate the energetic steps that the NHS in Scotland has taken and continues to take in its efforts to ensure that haemophiliacs in Scotland are given equal access to available treatment.
The hon. Member for Totnes asked about provision in England; that does not fall within my portfolio as a Scottish Office Minister, but I assure him that the matter will be responded to by the Department of Health, and someone will write to him.
The hon. Member for Perth asked me some additional questions, which I hope I have answered in part, about how soon the new treatment would be universally available. All but one of the health boards have agreed to provide it, and we expect the final one to provide it soon; so the answer is, virtually right away.
The hon. Lady asked about central funding. Moneys for such treatments are held by health boards and not central Government. As I said, it is the boards' duty to balance the needs within their areas and to fund those matters appropriately. That goes on all the year round, as new treatments become available, and health boards have been able to do that. She mentioned that money might be saved because the product has not been produced centrally. The costs are all fixed centrally, and the dropping of one plasma product would in no way affect the cost of the provision of the services, so there are limited savings to be made there.
Finally, the hon. Lady asked me a question about value added tax. As she will appreciate, that is not a matter which is within my portfolio, but I will certainly look into it and someone will write to her. I hope that, in answering those questions, I have dealt with all the issues raised.
Question put and agreed to.
Adjourned accordingly at half-past Ten o'clock.

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MINISTER WITHOUT PORTFOLIO
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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.

Scottish School Leavers: Basic Skills
Lord Hogg of Cumbernauldasked Her Majesty's Government:
How many pupils in each of the past five years left full-time education in Scotland unable to read or write.
Baroness Ramsay of Cartvale: My Lords, this information is not available in the exact form requested. However, we hold information based on Scottish Qualifications Authority data on qualifications awarded and on the number of leavers who do not obtain qualifications. This provides an indication of those leavers who are unable to read or write. However, it is not possible to give a precise figure. For the session 1995–96, the percentage of school leavers who held a standard grade English award at grades 1 to 7 was 88.5 per cent. In addition, the Scottish School Leavers Survey showed that in the spring of 1995 4 per cent. of 18 to 19 year-olds had no qualifications.
Lord Hogg of Cumbernauld: My Lords, I thank my noble friend for that Answer. It has a remarkable similarity to the reply I received to a Written Question some three weeks ago. Therefore, may I commend the Government for their consistency? Does my noble friend agree that it is important to have such information? If the system fails so badly that some children leave school unable to read or write, we have a right to know how many there are. Surely, it would he in the interests of the education authorities for such details to be collected centrally. Will my noble friend ask the department to do so so that if I table the Question at the start of the new Session I shall receive the information?
Baroness Ramsay of Cartvale: My Lords, we are nothing if not consistent. I am afraid that the department has no proposals for gathering information on the precise number of school leavers who are unable to read or write. I can assure my noble friend that increasingly sophisticated screening processes and monitoring systems are in place to identify any pupils with educational problems and difficulties. There is professional back-up to deal with those cases. Where necessary, a record of needs is opened—that is the equivalent of a statement in England and Wales—and the vast majority would be identified and dealt with. It would be foolish to believe that no children slip through the net, but a sophisticated, closely woven net is in place and constant efforts are made to strengthen it.
The Earl of Mar and Kellie: My Lords, can the Minister explain why no special measures are in place to ensure that the most fundamental skills of reading and writing are acquired by every pupil?
Baroness Ramsay of Cartvale: My Lords, I am not sure why the noble Earl believes that no measures are in place to do just that. The 1996 HMI report, Standards and Quality in Scottish Schools, indicated good standards of reading in primary schools. Constant monitoring is carried out not only to identify the children who have specific educational needs and problems but to assure everyone that standards are maintained. Recently, we launched a paper setting targets and strategies to raise standards.
Baroness O'Cathain: My Lords, does the Minister agree that focused resources should be available to deal with such a huge problem? One would then know the measure of it. Will the Minister assure the House that a system will be put in place to identify such children so that special educational resources can be made available to combat the problem?
Baroness Ramsay of Cartvale: My Lords, I am afraid that I must repeat my reply, although I do not wish to waste the time of the House. Such monitoring systems are in place. The Question specifically asks how many pupils left full-time education in Scotland unable to read or write. Some may have slipped through the already closely woven net which is in place to identify the children with problems.
Lord Northbourne: My Lords, if the teachers are doing their job, how is it possible for a child to pass through secondary school unable to read or write? Surely, the teachers will be marking the written work and must be able to see that the pages are blank.
Baroness Ramsay of Cartvale: My Lords, I do not wish to be too dismissive of the issue. I am not saying that anyone is leaving school unable to read or write. My noble friend's Question asked how many there are. I have said that constant monitoring takes place in schools. However. sometimes problems arise at the end of a school career when, for many reasons, children may become disturbed emotionally or in other ways and drop out of the school system. It is difficult to monitor such cases.
Lord Mackay of Ardbrecknish: My Lords, at the risk of worrying the noble Baroness, perhaps I may help her. As regards collecting such statistics, is not one of the problems that many youngsters who cannot read or write have long since given up attending school? Will her department consider the reintroduction of attendance officers—they were more aptly called "whippers in"—who went out to ensure that children attended school? Local government could arrange that. Can the Minister also comment on the 'suggestion that central government could make attendance at school a condition of receipt of child benefit?
Baroness Ramsay of Cartvale: My Lords, I knew that I was right to be worried when the noble Lord said he was going to help me. Of course, he is quite right to say that some children have given up attending school by the end of their school career. In fact, that is what I was trying to point out in my previous reply. As I am sure the noble Lord is aware, the whole question of truancy is constantly being reviewed by the department. As regards the noble Lord's last point about child benefit, I am sorry but I have absolutely no comment to make in that respect.
Baroness Nicholson of Winterbourne: My Lords, does the Minister agree with me that, while reading and writing are essential skills for profoundly and severely deaf children, there is also a third one; namely, the ability to speak? As some profoundly and severely deaf children in Scotland leave their specialist schools without speech skills, can the noble Baroness assure me that she will look into the question of introducing speech therapy as an essential part of the curriculum for those children throughout their school careers?
Baroness Ramsay of Cartvale: My Lords, I am grateful to the noble Baroness for raising this point. In fact, during our consideration of the problem, we have found that some children have difficulty in communicating; indeed, it is not just a matter of reading and writing, as the noble Baroness so rightly says.
Baroness Carnegy of Lour: My Lords, if the Government really do not have these figures—it seems quite extraordinary when we consider the amount of time we have spent talking about this matter and concerning ourselves with it—can the Scottish Office refer to the voluntary organisation which attends to adult literacy which, I suspect, does have the figures?
Baroness Ramsay of Cartvale: My Lords, I hear what the noble Baroness says. However, I do not know why she finds it so extraordinary that we have not managed this in the past 10 months when it has not been done previously.

Opencast Coal Mining
2.46 p.m.
The Lord Bishop of Durhamasked Her Majesty's Government:
What response they are making to the review of planning policy with regard to opencast coal mining.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, my honourable friend, the Minister for the Regions, Regeneration and Planning, will be announcing at 3.30 p.m. in another place that the Deputy Prime Minister has taken into account the responses to the
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consultation on planning policy on opencast coal conducted last year, and the announcement last December by my right honourable friend the Prime Minister of a full review of energy policy. In consultation with his colleagues he has concluded that there should be a full review of Minerals Planning Guidance Note 3 on coal mining and colliery spoil disposal. This will run in conjunction with the present review of energy policy, and will take into account its conclusions. The energy policy will, in turn, take into account the planning issues raised by coal extraction, including the issues on opencast coal dealt with in the 1997 consultation paper.
The Lord Bishop of Durham: My Lords, I am grateful to the Minister for that reply, especially as she has been able to take advantage of the extraordinary coincidence of a government announcement in another place and the tabling of this Question today. However, can the noble Baroness assure the House that the Government's guidelines to the mineral planning authorities will be consistent with their 10-point plan (which they published when in opposition) which stated, among other things, that opencast mining is one of the most environmentally destructive things in the United Kingdom?
Baroness Hayman: My Lords, the consultation which took place last July showed the Government's commitment to early action and our recognition of the environmental issues which are involved in opencast mining. However, we believe that it is necessary to look at these issues in the round and that we could not approach the problem properly unless we took into account the outcome of the Government's review on energy policy. We believe that the guidance we shall eventually be able to give to mineral planning authorities will be the better and the fuller because of that approach.
Lord Dormand of Easington: My Lords, is my noble friend the Minister aware that the problem raised by the right reverend Prelate is a real one? However, is she also aware that it is only one of a number of such problems now facing the opencast mining industry? One of those other problems is the position of deep mined coal. Has my noble friend seen a report published last week by Reading University which emphasises not only the need for deep mined coal—coal in the round—but also that it is particularly necessary to have a supply of such coal during the next few years? Having regard to employment in the coal-mining industry, which is by no means dead, does my noble friend accept that I absolutely agree that the full review that she has mentioned must take place?
Baroness Hayman: My Lords, I am grateful for that support for a full review. It is certainly a relevant consideration that opencast coal is at present a significant source of fuel in the UK energy market; about 16 million tonnes a year compared to 33 million tonnes from deep mines. This is a factor that the energy

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review has to take account of in looking at future energy policies and markets for coal. We in the department are concerned that the land use planning considerations arising from coal extraction will be fully considered in the energy review.
Lord Islwyn: My Lords, does the Minister recognise that opencast mining invariably takes place in areas that have had deep mining over the generations? Does she realise that opencast mining has a major detrimental effect on the environment? Does she not feel that priority should now be given to improving the environment in these coal-mining communities, which have suffered so much for so long from the ravages of deep mining?
Baroness Hayman: My Lords, I am aware of those strong concerns about environmental effects. We have to consider sustainable development. Social and community issues also have to be considered, not simply the balance between the economic and the environmental issues. When we published our consultation on a sustainable development strategy on 4th February we recognised that we had to take account of that wider balance. I am sure that is the right approach for the former coal mining areas.
Lord Ezra: My Lords, is the noble Baroness aware that during my period at the Coal Board opencast mining was regarded as supplementary to deep mining and not a replacement of it? Can we be assured that that policy will be continued by the Government in their forthcoming review?
Baroness Hayman: My Lords, the noble Lord's comments show exactly why we need a thorough review of energy policy which considers exactly that balance between opencast and deep mined coal and between coal and other forms of energy.
Baroness Seccombe: My Lords, does the Minister's reply include Scotland? When will we hear more from her right honourable friend about the new policy as regards planning and brownfield sites?
Baroness Hayman: My Lords, I believe I gave a comprehensive answer as regards planning and brownfield sites and the work that is being taken forward by the task force, chaired by my noble friend Lord Rogers of Riverside, which considers the availability of brownfield sites, when I made a Statement in this House only two weeks ago. As regards Scotland, separate consultation exercises were carried out in England, Scotland and Wales last year on the review of opencast coal planning policy reflecting the different circumstances in each country. The announcement that my honourable friend is to make in another place today relates solely to conclusions in relation to England. My right honourable friends the Secretaries of State for Scotland and Wales are considering the best way to proceed in the light of responses to their respective consultation exercises.

Power Stations: Energy Sources Review
2.53 p.m.
Lord Roberts of Conwyasked Her Majesty's Government:
Whether they will grant an exemption from the review of energy sources for power stations to the Shotton combined heat and power station.
Lord Haskel: My Lords, my right honourable friend the Secretary of State for Trade and Industry has said that she will be prepared to consider reasoned requests for exceptions to be made. These will be considered on their merits and she will bear in mind the environmental and other benefits of combined heat and power. A case has been made by Eastern Generation for the Shotton project to be an exception because of these factors. I can confirm that as a result the application is under active consideration.
Lord Roberts of Conwy: My Lords, I am grateful to the Minister for that encouraging reply. But is he not concerned, as I am, that an excellent scheme such as this is being held up by this review? I am sure he is aware that the scheme was specially designed for Shotton Paper, one of our major newsprint manufacturers and a heavy energy user, and will assist the company in its international competitiveness as well as bringing obvious environmental benefits. In view of all that and the case for the scheme, will the noble Lord do his utmost to expedite the exemption and let the scheme be carried out?
Lord Haskel: My Lords, certainly it is a good application, and that is why it is being actively considered. The current situation is that there is a local environmental issue raised by Ellesmere Port and Neston Borough Council; namely, whether the mound on which the proposed station is to be built can be reduced. A study has been carried out and the position as of this morning is that the relevant officials are urgently trying to set up a site visit with the DTI, the Environment Agency and other people involved to discuss the relevant problems. If the purpose of the noble Lord's Question is to place this application under the spotlight, I can assure him that the intention is that this visit will take place within days, not weeks or months.
Lord Ezra: My Lords, is not the Shotton scheme one that should be held up as an example? If the Government are really keen on expanding the use of combined heat and power, this scheme, which has more than 70 per cent. efficiency and which will replace the burning of heavy fuel oil, is the type of scheme to go for. Therefore, far from being held up in any way—which I hope will not be the case—it should be brought into operation and developed as a model for others to follow.
Lord Haskel: My Lords, it is certainly a good scheme. However, there is a statutory process for assessing what are called Section 36 applications, as the noble Lord well knows. This process is being completed as quickly as possible.
Lord Thomas of Gresford: My Lords, is the Minister aware that Neston and Ellesmere Port are in England, and that this application has the full support of the Welsh Development Agency and Flintshire County Council'? Shotton has suffered terribly from unemployment in the past. Special regard should be given to the feelings of people in that locality that no jobs should be lost as a result of delay.
Lord Haskel: My Lords, that is certainly taken into account. That is why my noble friend the Secretary of State for Trade and Industry is trying to speed up this application as much as possible.
Lord Elis-Thomas: My Lords, does the Minister agree that, for those of us who are concerned about sustainable development, this scheme from Shotton Paper and Eastern Generation appears to be a prime example of that very attitude towards environmental and energy management? Does he accept that Shotton Paper has invested substantially not only in production in North Wales, but also in the forestry industry, and that we have a fine example in mid and North Wales of sustainable forestry by that company? Will the Minister also take that into consideration and the fact that the whole cycle of energy production undertaken by the company is a positive one?
Lord Haskel: My Lords, it is certainly an admirable scheme. As I say, that is why the Government are taking it seriously.
Viscount Mersey: My Lords, I declare an interest as an immediate past president of the Combined Heat and Power Association. I have here a list of 13 combined heat and power stations which may be threatened by the moratorium. Rather than recite the list, I hope I may send it to the noble Lord. Will he comment on the future of each station in writing and possibly place a copy of his reply in the Library? Will he also confirm that the British Sugar combined heat and power station at Bury St. Edmunds has just been given the go-ahead?
Lord Haskel: My Lords, I can confirm that the British Sugar scheme at Bury St. Edmunds has been given the go-ahead and will be in operation in 1999 in time for the sugar beet harvest. As regards the noble Viscount sending me the details of other schemes, I shall certainly be happy to receive them but I cannot guarantee that I can give the noble Viscount more information than he probably already has.
Lord Roberts of Conwy: My Lords, in view of what the House has heard this afternoon, will the Minister give an assurance that he will consider all these applications for exemption and where there is an excellent case, such as the one we have dealt with this afternoon, he will give it his special attention?
Lord Haskel: My Lords, I can assure the noble Lord that the Department of Trade and Industry is looking carefully at these applications. Whatever encouragement is needed will he given.

House of Lords: Reform
2.59 p.m.
Lord Hoosonasked Her Majesty's Government:
Whether they envisage that the future role of the House of Lords will he changed, having regard to the impending changes in the United Kingdom's constitutional framework and her future relationship with the European Union; and when they intend presenting their views on this matter to encourage public debate.
The Lord Privy Seal (Lord Richard): My Lords, it is unquestionable that this House plays an important and valuable role as a revising chamber and makes an important contribution to the legislative and political process. We envisage that this will continue after reform.
Lord Hooson: My Lords, is the noble Lord the Lord Privy Seal aware that the Government are giving the impression that they have embarked upon a journey with little idea of their destination'? The Lord Privy Seal's Answer today reinforces that. In order to dispel this unfortunate impression, would it not be better for the Government to publish a preliminary paper on the possible enlarged function of this House in the future? That surely will govern how the House is to be constituted. Alternatively, are we to look forward to a future where this House as a second Chamber will depend entirely on patronage?
Lord Richard: My Lords, the answer to the noble Lord's last point is no. One should not look forward to a future where this House will depend upon patronage. I am happy to tell the noble Lord that the Labour Party manifesto was distinctly clear on the subject.
As regards the remainder of his questions, I do not think that we are on a blind journey. The Government are considering all the options, as one would expect a responsible government to do. When we have considered the options, we shall publish our conclusions. I hope that there will then be ample opportunity for public consultation.
Viscount Cranborne: My Lords, I welcome the last statement by the noble Lord the Leader of the House. I do not think that it was of great surprise to anyone who has followed his remarks in the past on this important question. However, he knows, as does the House, that the history of the reform of your Lordships' House has always foundered on the difficulty of deciding the form of stage two of the reform after the abolition of the rights of hereditary Peers. That is the easy part and constitutes stage one. Can the noble Lord the Leader of the House agree that the best guarantee of achieving the objective he has enunciated today is for any reform to take place simultaneously: that is, stage two simultaneously with stage one? We all recognise the temptation for any powerful government, in particular a powerful Prime Minister, to ride roughshod over the legitimate concerns of specific interest groups because

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of his majority in the other place. I imagine that above all this week students will readily understand the force of that argument.
Lord Richard: My Lords, the picture that the noble Viscount paints of this poor, defenceless House in which about 500 Conservative Peers shrink in the face of a Government who have a majority in the other place is somewhat fanciful.
I am delighted to welcome the noble Viscount's statement that the abolition of the hereditary Peers' right to sit and vote is easy. It will be easy if the Opposition accept that in principle. I am delighted to note that both the noble Viscount and his leader in another place, Mr. Hague, seem to be indicating that it is something they are now prepared to accept.
As to whether one has stage one first and stage two afterwards, I commend the noble Viscount to read the Labour Party manifesto.
Lord Bruce of Donington: My Lords, is the noble Lord the Lord Privy Seal aware that there is a growing volume of opinion in the United Kingdom that the role of the House of Lords, as distinct from its composition, needs but minuscule changes compared with the drastic changes that are required in the structure, powers and institutions of the European Union? Is he further aware that on present form and indications it is likely that your Lordships' House will be in existence long after the European Union?
Lord Richard: My Lords, resignedly, and somewhat wearily, I congratulate my noble friend on managing to bring the affairs of Europe into any single question. No doubt he will have ample opportunity to express his views in future, as he has had ample opportunity to do in the past—opportunities which he has taken, and no doubt will take in the future—but, with great respect, not on this Question.
The Earl of Lauderdale: My Lords, will the Minister assure the House that there is no intention to modify the powers of this House to veto any amendment on quinquennial action thereby delaying another general election?
Lord Richard: My Lords, at present I am not proposing any variation whatsoever in the powers of this House. Speaking for myself, I find it inconceivable that any government even, if I may say so, one composed of representatives of the noble Earl's party, would wish to remove that part from our constitution.
Lord Chalfont: My Lords, can the noble Lord the Lord Privy Seal at least say whether the Government expect to publish their views or intentions on the future composition of this House in the long term before any legislation is introduced into Parliament concerning the status of hereditary Peers?
Lord Richard: My Lords, I repeat what I said. The way in which the Government are approaching the issue is set out in the Labour Party manifesto which I have
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no doubt the noble Lord has read. We shall conduct our work inside the Government with, I hope, due deliberate speed. When we have done so, we shall publish our conclusions.
Lord Rodgers of Quarry Bank: My Lords, I hope that the noble Lord the Lord Privy Seal will appreciate that he cannot rely for ever upon the terms of the Labour Party manifesto. Your Lordships' House will expect to see a development of those ideas very soon. Not all of us share the argument that stage one must be accompanied by stage two. However, my noble friend Lord Hooson made an important point which I hope the noble Lord the Lord Privy Seal will accept. When we have stage one—and the sooner the better; I hope preceded by a Green Paper for full discussion in this House at least before the Summer Recess—the Government must clearly point to the direction of stage two. It would be inadequate to go through the first stage of reform without knowing what the final destination might be.
Lord Richard: My Lords, I am well aware that that is the view held by the noble Lord and his party—indeed, it is a view which I have heard often expressed.
Lord Taylor of Gryfe: My Lords, the Question refers to constitutional changes. Can I direct the Minister's attention to the major constitutional change that will take place in May of next year? Is my noble friend aware that from that date Scottish Questions will no longer be in order in the House of Commons? Can we have some assurance that similar strictures will not be applied in the House of Lords in these new constitutional arrangements?
Lord Richard: My Lords, I am aware of no rules of order in your Lordships' House which would prevent a noble Lord from putting down such Question.

Legal Aid
3.8 p.m.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, with the leave of the House I should like to make a Statement on improving access to justice.
At present the legal aid system is failing us all. It is failing the many millions of people on modest incomes who do not qualify for legal aid and who simply cannot contemplate going to law because of the potential legal costs if they lose. It is failing people on legal aid, because the Government cannot direct money to those who need it most and to those cases where there is a public interest in seeing justice done. Finally, it is failing the taxpayer who year on year is being asked to pay more and more, and yet can rarely get help from legal aid when it is actually needed.
But even though legal aid is costing us all more and more with costs running away ahead of inflation, it is helping fewer and fewer people each year. It is, therefore, our intention to modernise the way in which civil cases are paid for. We want a system of civil justice

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which is there for everyone when they need it, not just for the rich or for the very poor. We intend to transform the legal aid scheme so that we ensure we get good value for money from those lawyers who are paid from legal aid; and so that we spend taxpayers' money on those who need it most and on those areas where it can do most good.
Achieving all of our reforms will require the approval of Parliament through new primary legislation. But even using existing powers we can start the process of change. It is this first stage that I wish to concentrate on today.
The publication of this consultation paper marks the first stage of our modernisation of legal aid and legal services. When I announced the programme of reform at the Solicitors Annual Conference in October last year I said,
"it is essential that the details [of our proposals] are right … We shall be consulting widely and openly".
That is precisely what we have been doing in the four months since October and will continue to do for a further two months of the formal consultation period. This is a listening Government and we are listening to views on these proposals—and we will continue to do so. We have had detailed discussions with the legal profession and with many interest groups. More are planned. Their comments have contributed to the development of these proposals. But we will not confine our listening to the legal profession, because our aim is justice for all.
The consultation paper invites views on a proposal that will allow the majority of people in England and Wales to secure access to justice. We propose to allow conditional fee agreements (no win no fee agreements) to be used in all except family and criminal cases.
Conditional fees offer a new way for people to bring their cases. Lawyers share the risk of litigation with the client by agreeing to work without a fee if the case is lost. If the lawyer is successful he or she is entitled to claim a success fee in addition to his normal fees. Although the maximum success fee can be up to 100 per cent., normally it is 50 per cent. or less. In nearly all cases the lawyers also voluntarily limit the success fee to no more than 25 per cent. of the damages in any event. Conditional fees have been available since 1995 for a limited range of proceedings—personal injury, insolvency and human rights cases and they are working well.
Over 30,000 people have taken advantage of this approach to bring personal injury claims. Many of them would have been unable to afford to pursue their claims at all without conditional fees—people only just above the legal aid limit, people who are far from well off. They are the great majority of the population who are in work—with families, mortgages, savings, or other assets, which mean that they are not eligible for legal aid, but who cannot contemplate the open-ended
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commitment of meeting lawyers' bills. Only the very rich can face the thought of lawyers' bills without any financial fears and even they must worry sometimes. To continue to restrict narrowly the use of these agreements is to deny an avenue of access to justice to the majority of the people in the country.
The consultation paper also seeks views on any changes to the current law and practice that might improve the operation and use of conditional fees, for example by allowing the success fee and the insurance premium to be recoverable from the losing party.
Secondly, the paper invites views on the Government's plans to begin modernising legal aid. Over the past seven years, the cost of civil and family legal aid has tripled to £671 million. The average cost has grown from £1,442 to £2,684–53 per cent. above inflation. The number of acts of help funded in 1996–97 fell by about 39,000. Taxpayers are paying more and getting less. That cannot be right and it cannot continue.
We need a modern legal aid system in which only cases which cannot reasonably be funded in any other way and which have the necessary priority are backed by the taxpayer. It has never been our intention to abolish civil legal aid, as has been wrongly claimed. We want to focus taxpayers' money where it is most needed and can do most good: on social welfare matters—employment; housing; debt; state benefits; and actions against officialdom and bureaucracy.
To achieve this clear focus on social welfare issues, the Government therefore intend that, in future, most money or damages claims will be funded through conditional fees. Consequently, they propose to transfer most money and damages claims currently supported by legal aid to conditional fees.
However, as I told the House on 9th December, we do not intend to remove legal aid from housing cases where very often the main purpose of the action is to achieve a home fit to live in. That is precisely the kind of area to which legal aid ought to be directed. In addition, the ability to challenge public authorities through judicial review is a necessary check on the use of the power of the state, and a positive encouragement to maintain high standards in public administration or by public bodies. The poor must also be able to exercise this right of challenge. Legal aid will remain available for those who qualify. We also believe that legal aid must continue to be available where a person claims to be the victim of wrongdoing by public authorities; for example, the police. Here too, the ability to challenge misdeeds is an encouragement to maintain high standards and proper behaviour to those over whom public bodies exercise authority.
The extension of the availability of conditional fee agreements will provide an alternative means for people to bring most money or damages claims without public funding. Our aim is to create the conditions in which anyone can use conditional fees to bring cases, regardless of their financial status, across the whole range of litigation in which money or damages are the main remedy sought. However, we recognise that

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solicitors' firms may not presently be financially structured to do this, and that the insurance and finance industry needs time to develop products to assist in the expansion of the use of conditional fee agreements. The Government, therefore, propose a measured approach to encouraging this change to take place.
The Government propose to remove from the scope of legal aid most personal injury actions by the middle of this year. Lawyers working in this area have considerable experience in taking cases using conditional fees. Similarly, the insurance industry has developed products with premiums which in most cases are £155 or less. The Government will be working with the insurance and banking industries to help them develop more and still better products to allow everyone, regardless of their financial standing, to bring cases using conditional fees. This combination of the experience of lawyers in this area of litigation together with developed insurance products is sufficient to allow these cases to be alternatively financed through conditional fee agreements.
In addition, there are certain categories of proceedings which the Government believe no longer have sufficient priority to command continued public funding. It is important that scarce public funds are directed to where help is most needed. The Government are not persuaded that cases which involve, for example, disputes arising from running a business, inheritance, partnerships or trusts meet this criterion. Nor do they believe that taxpayers' money should be used to help neighbouring landowners to settle disagreements over disputed boundaries. In these cases there will be assets at issue which would allow the case to be taken with a conditional fee arrangement. In any case, the issues will generally be too narrow or too specific to deserve the use of public money, when such support means less for other matters of greater public importance. The consultation paper seeks views on the proposals to remove these categories from the scope of legal aid.
The Government have been listening carefully to the comments we have received in relation to medical negligence cases. The Government believe that many lawyers practising in this area need to modernise the way they run their firms, so that they can structure their finances to enable them to take cases on behalf of clients regardless of their financial standing. We accept, however, that this will take time. The Government do not, therefore, propose to remove these cases from the scope of legal aid for the present.
We do, however, intend to do what we can to reduce the high failure rate of these cases. It cannot be right that it is only in as few as 17 per cent. of all the cases that are supported by a legal aid certificate that more than £50 is recovered in damages. Medical negligence cases should be conducted by practitioners who are experienced in this field of litigation. We cannot any longer allow inexperienced practitioners to take cases. I have no doubt that part of the reason that the failure rate is so high is that lawyers take these cases on without the necessary experience. They are, therefore, unable to
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make timely, informed decisions on the merits of a case or whether an offer of settlement is appropriate or reasonable in amount.
It serves no one's interests if cases are brought with little prospect of success—least of all the victims of the alleged negligence. The consultation paper therefore invites views on a proposal to allow only experienced practitioners to be able to take cases on behalf of assisted persons in this field. We propose that the Legal Aid Board should establish contracts only with lawyers of sufficient experience. Anyone who is granted legal aid to pursue a medical negligence case will be required to use a lawyer who holds a contract with the board. We are keen to hear what criteria could be used to establish whether a lawyer is sufficiently experienced to hold a contract to take cases on behalf of those receiving legal aid.
We intend to remove the remaining money or damages claims from the scope of legal aid as experience of conditional fees among lawyers and insurers develops and they become more widely and readily available.
The Government recognise that help will be needed during a transitional period to assist in the change of funding away from legal aid. There may be some extraordinary cases among those categories to be removed which the lawyers may not initially be able to fully support on conditional fees. In time, the Government believe that these cases will be able to be financed solely through conditional fees. Therefore, the Government intend to establish a limited transitional fund. This fund would provide support in cases, for example, where presently few lawyers' firms are structured financially to carry a very high costs case, because they could not afford the risks of losing, or where there are high investigative costs of establishing the merits of the case. We would expect that the need for the fund to support this kind of case will cease because in the long term the Government believe these cases will find lawyers who are financially structured to take them on under conditional fee agreements. The transitional fund would also provide help in those cases which we exclude from legal aid which demonstrate a significant wider public interest. This would allow us to begin to provide assistance in this kind of case under the transitional arrangements ahead of primary legislation to establish a public interest fund. The size of the transitional fund will be set each year according to other priorities for spending legal aid money and the diminishing extent to which the fund is needed.
The Government will develop a modernised legal aid system. We are working towards a system in which we can control expenditure; obtain good value for public money; and target legal aid where there is the greatest need and it will do most good. In future, the Government's main priority for using public money to provide legal services will be to assist those who are excluded from society because they are unable to exercise their legal rights. The Government will achieve this through the legal aid scheme and through the creation of a community legal service.

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This consultation paper sets out the steps towards that goal which can be taken now. By making conditional fee agreements more widely available, targeting civil legal aid on social welfare matters and creating a special fund for public interest cases what we propose will significantly widen access to justice. We welcome responses on the consultation paper and will consider them carefully before we arrive at considered decisions on specific proposals to bring before Parliament.
My Lords, that concludes the Statement.
3.24 p.m.
Lord Henley: My Lords, I offer my thanks to the noble and learned Lord the Lord Chancellor for coming to the House to make this important Statement on legal aid. I offer my apologies to the noble and learned Lord for the fact that it is I who is responding to the Statement rather than my noble friend Lord Kingsland, who is, I think all will agree, better versed to make such a response. My noble friend is, sadly, detained in court today—whether in receipt of legal aid, I do not know.
We share the concerns expressed by the noble and learned Lord about the ever-rising cost of legal aid. We also accept the point he made in the debate on 9th December, that any review of these matters should not he Treasury-led, as I believe he put it on that occasion, though I believe he would accept that when costs are rising in such a manner the Treasury has a perfectly legitimate interest in the size of the bill that the taxpayer is asked to meet.
Turning to the Statement itself, I believe that the noble and learned Lord will recognise that it was his predecessor, my noble and learned friend Lord Mackay of Clashfern, who introduced the concept of "no-win, no-fee"—conditional fee—agreements to increase access to justice, but did so by making it an add-on to the legal aid system. What the noble and learned Lord proposes is different. I would argue that, in proposing conditional fees agreements for personal injury cases, other than medical negligence cases, he is missing the point. Will he confirm that the overall legal aid costs are around £1.6 billion gross, which I understand is £760 million net? Is it not the case that the great bulk of those costs are incurred on criminal and matrimonial legal aid and immigration and that personal injury is the one area of legal aid which is largely self-financing? Can the noble and learned Lord say what the net costs would be without the medical negligence cases?
Is it not the fact, that if civil legal aid is withdrawn from personal injury cases and replaced by no-win, no-fee agreements, little, if any, money will be saved and a complex system will result which will damage the poorest litigants, with little benefit to anyone else?
Litigants will meet an elaborate system involving insurance against costs. We heard the noble and learned Lord talk about the insurance industry developing packages costing at most £155. I imagine that that figure would be greeted with a degree of cynicism by a great many people in that field. If a system is developed which involves insurance against costs in cases which do not succeed, and a reduction in damages, will not the
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poorer litigants, those who would not receive legal aid, be worse off and have less access to the courts? How much does the noble and learned Lord estimate the reductions will be? Will they not be significant, particularly in the more complex personal injury cases, where damages are badly needed?
I wish to put a number of other points to the noble and learned Lord on which I should be grateful for a response. The first relates to his comments about medical negligence. I wonder whether the noble and learned Lord could say a little more about the system that he proposes for licensing practitioners. It seems rather odd. In his Statement he refers to the fact that as few as 17 per cent. of all cases supported by a legal aid certificate recover more than £50 in damages, which he thinks is largely a result of cases being pursued by practitioners with insufficient experience. I should be grateful to know what evidence there is for that statement and what evidence exists to suggest that better figures would be produced if practitioners were licensed by the Legal Aid Board and were therefore more experienced.
My second point relates to some remarks made by the noble and learned Lord, Lord Brightman, and the noble Lord, Lord Goodhart, in the debate on 9th December when they referred to what I understand is described as CLAF, the Contingency Legal Aid Fund. The noble and learned Lord makes no reference to those suggestions. I do not think I need to go into detail here because they are dealt with in considerable detail by the noble Lord, Lord Goodhart, in that debate. The noble and learned Lord makes no mention of them in his Statement. Whether they are dealt with in the consultation paper I do not know because obviously I have not had it long enough to have studied it. But I know that the Bar Council has put further submissions relating to CLAF to the noble and learned Lord. I would be very interested to hear what his considerations are and what his conclusions are likely to be.
The final point I wish to make relates to timing. The noble and learned Lord referred to a consultation lasting some two months. The consultation paper itself refers to a consultation that ends towards the end of April, a little short of two months but very nearly two months.
Can the noble and learned Lord give us an assurance that we will at some point during the course of that two months, or possibly later on, have a full-scale debate in this House on these issues? They are very important issues, as the noble and learned Lord will discover during the course of the brief debate on this Statement. They are issues that need to be addressed in full by the House. I would be most grateful if he could seek through consultations with the usual channels an assurance that these matters will be given full debate at the appropriate time.
3.32 p.m.
Lord Thomas of Gresford: My Lords, I welcome the much less precipitate approach to change that this Statement suggests and that the April date for the commencement of these changes, which was initially announced by the noble and learned Lord the Lord Chancellor, has now been pushed back.

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We also welcome the absence in the Statement of controversial and dubious rhetoric about overpaid legal aid practitioners. These proposals either stand on their merits or they do not. The absence of that rhetoric means that the noble and learned Lord can expect much greater co-operation in consultation with the legal profession.
We are also glad to note that the 75 per cent. merits test has been dropped and does not appear in the Statement or the accompanying document. As we said in the debate on 9th December, it is meaningless to aim at a particular percentage of risk. The percentage has now been replaced by the phrase "strong prospects of success". That is a much more acceptable way of approaching the difficulty that practitioners feel in this area. The practitioner, after all, is faced with an inchoate series of facts by his client upon which he has to put some sort of legal form and decide the proper route to pursue. From his own experience he will get a feel as to whether the ultimate outcome will be successful, but his appreciation of the chances of success will vary as documents are disclosed, reports are revealed and witness statements come forward.
Legal aid has been phased so that conditional certificates are granted first of all, and the various stages of the action do not usually take place until counsel's opinion has been obtained to ensure that the prospects of success are still there. One of the problems of conditional fee agreements is that presumably, once one enters into a conditional fee agreement at the beginning, there is no subsequent point at which one can assess the way in which the case will go.
We also welcome the retention of legal aid in medical negligence cases. I suspect that that is a response to the problems that arise from the cost of initial disbursements for medical experts and the high risk of those cases. It may be that insurance cover is not available or is completely unaffordable. The 17 per cent. success rate to which the noble and learned Lord the Lord Chancellor referred in his Statement should not be thought to reflect upon inadequate advice or inexperience.
These are very difficult cases where, at the present time, the boundaries of liability are being pushed forward. It is very much the case that there are competing views as to whether there has been negligence in this type of case. It is only in this field that the noble and learned Lord has referred to block contracts. I would be glad to know whether he is now saying that block contracts are not suggested as the way to proceed in any other type of personal injury case. The problem with block contracts is that representation is confined to a number of firms. That means that there is liable to grow up a very narrow and tight industry in which there are professional witnesses on both sides appearing in case after case against each other. That cannot be in the interests of the public in the long term.
The retention of legal aid in housing and social welfare cases is also welcome, but what about the public interest cases to which the noble and learned Lord referred on 9th December, in particular issues arising under the Human Rights Act and multi-party actions
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where a large number of people are damaged in drug-related disasters? Is there any prospect that public interest cases of this sort will he funded by legal aid regardless of the injured person's level of income?
So far as concerns housing, a query still remains. It is not much good giving legal aid in housing cases if the small claims limit for housing cases is to be raised from the present £3,000 to £5,000. That means to say that there is no legal representation available if there is a claim that is below that £5,000 limit. The vast majority of cases are below that £5,000 limit. I hope the noble and learned Lord will take into account the representations made to him by practitioners in this field that the limit should be reduced from the current £3,000 in small claims cases to £1,000 so that there can be support for the poorest people who need representation to deal with issues such as enforcing landlords' obligations to repair, and resisting eviction proceedings or damages in housing cases. These are the people who are the most disadvantaged by poor literacy, very often poor English, and sometimes ill-health and mental health problems. For them, the small claims procedure, in which they must present their own case, is far more daunting than for middle income litigants.
Legal aid in personal injury cases, paid for by ordinary people out of taxation, redresses the balance between the most vulnerable groups in society and the insurance companies who are themselves funded by insurance premiums paid by ordinary people. Taxation is one way of getting money, but premiums paid to insurance companies who are on the other side is another. The ordinary people pay for insurance companies to defend to the utmost degree the cases that are brought against them. Conditional fee agreements do have their drawbacks. I would ask the noble and learned Lord the Lord Chancellor what research has been carried out on the out-turn of conditional fee agreements since their inception in 1995. I know of only one firm which has evaluated conditional fee agreements. Of the 450 conditional fee agreements into which it entered it found them to be only marginally profitable. A small firm is liable to be very considerably disadvantaged if conditional fee agreements become the main way in which personal injury cases are brought. That means that those numbers of people, particularly in the areas that I know in Wales, will be very considerably disadvantaged if there is no local firm of solicitors able to take their case.
The noble Lord, Lord Henley, referred to the fact that there is no mention in the Statement, nor so far as I can see in its accompanying document, to the Contingency Legal Aid Fund proposals that the Bar Council has put forward in its report, Access to Justice. It may that the Government remain unpersuaded on that, but I can give the noble Lord, Lord Henley, notice of a debate. I have an Unstarred Question down for next Monday during which I will be going into that subject in some detail. I shall leave further queries on that matter until then, when I hope to see the noble Lord, Lord Henley.
3.39 p.m.
The Lord Chancellor: My Lords, the current expenditure plans for legal aid are: for 1997–98, £1,553 million, and for 1998–99, £1,602 million. It is not intended, as a result of these changes, either to increase or decrease expenditure on legal aid in real terms; so the object of conditional fees is not to provide savings to the legal aid fund but to focus limited resources on those most in need in the areas of social welfare law. It is estimated that with the extension of conditional fees the following amounts will become available to concentrate on social welfare cases: in 1999–2000, £69 million; and in 2000–2001, £100 million.
The noble Lord, Lord Henley, mentioned personal injury cases. What he must remember is that the eligibility limits are such that the vast majority of people in this country do not qualify for legal aid in respect of personal injury cases. The principal benefit which will flow from conditional fee agreements is the expansion of access to justice which they will bring. I understand that later today the biggest personal injury firm in the country is to make a statement to the effect that, having considered the Government's proposals, it judges that it will significantly expand access to justice and hopes that it will be supported in the interests of the public. I, too, hope that it will not be undermined because of a reluctance on the part of the profession to change.
The noble Lord, Lord Henley, asked about medical negligence cases. A 17 per cent. success rate in cases that go to trial is a very, very poor success rate. What it suggests is that legal aid is being granted in too many cases which are too weak to go forward. The likely reason for this abnormally low success rate is that lawyers of insufficient experience are undertaking these cases. That is why the Legal Aid Board should contract for the expenditure of public money with those of proven expertise in this field. I do not think one does any favours to those who have suffered severe injury for medical negligence, if their case is weak, to drag them through the courts for disappointment at the end of the day. Litigation that fails is a very traumatic experience for those who are involved in it. It is the fact that legal aid is currently being used to support cases which should not go forward.
After I made my Cardiff speech, if I may be a little anecdotal—I know the noble Lord, Lord Thomas of Gresford, will permit me to refer to the Principality—I heard on the radio a solicitor from the Principality complaining about my proposals, which I had presented in outline. He said that he was very, very experienced in medical negligence cases, that he had brought many of them, that they almost always failed and that he could not possibly have brought them unless backed by legal aid. He was very frank, but that is the point.
I was asked about a conditional legal aid fund. We will be consulting on it and the consultation paper will deal with it. We envisage the possibility, and will consult on the possibility, of even taking powers to that effect. But I remain very sceptical about a conditional legal aid fund for this reason. I think the inevitable tendency would be for the profession to cream off the strong cases under conditional fee agreements and leave the weak cases for a conditional legal aid fund. I require persuasion that a
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conditional legal aid fund could work without outlawing conditional fee agreements, which I do not think anyone is proposing.
The noble Lord, Lord Thomas of Gresford, asked about the 75 per cent. merits test having been dropped. He is right, of course, that to specify an absolute figure is very difficult. He will, from his great experience, be the first to know that lawyers frequently advise without quantifying the prospects of success. They do not actually commit themselves to a prediction. I remain unrepentantly of the view that only really strong cases should go forward.
I also submit that contracting is the way forward, and contracting at fixed prices. Contracting is a means of guaranteeing quality assurance. I can assure your Lordships that nothing would concentrate the mind of a lawyer more wonderfully than if he had to contract at a fixed price. Any incentive to delay, any incentive to spin out a case, since paid on a time basis, would be gone.
3.48 p.m.
Lord Hooson: My Lords, perhaps I may ask the noble and learned Lord one question which relates to medical negligence cases. He referred to the 17 per cent. success rate at trial. My experience—and I did a fair amount of medical negligence cases during my career at the Bar—was that most of them settled. Does he have the statistics for cases that were started off under legal aid and were successful to the extent that they were settled? My experience from appearing for defendants was that one really fought the case if one was fairly certain of success. There is a difference between the cases that are started off and settled and those that are eventually fought. I have no idea what the statistics are, but I would be interested to know.
The Lord Chancellor: My Lords, I do not believe that such statistics exist. On the other hand, I would be ready to accept that a 17 per cent. failure rate at trial says nothing at all about cases which succeed in the sense of leading to a satisfactory settlement. However, if the noble Lord is right, on the basis of his experience, that a very high proportion of these cases settle because they are strong, that adds to the argument that they will in due time prove suitable for conditional fee agreements. But one cannot be complacent about a statistic for cases that go to trial when only 17 per cent. succeed because, again as the noble Lord will know from his experience, the really heavy costs of litigation arise out of protracted trials.
Lord Ackner: My Lords, before asking my noble and learned friend one simple question, might I remind him of the following matters? The first is from the Labour Party's proposal at the 1995 conference with regard to access to justice. The quite short quotation reads,
"We regard conditional fees as an experiment to be monitored closely, and in the light of the Scottish experience, do not expect their introduction to make a significant improvement to access to justice. They are, at present, little more than a gimmick designed to mask the chaotic state of the legal aid scheme and the court service".
The next short matter to which I ask the noble and learned Lord to apply his attention is again in 1995 when his own advisory committee impressed on him that in view of the novelty and potential risk to the litigant inherent in setting

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up conditional fee agreements, there must be effective monitoring of the results and that the committee did not believe that monitoring would be effective if it had to rely on a sample that might well be unrepresentative.
The third and penultimate matter is that there was commissioned, as your Lordships may recall, a very small sampling by the Policy Studies Institute. In its report it said,
"However, on the basis of the evidence so far available, there is potentially cause for serious concern about the way risk is being assessed and uplift calculated [and that] this could cast doubt over the fairness of the entire scheme".
The last matter before I come to the question—
Baroness Farrington of Ribbleton: My Lords, perhaps the noble and learned Lord will allow me to observe that there is very limited time. There should be very brief questions or comments to allow as many speakers as possible.
Lord Ackner: My Lords, this is very brief and I have only one question. The last matter to which I refer is an Answer by my noble and learned friend as recently as 18th February to a Question for Written Answer which I asked him about monitoring. The Written Answer states,
"In the five months since the Policy Studies Institute report was published, I have not commissioned further research on the practice of conditional fees … the Policy Studies Institute report concluded that many of the potential problems identified with conditional fees before they were introduced appear to have been successfully addressed. I accept that further research, at the appropriate time, may be necessary and I plan to seek views on what further research might prove useful in the consultation paper".—[Official Report, 18/2/98; col. WA 49.]
My short question, in the light of that preparatory material, is this. Can my noble and learned friend agree that as matters now stand we do not know enough about the manner in which conditional fee agreements are operating to switch to a system for which they are primarily a means of funding litigation?
The Lord Chancellor: My Lords, out of consideration for other noble Lords who desire to ask questions in the limited time available, I shall attempt to make a brief answer. In the PSI research to which the noble and learned Lord referred, there was certainly some concern about the ability of solicitors to assess risk. But the report also said in terms that many of the potential problems identified before conditional fees were introduced seem to have been successfully addressed. In most cases the uplift was under 50 per cent.—I believe that the average which emerged was 43 per cent.—and far less than the 100 per cent. maximum that is allowed. So that the overall picture that emerges is that the scheme seems to be working as intended.
I want to make a short point. As long as the availability of conditional fees remains limited, a very large number of people are, in practice, denied access to the courts. All the available evidence suggests that while there may be some areas where more research may be necessary, conditional fees are working as intended and clients are not being charged exorbitant sums. We have no evidence whatsoever in my department and none is reported by the Law Society, that clients are dissatisfied with the
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agreements that they have entered into. On the contrary, all the requests to my department have been to extend conditional fees.
Lord Campbell of Alloway: My Lords, I ask the noble and learned Lord one question on a point of clarification. What has happened about the proposals of the noble and learned Lord, Lord Brightman, which were put forward by the Bar Council? Can the noble and learned Lord deal with that?
The Lord Chancellor: My Lords, that is the CLA that I have already referred to. I have myself met personally with the Bar and discussed it with them. I have already expressed my reservations about it. However, in the consultation paper, which this Statement presages, we are consulting on it further.
Lord Borrie: My Lords, as I may ask only a short question I shall resist making a lengthy statement about the excellence of the Statement made by my noble and learned friend, especially on the changes that have been announced towards a measured approach. My question concerns what were referred to, if I remember correctly, as "financially well-structured lawyers" and "experienced lawyers" in the field of medical negligence. I hope that I am not being flippant when I say that, given that only 17 per cent. of the cases brought in this field on legal aid have been successful, there would seem to be more inexperienced lawyers than there are experienced ones. How does one become experienced except through practice? Therefore, I am really concerned about the use of the word "experienced" in this field and the use of the phrase "financially well-structured lawyers", which may mean that there is a severe reduction in the choice available and a narrowing down of those firms of lawyers—presumably, only substantial firms—that will be in receipt of legal aid in these cases.
The Lord Chancellor: My Lords, if I as plaintiff had a medical negligence claim to bring, I do not believe that the state would be doing me a great service if it pointed me in the direction of an inexperienced lawyer. The fact is that there are many experienced lawyers in medical negligence cases. I repeat what the noble Lord, Lord Hooson, said, that the picture is not as bleak as the success rate at trial suggests because of settlements. However, it appears to me to be right in principle that scarce public funds should be spent on medical negligence cases where they are used to secure the services of experienced lawyers.

Business of the House: Debate this Day
Baroness Ramsay of Cartvale: My Lords, on behalf of the Lord Privy Seal, I beg to move the Motion standing in his name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Astor of Hever set down for today shall be limited to five hours.—(Baroness Ramsay of Cartvale.)
On Question, Motion agreed to.

Charities
3.58 p.m.
Lord Astor of Hever Lord Astor of Hever rose to call attention to the importance of the work of charities; and to move for Papers.
The noble Lord said: My Lords, charities play a huge and vital part in the life of this country. They are tremendously varied, ranging from household names like RoSPA (the Royal Society for the Prevention of Accidents) of which I am president, to local community trusts. They have little in common other than that their reason for existence is to advance some aspect of the welfare of the community. The size of the sector is impressive. There are more than 180,000 charities and a new one is registered with the commission every 12 minutes. The charity sector has 440,000 full-time employees backed by an army of 3 million individuals providing voluntary services. I have no wish to blind your Lordships with statistics but wanted to highlight some of the indicators that show how important is the charity sector; not simply because of the social purposes that the sector is fulfilling but because it makes a real contribution to the country's economy.
This debate is timely for several reasons. Despite the Prime Minister's exhortation to make the advent of the Labour Government the start of a "giving age", charitable giving is in a state of decline—especially among the young generation. The charities Acts and the lottery brought about great change in the charitable sector. The Government are due to produce their own consultation paper on charities in the next few weeks. The charity tax review was announced by the Chancellor of the Exchequer in the summer, and I know that a number of charities have submitted their views to that review. I have received a copy of the submission by the Charities Aid Foundation. I wish that more people would use its services, which are a most convenient and efficient way to give to good causes.
The Government also have a draft Bill to restrict the frequency of on-line lottery draws—in effect, a ban on Pronto! Doubtless my noble friend Lord Mancroft will speak on that matter. I look forward to the Minister's reply—particularly as I am a trustee of the Hearing Research Trust, which had hoped to raise £100,000 through Pronto! this year.
In January, the Government announced plans for a compact with the voluntary sector on the lines proposed by the 1996 Deakin Commission. That would set out principles for the relationship between the government and charities, against the background of the voluntary sector being increasingly identified with government because of the amount of work that charities do under contract to Government agencies.
This debate also provides the opportunity to review the need for measures to support the sector's development and independence, and I much look forward to hearing the maiden speech of my noble friend Lady Fookes.
First and foremost, as the roles and responsibilities of charities and the Government are drawn ever closer, we must be vigilant to protect the independence of charities
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from governments of all political colours. With so much of the charities' money coming from government sources, many charities lack genuine freedom of action. The vitality of charities and community groups comes about precisely because ordinary people feel strongly about particular causes or issues and get on with doing something about them. That personal commitment untrammelled by politics, is the lifeblood of the sector. It is not the place of the Government to silence the voice of charities, who tend to know a great deal more about people's problems and needs than any government. As an unfortunate example, a couple of years ago Barnardos was embarrassed by accusations that it delayed publication of research that it had commissioned, which conflicted with government policies.
Charities are now providing a whole range of mainstream services for people in need. They are no longer on the margins or simply the province of the original idea of the amateur do-gooder. It is no exaggeration to say that many local authorities and health authorities are now dependent on charities for providing services as part and parcel of their overall provision.
Many of your Lordships are aware that reform of the welfare state is on the agenda and that a Green Paper will be published on 26th March. No one is afraid of change, and undoubtedly we cannot go on as we are indefinitely, but there must be positive discussion with charities and voluntary groups about their contribution to change which ensures that their independence is protected and also encourages partnership and participation. The current Administration claim to want to develop that relationship, but ill-thought through taxation policies recently introduced are having the reverse effect.
The current charity tax review is in full swing and a consultation paper is expected shortly. I hope that paper will look widely at the options for change in the tax regime for charities and that the Government will not forget that they take 12 per cent. of the lottery's £5.8 billion turnover. I hope also that early commitments will be made to simplifying covenants and gift aid procedures. In addition, I look forward to the proposals for dealing with irrecoverable value added tax paid by charities on their non-business activities. That would particularly help Britain's ecclesiastical buildings, from our marvellous parish churches to the great cathedrals. I declare an interest as a trustee of Canterbury Cathedral and, with my noble friend Lord Mayhew, Rochester Cathedral.
Value added tax bears particularly heavily on cathedrals, with expensive programmes of building maintenance. Most cathedrals pay out more in VAT than they receive in grants, which is quite absurd. They have been seeking either a lowering of the VAT rate on repairs or extra grant from the Government through English Heritage, but to no avail. Will the Minister say what the Government intend to do to compensate cathedrals for those losses? Perhaps the right way is for the Government to decide and publish the net contribution that they wish to make to the built heritage, then top up that sum with the amount of VAT collected from it.
With regard to advanced corporation tax, it appears that charities have been the victims of changes aimed principally at pension funds. That will eventually cost UK charities £400 million a year. Will the Government consider treating charities separately from pension funds in respect of ACT and other corporate taxes? We would welcome it if the Government were to reconsider the position of charities in respect of ACT, even if they are not prepared to consider the changes made in relation to pension funds. The transitional relief announced by the Government will only give charities a soft landing. Make no mistake. They will lose out.
Given the importance of public confidence in charities and in the proper use of the money that they are given, the Charity Commission's role in providing public reassurance through its monitoring of charities is most important. Constant vigilance is also needed to prevent abuse of charitable status. The Royal Society for the Prevention of Cruelty to Animals has been warned by the Charity Commission that the society's links with the animal rights movement must be broken, which I welcome. We need to be clear that other charities are not abusing their status to run political campaigns.
That spotlights the need for clarification of the application of charity law. Case law is so vague, as to what is or is not acceptable conduct by charities, that a climate of uncertainty exists. On the one hand, the RSPCA brazenly pushes its luck and hopes to get away with it. On the other hand, the threat of penalties for possible unlawful activity tends to stifle other charities. I shall be grateful if the Minister will say whether the Government have any plans to clarify that point.
The Conservatives introduced the National Lottery, for which they should be praised. In my opinion, it has been a quite remarkable success in tapping major new funds for good causes. It has been extremely popular; given a welcome fillip to the retail trade; strengthened communal ties; promoted economic regeneration and enhanced equality and opportunity. I regret to see already that money that was dedicated to charities through the lottery is to be creamed off to support, what everyone can see but the Government will not admit, is revenue spending on Labour's pet projects. The beauty of the National Lottery was that it was an independent source of funding for charities and other good causes. Any charity could apply to the National Lottery Charities Board for a grant, but the initiatives paid for through the new opportunities fund will be specified by the Secretary of State.
According to the Office of National Statistics, there is no evidence that the National Lottery has had a significant impact on charitable giving. To date, the National Lottery Charities Board has made 12,200 awards, amounting to £640 million, to charities and voluntary organisations. Charities have also been successful in applying for lottery grants to the Millennium Commission.
However, that is not to say that the lottery does not need some fine tuning. The detailed research and administration necessary to make a bid for major funding has taken RoSPA six working days on each occasion when it has applied. Unfortunately, both bids
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were unsuccessful. Charities cannot afford to invest at that level for very long, which becomes a deterrent to applying for lottery funds. Perhaps applications could be dealt with in a two-stage process so that if a bid is clearly not going to be successful it can be filtered out before too much work is done.
If there are to be major preparations for activities to celebrate the millennium, the charitable sector needs to know quickly how it is to be involved. It is essential that a whole range of community and voluntary activities are encouraged in a way that will have a lasting impact on future generations.
When we were in government we sought to promote private giving to charities. We eased the regulations surrounding covenants. We introduced the Gift Aid system to allow one-off gifts, tax free. We extended tax concessions for charities and gifts to them. We created the National Lottery and ensured that charities were among the major classes of beneficiaries. I hope that those attitudes will be carried forward by the present Government. The Government must play their part in reinvigorating the culture of giving in this country and set a positive economic and fiscal environment within which charities can thrive. My Lords, I beg to move for Papers.
4.13 p.m.
Baroness Young of Old Scone: My Lords, I thank the noble Lord, Lord Astor of Hever. for the welcome opportunity to debate the importance and the work of charities. I should declare an interest. I am—at least for the next two months—the chief executive of the Royal Society for the Protection of Birds, one of this country's largest charities and certainly its most effective. I am also on the president's advisory council of the National Council for Voluntary Organisations and was a member of the Deakin Commission on the Future of the Voluntary Sector, to which the noble Lord referred. Those of your Lordships who have not recently read the work of the Deakin Commission will find that it is well worth revisiting. It is important that the commission's recommendations are followed through.
The noble Lord, Lord Astor, rightly pointed out the economic and social importance of the charity sector in public life in this country. It provides a large, diverse and ever-growing range of services across many areas. It provides an essential focus for community action and for people getting together, both locally and nationally, to make a real difference to issues that concern them. Most importantly, it provides a voice of advocacy for those who cannot speak for themselves. I do not just mean, in my case, the birds, but the disadvantaged, the marginalised and the persecuted. It is a fundamental part of a civilised society and democracy.
One could almost say that charities are more democratic than key political institutions including, with respect, your Lordships' House. After all, politicians in the other place are elected only once every five years, but charities are subject to a form of election virtually every day when a member or supporter decides to renew a subscription or to give time or money in support. Therefore, I believe that charities have a great

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legitimacy for both action and advocacy. However, one sometimes gets the feeling that successive governments wish that charities would sometimes go away.
Charities in this country have key characteristics which we must protect and for which we must fight. I refer first to the diversity of the sector. The voluntary sector was once called "a loose and baggy monster". We have 125,000 active registered charities. Some are very large and highly professional while others are small, struggling and, frankly, chaotic. We should not have concerns about the range, diversity and struggling nature of the charity sector. Tidiness is not a virtue in this sector. The idea that we should have mergers to avoid duplication or that small, struggling organisations should disappear flies in the face of the importance of local, individual, value-driven personal effort. Charities spring up from the conviction of their founders to meet perceived needs. Their ability to work in the way best suited to themselves is essential for their vitality and appropriateness. Let us celebrate the glorious diversity of the charity sector and defend the loose and baggy monster.
Charities are also adaptable. They certainly show greater creativity than the public sector, and greater flexibility to respond to challenges and changing needs. We need to foster that. The noble Lord, Lord Astor, also pointed out the importance of the independence of charities. They represent different interests and views in an independent fashion. Charities are, of course, very driven by their values. They allow people to give expression to the values that have brought them into existence. I hope that I can persuade your Lordships that the charity sector is a good thing and that it has characteristics that need safeguarding.
Charities have to operate within certain frameworks: a framework of relationships; a framework of regulation and within a financial framework. On relationships, we need a partnership with the public sector, including government, and with the private sector, including business. The growth of the contract culture whereby the Government were buying services from the charity sector began to jeopardise that partnership and produced a master/servant relationship. We see the work on the compact between government and the voluntary sector which the Deakin Commission recommended. I ask the Minister to assure us that the Government will lay out not only the key principles of the relationship between the voluntary sector and government, but that they will also enshrine a commitment (shown by the Government in their early days) to involve the knowledge and experience of charities in designing, as well as implementing, policy.
The framework of regulation is important. It is important that the public have confidence in charities—and they generally do. The National Council for Voluntary Organisations recently carried out a survey. It showed that 91 per cent. of the public respect the work of charities and that 89 per cent. believe that they play an essential role in society.
However, the public and particularly the press are now tending more towards criticism of institutions than was the case in the past. The press particularly has an
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increasing habit of "having a go", almost in direct proportion to the worthiness of the bodies concerned. I am sure that my noble and learned friend the Lord Chancellor would recognise that phenomenon.
There is a need for a framework of regulation—not only external regulation, but also self-regulation. I commend the work of the Charity Commission in developing measures to enhance the credibility of the charity sector overall. The commission is developing its computerised register that will give all of us access to more information about the range and functions of charities and allow us to judge the appropriateness of their work. But there must be regulation with a light touch that does not stifle some of the characteristics that we value—the spontaneity, independence and value-driven nature of the sector—or put the loose and baggy monster into a straitjacket. In particular, small charities would find it difficult to cope with heavy regulation.
I also commend the work of the Charity Commission in giving advice to charities to foster standards of good practice, particularly the advice it has given on political activity. The role of advocacy by charities is fundamental in this country and must not be stifled illegitimately. But self-regulation must be the main form of regulation for this wide and diverse sector. All organisations in the charitable sector must embrace standards of conduct, governance, accountability, service and management. I ask the Minister to give an assurance that the balance between light formal regulation and strong encouragement and incentives to charities to self-regulate will prevail.
Charities operate within certain financial frameworks. The noble Lord, Lord Astor, pointed out some of the difficulties. I take issue with him on the impact of the lottery on charitable giving. There is conflicting evidence, some of which appears to demonstrate a downturn in individual fortuitous giving to charities as a result of the lottery. In this country in general charity income is stagnant apart from investment income. The recent changes in ACT that have already been referred to will shortly hit that hard by as much as £350 million each year.
The Government have the opportunity to review the tax treatment of charities. A vital element of a civil society is that charities need support financially. As part of the review the opportunity needs to be taken to consider the tax burdens of charities and reinvigorate the environment for charitable giving. Charities require a reduction in their annual £400 million burden of irrecoverable VAT. They need simpler arrangements to allow them to trade on a tax-free basis. Most of all, individuals and companies need to be incentivised by effective tax breaks to encourage tax efficient charitable giving. It is bizarre that in this country compared with the United States the level of charitable giving both by individuals and companies is so low. I ask the Minister to give noble Lords an indication of how he sees the tax review proceeding. Charities are a vital part of an effective civil society in this country. This glorious loose and baggy monster deserves all the support that we and government can give it.
4.23 p.m.
Baroness Fookes: My Lords, I rise with considerable trepidation to address your Lordships' House for the first time. Although I was in the other place, for the past five years I was unable to speak from the green Benches because from time to time I occupied the Speaker's Chair as a Deputy Speaker. It means that I have become something of a connoisseur of others' speeches, but it is a different matter now that I am making one myself. It is probably a case of the biter bit. I am emboldened to make this speech this afternoon because I have believed passionately in the value of charities from the time I was a very timid teenager who rattled a box for the local lifeboat appeal to the time that I became involved in other charities in which I was either a participant or ran. In the presence of my noble friend Lord Astor perhaps I may dare to mention the RSPCA which I chaired for two years.
As a Member of Parliament I came to realise the immense breadth and value of charities both locally and nationally. More than one lord mayor of Plymouth said to me after a year in office that he thought he knew the city but had been staggered by the amount of charitable and voluntary work that had taken place in his time as lord mayor. From my position I say a fervent amen to that. One should not overlook the value to the some 3 million volunteers, not just those on the receiving end of the charitable work, who gain tremendous satisfaction from dealing with a cause that they hold dear. Sometimes it arises through tragedy or unhappy circumstances. Perhaps a loved one has died or become handicapped and the volunteer wants to do something to save or help others. That is a great motive for many charities. I have witnessed this in the MENCAP organisation in Plymouth of which I am proud to be a patron.
I have also been grateful for help that is readily available. Perhaps I may deal with a matter that is very close to my heart. Two years ago my mother died of cancer. In the last month or two she was able to remain at home. Hospitals could do no more for her. But I did not know whether it would be possible even with nursing assistance and My help for my mother to remain at home, which was what she wanted. But I knew that the local hospice, St. Michael's Hospice in St. Leonard's on Sea, had a bed ready if I needed it. It was not needed but it gave me tremendous support to know that it was there if it was wanted. Local community nurses came in and supplemented the work of the district nurses. I was very grateful for that. I am now a very happy fund-raiser for that particular hospice, even to the extent that I took part in a marathon "aqua fit" session which lasted for three hours—it felt like three days—to raise funds. For those noble Lords who are unaware of that particular activity, it involves vigorous exercise in a swimming pool, but not necessarily swimming. There are very many volunteers who have exactly the same kinds of reasons for doing it.
I believe that the role of charities can be seen also at community level. Charities are great fosterers of community relations with people acting together locally or otherwise. I vividly remember one small charity in Plymouth. It tries to give holidays to children who have
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never had much. I refer to the Mayflower Children's Charity that has done sterling work year after year for some very disadvantaged children with little publicity. Perhaps at the other end of the scale is the London Marathon which has become a tremendous national event but with the same charitable instinct. One can also think of the Hampton Court flower show organised by that great charity the Royal Horticultural Society. We must never underplay the value of charities in fostering good community relations, especially at a time when there is so much talk of that going out of the window.
There is also the traditional pioneering role of charities. I refer to the promotion of education and the relief of poverty. Historically, they have been great matters for charities. But I still believe that there is a pioneering role for charities today because they are unhampered by the kinds of restrictions of the state or even local authorities. I should like to give one example taken from the body that I know best, the RSPCA.
A little while ago the RSPCA developed what it termed "freedom food". Many of us who are not vegetarians want to know that the food that we eat has been produced from animals that have been treated humanely and in a manner that goes far beyond what the state requires for the care of animals. That society has developed a very ingenious arrangement whereby it vets food producers and has an arrangement with retailers. Any food that comes up to scratch bears its logo so that consumers can be satisfied that the animals have been treated humanely during their lives. I always buy those goods when I shop in a supermarket. It would not be possible for the state to undertake that function because it would be yet one more thing for it to do and it would have to be done on a universal scale, whereas this can be done almost as an experiment. It happens to be working extremely well, but, if it was not, it would be very much easier for an individual charity to withdraw it than if the state had embarked upon it. There is a continuing role for charities in reaching out and doing things which are thought to be good and necessary, which the state cannot entertain.
There is a role for charities, as an arm of the state, in providing services. I very much approve of that in one respect and I think that it is a valuable use of charities, but I share the view of other noble Lords that it could become a straitjacket. I hope that we will hear from whoever winds up for the Government tonight that the Government will not be putting them into such a straitjacket, which would be a great shame and diminish the value of charities.
Charities already have considerable tax advantages. I hope that those advantages will continue because much of the work of charities would come to an end if they were taken away. I welcome the review that is taking place, but I have been in public life long enough to be wary of reviews, especially when a government may be a bit strapped for cash. That is just a gentle warning within the limits of not being controversial. I hope that the Government will not go down that path.
There may well be good reasons for altering the system; indeed, a professor at Royal Holloway College, my own college, has put forward the view that the tax

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arrangements or breaks for charities should be on their expenditure rather than on what they receive. Be that as it may, I hope we will not see any attempt to undermine the valuable work that charities do.
I very much look forward to hearing what the Minister has to say on charities. In my youth it was thought that they were almost passé, that the state had taken over. Happily, I believe that to be quite wrong and I look forward to a strong and important role for charities in the years ahead.
4.31 p.m.
The Lord Bishop of Lichfield: My Lords, it is a convention of your Lordships' House that the speaker following a maiden speech has the privilege of congratulating that speaker. I congratulate the noble Baroness on her maiden speech. It was impressive that someone who confessed trepidation should nevertheless give a maiden speech extemporary and with such panache. We congratulate her very warmly. Her speech revealed her wide experience as a Member of Parliament and as Speaker in another place. I warmed to her passionate advocacy of the charitable principle not least in relation to the City of Plymouth and her reference to appeals for lifeboats. I was fascinated to hear how the noble Baroness can indulge in vigorous exercise in a swimming pool without swimming! We hope that the noble Baroness will appear often in this House and look forward to her future contributions.
I welcome the opportunity to comment on the importance which the Churches attach to the work of charities not only in this country but throughout the world. The Churches have often been at or near the forefront of endeavour in the charitable and voluntary sectors. During the 19th century the Church of England was central to the development of the voluntary sector. I worked for some years in Uganda and was deeply impressed by how Anglican medical missions had pioneered medical care as charitable voluntary institutions in so many regions across sub-Saharan Africa. This involvement still takes many forms; for example, the Children's Society, the Church Army and Christian Aid. It should be noted that Christian Aid supplemented the work of missions in a most imaginative way. The hard print is that last year Christian Aid raised £39,344,000 for work in needy regions overseas. A year or two previously it had raised over £40 million.
The extensive work undertaken more recently by the Churches Urban Fund, which was set up only 10 years ago, has now distributed more than £27 million. This fund received a frosty response in some quarters when it was first launched, but the £27 million has generated over twice that figure in partnership funding. Charities can prime pumps. Members of my own diocese—West Midland churchgoers—have raised nearly £1 million for the urban fund, but in our region that has generated over £15 million of partnership funding for urban regeneration in areas of post-industrial shock across regions like Wolverhampton, the Black Country and elsewhere.
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It is particularly at diocesan and parochial level that there is the widest experience of direct involvement in charitable work. Last Sunday I visited Bilston, a Black Country town that has suffered very high levels of unemployment since the foundry and steel works were closed. Over lunch I spoke to a pensioner, a woman who had worked most of her life in Bilston's industries in an enamelling plant. She described to me how the closing of those foundries has removed the community glue of Bilston and its identity.
However, in Bilston last Sunday a training community centre was opened, triggered by church leadership but in partnership funding between charitable trusts, the European Development Fund and the borough council. That partnership has created a training and community centre for bringing self-excluded post-industrial young people off the streets into worthwhile activity. It is providing facilities where young mothers, for whom jobs are available in that town, can safely leave children in order to go to work, and where life-long learning and appropriate work training for that area can be promoted.
There is a pattern of involvement with local councils for voluntary service from the charitable sector, able to encourage and support the conduct of voluntary activity.
I should like to emphasise the role of individuals in the range of activities that make up the voluntary sector, in church-based organisations and secular areas. This involvement is not undertaken as a formal representation by the Church. Such individual involvement, often in a sense private or even hidden, is hard to measure, but a survey of almost any local congregation would demonstrate the point. For example, I know of a long-term Alzheimer's sufferer whose family struggled to support her in her own home for as long as possible. That has inspired a group of volunteers to come for parts of five days a week to hold her hand and give a break to the principal carers in order to keep her at home. That kind of endeavour by individuals provides a vital channel for people to answer a call to help the weakest and neediest in our society.
I have a further important point to make about the fact that even the voluntary sector needs funding. There has been considerable provision in the past for tax relief from various forms of taxation, as other speakers have said, because of the recognition of the public benefit of charitable work. Back in 1973, when VAT was introduced, it began to be charged at the rate of 8 per cent. on repairs to our Church buildings, to which the noble Lord, Lord Astor, referred. That rate is now set at 17.5 per cent. The Churches are now paying out more on VAT than they are receiving from such welcome sources as English Heritage grants.
Annually, £16 million is paid out on repairs to listed buildings. Only £10 million comes back in heritage grants. Indeed, Churches of all denominations pay out annually £25 million on repairs—a figure far in excess of English Heritage grants. That applies also to cathedrals which have commitments, as the noble Lord, Lord Astor, said, to things such as sustaining their great musical traditions which are of such interest to large numbers of the general public.

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The work out there, in Bilston and such places, suffers while energy is taken up on such issues. That problem can also damage our schools. The DfEE has recently given approval to the Stoke-on-Trent City Council to proceed with a public/private partnership scheme for the maintenance and repair of school buildings in Stoke-on-Trent, but because of the current arrangements for VAT payment it may not be possible for our crumbling schools to benefit from that arrangement. It is vital that Church schools, which in Stoke-on-Trent are popular with parents, should have the same opportunity to participate.
This is a crucial moment for me to be raising these issues. The time for change over the VAT issue has come. The UK occupies the presidency of the EU. The date for the revision of the VAT system is close. Tax relief for labour-intensive occupations is currently under discussions. I urge the Government to start the ball rolling now. I support enthusiastically the Motion:
"To call attention to the importance of the work of charities; and to move for Papers".
4.47 p.m.
The Duke of Norfolk: My Lords, I, too, congratulate my noble friend Lady Fookes on her maiden speech. We are lucky to have her as a Member of this House. I must declare that I am concerned with about 50 charities, as, I imagine, is the case with many of your Lordships. I declare also a special interest in the rapid-draw lottery game PRONTO, run by my noble friend Lord Mancroft.
My wife started her national charity Help the Hospices 13 years ago. Its title is self-explanatory. It mainly funds training in palliative care for the terminally ill, following the principal recommendation of the 1994 House of Lords Select Committee on Medical Ethics. Help the Hospices is one of the charities due to benefit from PRONTO by possibly up to £200,000, which is about one-fifth of the charity's income.
The draft Bill that the Government have published on lotteries (frequent draws), if carried, would kill PRONTO, which is not viable if the draw is limited to one per day, as proposed. I am not speaking merely on behalf of my wife's charity, but for many others. Most charities have appealed, more than once, to the National Lottery Charities Board. Most, like Help the Hospices, have received not one word in reply to their appeals. I hope that the Government are feeling guilty about some of these things.
Each PRONTO game is played in the name of the charity due to benefit. That is good publicity. The proceeds of the game can be spent on the charity's objectives, as the trustees think fit. The trustees are not constrained by rules which the lotteries board requires them to follow. Those are some of the advantages of PRONTO. Once chosen, a charity is certain to gain.
The Gaming Board, the Government's adviser on gambling, granted a licence to PRONTO in March 1997. The board, in discussions with PRONTO, made no comment about the frequency of draws, until a day or two before PRONTO was launched at the end of November. I find it disgraceful and abnormal to wait from March until then. I hope that there will be an
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explanation for that later. The Government have not responded to inquiry about the Gaming Board's views on the frequency of draws.
The Government's case against PRONTO is that the frequency of draws will make it addictive. Playing PRONTO is under much closer supervision than any other form of gambling in pubs, such as scratchcards and one-arm bandits. There is plenty of evidence that those are addictive, especially when played by youngsters of 16. The recent Fisher Report makes that clear. There is no evidence of the effects of PRONTO which is limited to 18 year-olds and above, according to the direction given by my noble friend Lord Mancroft.
I am not in favour of unrestricted gambling. I believe that the Government should review all gambling in pubs and postpone consideration of the draft Bill. In a few months' time, there will be evidence of the implications of playing PRONTO, to contribute to the other findings in their review.
In the meantime, the Government have failed to make their case. Charities, above all, should not be penalised by legislation based on opinion which is purely speculative. PRONTO has the capacity to make a significant amount of money for charity. Until the review is complete, PRONTO should be allowed to continue. If a problem develops and legislation is thought desirable, it can be introduced next year. I hope that the Government will come clean. The suspicion is that their reason for trying to harness PRONTO is that they are afraid that it is a rival for the National Lottery.
4.49 p.m.
Baroness Linklater of Butterstone: My Lords, I, too, am grateful to the noble Lord, Lord Astor, for initiating the debate on this important subject. I, too, add my congratulations to the noble Baroness, Lady Fookes, for an absolutely wonderful maiden speech. I feel that we are all more or less singing to the same tune. I hope that noble Lords will forgive me, if, on occasions I echo, or even repeat, what some have already said.
Charities have played a major part in my life. I have been on the boards of several and have founded or co-founded three charities. One in the late 1960s which was the first visitors centre for prisoners' families at Pentonville. In 1985 I set up the Butler Trust which gives recognition to people who have done outstanding work within the prison services. It is concerned with standards of practice. Five years ago I founded a small secondary school near my home in Scotland called The New School Butterstone from which I proudly take my name. It was founded in response to the perceived lack of provision for a particular group of children; educationally fragile children who find the experience of mainstream education overwhelming, but would not be appropriately placed in a special school. It is the classic motivation for charitable initiatives. Since then, it has been greeted with considerable interest from the Scottish Office and a range of other bodies and professionals in the education field. This, too, is characteristic of activity in the charitable sector when links are made with other sectors and the charity acts as a catalyst for new developments and provision.

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When I started my professional life as a child care officer, I had come fresh from university where I read from the works of my noble friend Lord Dahrendorf. I leant about the development of the welfare state and the vital influence of, among others, that great Liberal Sir William Beveridge who laid its cornerstone in the new post-war world. I believed that I would play my part in that statutory safety net through which no one was meant to fall, and that there would be provision from the cradle to the grave for all our citizens with the state replacing the "do-gooding" of the unprofessional Victorian past. Those simplistic expectations were quickly adjusted in the light of the reality of the Children's Department of Tower Hamlets Council.
My first stop in the charitable world was at Pentonville, where we saw the daily queue of women and children, standing in the street in all weathers outside the prison, waiting for the moment when the prison officers came back from their lunch to start visits. Here was a very visible group of vulnerable people who badly needed help and for whom no one was taking any care or responsibility. Now, I am glad to say, there are similar centres throughout the country. This was the first of many holes I was to encounter in the safety net.
Today, it is fully acknowledged that the voluntary sector in general, and the charitable sector in particular—and there is an important distinction here—is a vital part of our society and a major force in its own right. Independent voluntary associations have been portrayed as the backbone of civil society and their presence as the essential precondition for the health of democracy. That is a major claim. The charitable sector is a kind of organic link between the state, private and personal sectors of society, filling gaps, challenging values and brokering links between the other sectors.
Its real strength is its flexibility and diversity, its ability to respond to perceived need—such as my school—and to changing needs. These may be small scale specialist services which fill a gap, such as the visitors centre. They may be a challenge to current thinking and statutory provision; my school again. They may push against institutional boundaries and put a brake on uniformity. They come in an infinite variety of shapes and forms and, above all, they contribute to the wellbeing of society outside the confines of the state and the market.
A key element is the presence of volunteers, who are as varied and diverse in their interests, input and motivation as the organisations for which they work. They are the life blood of the sector and add value in a multitude of unquantifiable ways. By and large they are unsung, unseen and unpaid and therein lies their great strength. At the visitors centre, the very fact that our volunteers were neither from the prison nor the social work department was a real bonus, and they were a complete cross section from former prisoners' wives, to lawyers, to people like myself. They brought with them a commitment which could not be measured in money terms.
In fact, the charitable sector is not only very important it is surprisingly large, with 125,000 active, registered charities, 27,000 of them in Scotland. No fewer than
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23 million people are involved in volunteering in some way or other, and in Scotland there are 700,000 regular volunteers which, out of a population of 5 million, is a remarkable figure. What this reflects is the high value that is placed on charitable bodies in this country, not only in terms of the work they do but in the desire to participate in their work.
I am privileged to have an overview of what is going on in the charitable sector as a trustee of one of the major grant-making trusts, the Esmé Fairbairn Charitable Trust. It is one of about 8,800 grant-making trusts and foundations in the UK which give about £1.25 billion a year to charitable causes. Esmé Fairbairn is the 12th largest in the UK, one of only four generalist trusts, and last year it gave £11.55 million in grants; 866 in all. In so doing, we become aware of the truly remarkable range, diversity, imagination, commitment and generosity of spirit of people the length and breadth of this country, which is really very humbling. They include schemes to help the homeless and unemployed; to teach better parenting skills; to support the underachieving, vulnerable youth of our country; to help people to help themselves; and to mitigate the problems of childhood and the difficulties of old age, just to mention some in the field of social welfare alone. To imagine that the state could or should be able to do what we see is to dream the impossible and the undesirable.
There is now a wish on the part of this Government to work in some form of partnership with the voluntary sector in a "compact", as it was called by the Deakin Commission which was set up last year to look at the future of the voluntary sector. I have read parts of it and can say that it is a model of clarity. This desire comes from a recognition of the scale and importance of the sector and is also a reflection of the fact that much of its work not only impinges on but overlaps the activities and responsibilities of the state sector.
There are potential opportunities for the future of the voluntary sector through the chance to contribute to government policy thinking and also in developing further the quality of its own delivery. In theory, both government and the voluntary sector could gain more and bring more clarity into their relationship. But what is absolutely crucial is that the voluntary sector retains both its service and advocacy role and remains distinct, vibrant and independent. Without the flexibility and diversity which the charitable sector enjoys today, its role and position could be dangerously compromised. Government must start to promote a climate in which the charitable sector can thrive and its activities develop for any partnership to be meaningful. There are at the moment some worrying signals.
Those signs have been referred to, but perhaps I may reiterate two. The first is the phased withdrawal of the Advance Corporation Tax credits. Overall, this will result in the sector losing as much as £350 million each year. As regards the Esmé Fairbairn Trust, it means that its annual income available for grantmaking will be reduced by 2 per cent. next year. By the time the transitional relief ends in 2004, its annual loss of income is likely to be about 18 per cent. or £2.3 million in 1997 terms. That is a huge loss to the sector. In terms of a partnership, this seems a very one-sided relationship so

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far. The irrecoverable VAT charged on charities is another: it affects my school. To see money given in good faith stopping, touching base with us and moving on to the taxman seems to me to be mad.
We all owe it to the charitable sector to support, sustain and promote the activities of these groups and individuals who make such an important contribution to our society and to our lives. We must protect its freedom, nurture its diversity and recognise the profound value that it has in promoting a better quality of life for all the people of this country.
4.59 p.m.
Lord Vestey: My Lords, I am very grateful to my noble friend Lord Astor of Hever for initiating this debate. I should also like to add my congratulations to those already expressed to my noble friend Lady Fookes on her maiden speech. As I understand it, she is likely to be longer in this House than I am, hut I hope that I am allowed to remain long enough to hear more of her speeches. I believe she said that some of the regulations which are laid down in this country should be laid down by charities and not by government. As a fourth generation butcher, I hope that we can find some charity which will allow us to eat beef on the bone again.
I should like to declare an interest in charities as I am the Lord Prior of the Venerable Order of St. John, whose two active foundations—St. John Ambulance and the St. John Ophthalmic Hospital in Jerusalem—have done so much invaluable work for well over a century. I welcome the chance to contribute to this useful debate.
The noble Baroness, Lady Emerton, of Tunbridge Wells and Clerkenwell, will describe after me the work of St. John Ambulance in England. She is well qualified so to do because she is our Chief Officer for nursing. I honestly do not know how she has the time to do all this and also carry out her other work, but I can assure the House that she does it extremely well.
St. John Ambulance is an entirely independent operation without any state subsidy. Although we co-operate closely with the statutory services, and increasingly provide commercial training, we remain substantially dependent upon the generosity of the public we serve. Your Lordships will hear today—and have already heard—about the problems that most charities are having with fund raising, in particular because of the National Lottery. Of course, there is funding available from the lottery but so far, in my particular charity, we have not yet balanced what we have lost with what we have gained.
St. John is one of the largest youth organisations in the country. Its young people from the age of six upwards, acquire skills to equip them as adult citizens of the future. At the same time, they make a dedicated contribution to public service. Moreover, from the traditional "core business" of first aid, St. John Ambulance is now expanding into social care, which we see as an area of growing concern in the 21st century with an ageing population in Britain.
However, our work does, of course, extend even further than that, both around the world and back into history. For our order is in effect an international
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network of charities. Autonomous priories operate not only in Scotland and Wales, but also in South Africa, New Zealand, Canada and Australia. Then there are St. John Councils in over thirty other Commonwealth countries and territories, which carry out St. John Ambulance work. We are now embarked on a major reform which will result in this network being operated more along Commonwealth lines. Simultaneously, for the first time, a distinct English priory will come into existence.
This great St. John family throughout 40 countries in both hemispheres has been spreading "best practice", over first aid and healthcare training and duties, all around the world for many decades now. Recently, for example, we have been developing a new training course tailored to the needs of developing countries, particularly in Africa. During last year's catastrophic volcanic eruptions in Montserrat, we were able to get an ambulance shipped there quickly from Bermuda. We also sent money which helped the islanders considerably in their hour of need.
When Hong Kong reverted to Chinese rule last year, although the authorities in Beijing could not accept a continued formal link with our Royal Family, they strongly encouraged St. John to continue its charitable work in Hong Kong. Indeed, we have been discussing whether first aid training might not be extended to the mainland of China. St. John first aid training has also just started in Japan—an entirely new venture. St. John's training packages in first aid and social care are starting to become available on CD-ROMs and via the Internet; for we intend to enter the 21st century as a practical and forward-looking charity using the latest techniques of communication, while never losing sight of the caring mission that we have had for so many centuries.
St. John goes back a long way. Although our present order was created by Queen Victoria, we shall next year be celebrating 900 years of the "hospitaller tradition" of caring for the poor and sick. That great tradition is maintained not only in the United Kingdom and in most Commonwealth countries, but also in the Holy Land—where it all started. Our Ophthalmic Hospital in Jerusalem has been providing top quality eye care for the people of that city and the surrounding area, regardless of race, creed or ability to pay, for over 100 years. Regimes have changed in Jerusalem, but the need for eye care remains as great as ever.
In all this, the order has tremendous international support from all round the Commonwealth; from the United States; and from our friends in the European Alliance of the Orders of St. John. It gives us great encouragement that the Minister of State for Foreign and Commonwealth Affairs, Mr. Fatchett, visited our Jerusalem hospital last month. We see that as evidence of the Government's continued support for our endeavours in that volatile but key part of the world.
We are also proud that our order has been based in Clerkenwell since 1140 (despite a short interruption of 350 years caused by King Henry VIII); that we enjoy such wholehearted support from Her Majesty the Queen, our Sovereign Head, the Duke of Gloucester, our Grand Prior, and indeed all the members of the Royal Family;

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and that for the past hundred years our St. John Ambulance volunteers have been on public duty to provide first aid cover to the public at virtually every major event in this capital city.
On the sad event of the funeral of Diana, Princess of Wales, St. John had over 1,400 personnel on duty from early in the morning until late in the afternoon. Moreover, for the week before the funeral and the week after, we had 25 people a day at St. James's Palace looking after the vast crowds signing the condolence books. I am sure that many of your Lordships will have seen the St. John personnel at the countryside March last Sunday. We are confident that the sign of St. John volunteers on duty will be as familiar in the 21st century as it has been in the 20th.
However, apart from fund raising, we have another worry in this age of increasing litigation: the spectre of unreasonable lawsuits being brought against our first-aiders simply doing their duty. The matter was raised five years ago in an Adjournment Debate in another place on, "The Volunteer in the Community". The question was raised as to whether the time had not come for so-called "Samaritan legislation" to enter our statute books to protect good Samaritans, such as first-aiders, helping people who have had accidents. I regret to say that, despite the support of the then Minister of Health at a meeting which I attended with other senior volunteers from St. John, the previous Lord Chancellor turned that suggestion down. I trust that this Government will be prepared to re-examine the question in a more positive spirit.
Finally, I have an offer to make. I should be pleased to arrange training for any noble Lord who is interested. We are, in St. John, the leading providers of first aid training. To show your Lordships why, I will arrange, completely free of charge, a three-hour first aid course at the headquarters of the London District of St. John Ambulance in York Street, W.1. If any noble Lords are interested, would they please contact me here.
I hope that your Lordships will have gathered from what I have said that St. John, as a charity, plays a very large part in the fabric of our country. I thank your Lordships for being able to speak in this debate to call yet further attention to the importance of the work of charities in this country.
5.8 P.m.
Baroness Emerton: My Lords, I, too, should like to thank the noble Lord, Lord Astor of Hever, for opening this debate on such an important topic in such a comprehensive way. I should also like to congratulate the noble Baroness, Lady Fookes, on her excellent maiden speech and on her enthusiastic support of charities. I should, first, declare an interest. As has already been mentioned by the noble Lord, Lord Vestey, I am the Chief Officer Nursing and Social Care for St. John Ambulance, and have been a member since 1946 when I joined as a cadet.
I want to speak for a few moments on the St. John Ambulance Foundation. The mission of St. John Ambulance is to provide first aid and medical support
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services such as caring services in support of community needs and to provide education training and formal development of young people.
It is well known by most members of the general public that St. John Ambulance provides first aid cover at activities ranging from the village fete, to football matches and the London Marathon, which has already been mentioned. But what is often not recognised is that 68,000 adults and young people between them provide in an average year 2.4 million hours of public service, 207,000 hours in transporting patients, 12,000 hours in hospital duties and 240,000 hours in nursing and social care, in addition 1.4 million hours in community work. The noble Lord, Lord Vestey, has already mentioned the duty that was undertaken at the march organised by the Countryside Alliance last weekend. That was a comparatively small duty. In 1997 1,469 St. John Ambulance first aid and medical personnel were on duty at the London Marathon. Some 6,000 competitors were treated and 36 were taken to hospital. Some 110 members of the public were treated, six of whom were sent to hospital.
There are 1,000 doctors and 2,000 registered nurses, all of whom are volunteers, within the membership of St. John Ambulance who assist with training and who support first aiders on public duties. Specialist doctors and nurses in the field of resuscitation are involved in the formulation of protocols, training, and are accountable for the training of selected first aiders in the use of defibrillators. Gone are the days of "do gooders" referred to by previous speakers.
These are a few examples of volunteers providing a service to the public of the highest quality of first aid and care performed by professional first aiders, all free of charge to the public. The organisation is dependent on donations for providing these services which are costly to mount. The duties mentioned require precise management in collaboration with the police and local ambulance trusts. The operational plan is set out as a military operation, the aim being to provide the highest quality of first aid when required.
St. John Ambulance is also well known as a training organisation—as has been previously mentioned training volunteers in first aid and care. But in addition St. John Ambulance trains 200,000 members of the general public each year, including those trained to provide first aid in the workplace to fulfil health and safety requirements. This latter part of our operation is designed to raise funds to keep our volunteers active in the community. An organisation such as St. John Ambulance has to balance carefully its charitable mission with its commercial enterprise in order to survive in a competitive marketplace.
One matter which is causing considerable concern not only to St. John Ambulance but to other charities such as the British Heart Foundation and the Royal Life Saving Society is the question of VAT relief on medical training goods. As a result of some considerable campaigning by the Charities Tax Reform Group in the 1990 Budget, provision was included for zero rating to apply to medical equipment used in training. Since then this relief has been worth up to £75,000 a year to

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St. John Ambulance alone and our local divisions have been the beneficiaries. Overall relief to the eligible charities involved in resuscitation training has been estimated to be £350,000 a year. A Customs and Excise notice published in March 1997 contained a new detailed list of eligible and ineligible items and resuscitation training models appeared on the ineligible list. Subsequent inquiries to Customs through the Charities Tax Reform Group established that in their view such models are not items of medical equipment. St. John Ambulance and the British Heart Foundation intend to challenge this ruling jointly at a VAT tribunal which is likely to be held later this spring.
The Government have stated their commitment to charity. Withdrawal of this relief will cost St. John Ambulance £75,000 a year and the purchase of vital life saving training equipment has already slumped. How does this demonstrate commitment to charity? Furthermore, as fewer models are being purchased, inevitably fewer people will be trained. Her Majesty's Customs and Excise were in no doubt about the eligibility of the relief until the production of the 1997 listings. Why have they reneged on their previous rulings? It is unfortunate that valuable and much needed charity funds, and, indeed, taxpayers' funds, will have to be expended to challenge the ruling at the tribunal. I understand that this matter has been raised today in another place and I hope that the support of this House can he given to examine this matter because if resuscitation training models are not items of medical equipment, what are they?
First aid is only one aspect of our work. The second I wish to mention is that of our nursing and social care role in the community, which is by the year 2000 to be recognised as a core activity of the organisation. While training in first aid has been the lead role, there has always been training for members in home nursing and more recently caring for the sick. Members have carried out a variety of basic nursing and care activities for many years but within the past seven years St. John Ambulance has worked towards developing a strategy to meet the requirements of the elderly, physically or mentally handicapped, and their carers to assist them in living an independent life with the appropriate care and support giving an enhanced quality of life.
The services range from the most simple to the more skilled; for example, taking an elderly person to the doctor, hospital, library or on holiday; taking the dog for regular walks; tending the garden; preparing a meal; cleaning the house or just befriending; organising individual care programmes of bathing; assisting someone to get up or to go to bed and rehabilitation; applying simple dressings and assisting people to the toilet. This allows people to retain independence to live at home and to retain their dignity.
A more recent development is to provide first aid and care to the street homeless who, in the main, are marginalised by the primary healthcare services and hospital services. Many of the homeless have real healthcare needs. We provide respite care for carers by running day centres in four social services' premises at weekends for 60 Alzheimer's sufferers and also day centres for the elderly, providing reminiscence
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therapies, laundry and bathing facilities and transport to and from home. These programmes are set up through service agreements with social services.
There are 6.8 million informal carers in England as well as those who provide care in residential homes and nursing homes as care assistants. St. John Ambulance together with the British Red Cross Society and St. Andrew's Ambulance Association has recently published a carers handbook. This is designed to meet the basic needs of carers. St. John Ambulance has produced a modular course for carers which is designed to provide a knowledge and skill base which will produce a competent carer able to deliver care to the client. It is also hoped to attract social services, residential home and nursing home carers to buy into the course. In addition, courses will be mounted at local level for informal carers with St. John Ambulance volunteers providing a sitting service to clients while they attend the course.
The third aspect of the work of St. John Ambulance I wish to highlight is relative to our youth movement which currently has 39,000 members, of whom 17,000 are between the ages of six and 11 and 22,000 between the ages of 11 and 18. Our work with young people aims to develop their skills in team work and to develop them to become responsible young people. We also run a training scheme in schools and we would like to see first aid included in the national curriculum.
In 1099 the Knights of St. John provided first aid, transport and care in the crusades. Today St. John Ambulance members provide first aid, transport and care delivering quality through well trained members. I suggest that the role of a voluntary organisation such as St. John Ambulance deserves the support of government and the public as it seeks to meet the mottoes of the Order of St. John; namely, pro fide (for the faith) and pro utilitate hominum (in the service of mankind).
5.20 p.m.
Lord Mancroft: My Lords, 1, too, wish to thank my noble friend Lord Astor for initiating this important debate. I join with him and other noble Lords in congratulating my noble friend Lady Fookes on her excellent maiden speech. I hope that she will not delay too long before speaking to us again. I hope she realises that it will not be necessary for her to jump around in swimming pools every time she wishes to speak in your Lordships' House. I suspect that those of us who have charitable interests might keep our interests to a minimum if we were forced to do that every time we were involved in charities!
I wish to restrict my remarks to issues surrounding humanitarian charities. I refer to those charities which look after the most disadvantaged in our society—children, the ill, the old and those whom we call the most under-privileged within our society. I speak as chairman of the Drug and Alcohol Foundation. Like many others, it is a small charity doing its work within a local community. It may he interesting to your Lordships because it is based in Westminster. For 24 years the Drug and Alcohol Foundation has provided

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care in the City of Westminster to those who suffer from drug and alcohol problems. I believe that it is the only provider of day care for drug and alcohol sufferers in the City of Westminster. As noble Lords will appreciate central London will be a magnet for drug addicts.
Last year we gave 3,500 counselling sessions. We undertook 240 school visits educating people on the problems of drug and alcohol addiction. But, as we all know—it has been said today and on numerous occasions—charities are only as good as their income allows them to be. A small charity such as the Drug and Alcohol Foundation receives about half its funds—in this case it is about £65,000 to £70,000—from donating trusts such as those of which the noble Baroness, Lady Linklater, spoke. I am delighted to be able to thank the noble Baroness. The Drug and Alcohol Foundation has received many donations over the years from the Esmé Fairbairn Trust. We are enormously grateful for those. Other grant giving trusts such as Smith's Charity and the Tudor Trust are well represented in your Lordships' House. They are enormously important to us.
Like many other charities in different fields up and down the country, we receive some help from local authorities because we now care for people from local authorities. We received £8,500 last year in return for 3,500 counselling sessions. It is a drop in the ocean. However, in the past two or three years we have benefited from charity lotteries and scratch card lotteries, from which we did not previously benefit. I declare another interest. It is a financial interest. Not only did I act for the Drug and Alcohol Foundation as the promoter of its charity lottery under the 1976 Act. but, thanks to the amendments moved in your Lordships' House in 1993–94, I also act as the manager under a licence granted by the Gaming Board for Great Britain. It is a company which I chair and of which I am a shareholder. I am proud to have founded it. Between 1995 and 1997 the little company that I chaired sold 28 million scratch cards across Britain and raised £5 million for charities. Those were small humanitarian charities which would not have received that money otherwise. My noble friend the Duke of Norfolk referred to the charity, Help the Hospices. I refer also to charities such as the Royal British Legion which is not so small but well known; the Chemical Dependency Centre which also offers drug care and is chaired by my noble friend Lord Parkinson who, sadly, is not in his place today; and MENCAP, chaired by the noble Lord, Lord Rix, who, again sadly, is not in his place today.
The bad news is that what we did between 1995 and 1997 is not commercially viable. We cannot do it. It does not work. We cannot compete against the National Lottery, and against the enormous monopoly that the Government have set up. Last year we set up a new company which I also chair and of which I am also a shareholder. I am proud therefore to declare an interest. It was set up to run other lotteries for charities in the UK. We have been developing the business over two years. We have injected £30 million worth of capital. We are licensed by the Gaming Board for Great Britain.
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The activities in which we indulge are legal, and have always been legal. They are approved by the Gaming Board, and confirmed by the Home Office.
Yet two weeks before we launched, after an injection of £30 million of capital, and two years development, with the objective of raising £100 million a year for individually named charities—that is not a drop in the ocean by any means—the Government announced that they will ban us on social policy concerns: the raising of £100 million for UK humanitarian charities is not justified by the means of compulsive gambling, linking alcohol to gambling in pubs, and all those wicked things. The argument sounds convincing, but the Home Office has not been able to produce one single shred of evidence to back its case. The gaming board, its official adviser, which raised those concerns has not been able to produce one single shred of evidence. It has been asked to do so; it has no research data to back it. The Home Office has no research data to back it. In the past two weeks the Home Office's own adviser, Dr. Fisher of Plymouth University, has released a report. Noble Lords may have seen articles in the press last week. It does not indicate that the small charities are causing a problem or that there is a social policy concern as regards our undertaking. But it does indicate that the Scratchcards from the National Lottery, the weekly draw of the National Lottery and, more importantly, the slot machines are causing serious problems among young people in this country. Seventy-five per cent. of people under the age of 16 are gambling on slot machines; and 40 per cent. are gambling in pubs on slot machines. Slot machines are taking £3 billion a year out of those pubs. And we are causing problems, my Lords? It is a serious problem. The Government's case has been pulled from under them like a rug.
It is important that noble Lords see the issue in its full context. Currently your Lordships' House awaits the Report stage of the new National Lottery Bill which creates the sixth good cause. That will remove £60 million per annum from charity. That is what it will cost the National Lottery Charities Board. It is not an insignificant sum. I remind noble Lords, if they did not know it before, that when the Bill hits the statute book, as it undoubtedly will, the United Kingdom Government will be taking more money out of their national lottery than any other government or state in the world. State and national lotteries are not for governments. They are set up for charities, sport, the heritage, and so on. This lottery, more than any other lottery in the world, now goes straight into the Treasury's coffers; and that is not what was intended.
The noble Baroness, Lady Young of Old Scone, mentioned the NCVO report of 1996. It states that there has been a 20 per cent. decline in charitable giving since 1993. If the voluntary sector is to continue to fulfil its role, it must be properly funded. The role of Government is to facilitate and help. The Government's draft Bill is opposed by the National Council for Voluntary Organisations. It is opposed by the Institute of Charity Fundraising Managers. It is opposed by almost every charity, and by the 70 charities which hope to benefit.

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Introducing non-manifesto legislation without adequate consultation, in response to a knee-jerk reaction, legislation which will destroy the single biggest initiative in charity fundraising in Britain today, is strange action for a Government which claim a close relationship with the voluntary sector. I hope that upon sober reflection the Government will realise that they are making a silly mistake and will decide to allow us to carry on raising the money the voluntary sector needs to do the work it does so well.
5.28 p.m.
Lord Ponsonby of Shulbrede: My Lords, when I looked at the list of speakers today I noted that I was to follow the noble Lord, Lord Mancroft. I wondered whether he would raise the issue of the gambling game, "Pronto!". I took the trouble to look up the Companion to this House. The Companion states clearly about noble Lords declaring a financial interest, which the noble Lord has done. However, it also states that,
"Lords should, however, he especially cautious in deciding whether to speak or vote in relation to interests that are direct, pecuniary and shared by few others".
I question whether the noble Lord has crossed the line set out in the Companion.
In opening, I wish to thank the noble Lord, Lord Astor of Hever, for initiating this debate. The voluntary sector faces a fundamental debate about its identity and the role it will play in the future. Over recent years, the state has shifted its responsibilities and many charities have responded by adopting new responsibilities, primarily in the field of social welfare, as the noble Baroness, Lady Linklater, said in her excellent speech. It is to those additional responsibilities that I wish to address my comments.
I wish to concentrate on two aspects: first, the funding mechanisms of the voluntary sector; and, secondly, its independence from government as part of the building of greater partnership. I should declare an interest in that my wife is chief executive of a charity that is currently facing many of the problems that are 'so typical within this sector.
The introduction of the National Lottery has highlighted the increasing trend on the part both of government and other funders away from core funding towards project funding. By core funding, I mean funding that is not restricted to a particular project but which can be used by the organisation for whatever it sees fit within the general purposes for which it was set up. By project-based funding, I mean funds that are allocated for specific projects which are seen to be new and innovative and have clearly defined objectives that can be easily measured.
I understand that trend, but I believe it has gone too far. I understand that funders want to know how many pieces of equipment they have bought for a hospital, or how many mouths of starving children they have fed. But what happens when successful projects come to the end of their funding period? They are no longer new or innovative. Many charities have great trouble raising on-going funds for routine work.
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I shall give one example from my wife's charity. For the past 10 years it has run a telephone advice line, providing advice for working parents on childcare problems. It has been an extremely successful and popular advice line over the years, but now it is neither new nor innovative. The charity has found it impossible to obtain on-going funding for that service and has had to downgrade it to an answer-machine service simply in order to cut down the cost. It is a small example, but is entirely typical, I understand, of the difficulty that many charities are experiencing through relying excessively on project-based funds while perpetually seeking new and innovative funding ideas.
Funders say again and again: be more efficient, effective, accountable and open; have higher standards and better systems—and so it goes on. Yet nobody wants to fund routine administration costs, overheads and the tried and tested services that have stood the test of time. Without those, charities cannot function.
If the Government want to encourage and develop the voluntary sector, the single most beneficial action they could take would be to reverse the trend from unrestricted funding to restricted funding, and to encourage funders to give charities whose work they value the flexibility to allocate funding where it is needed most.
I turn now to the relationship between the Government and the voluntary sector. One of the greatest strengths of the voluntary sector is that it can reach parts of our society that neither the public nor the private sector can reach. It should be recognised that independence is vital to these organisations, and that they have a key role and duty to act as an advocate on behalf of their beneficiaries, speaking on behalf of those who would otherwise have no voice—and that includes birds, I would say to my noble friend Lady Young.
I recognise that the Government place a high priority on developing and strengthening the partnership between government and the voluntary sector, and that the main vehicle for that will be the compact to which many noble Lords referred, on which the Government are currently collaborating with the sector through a working group which I believe is chaired by Sir Kenneth Stowe.
My honourable friend Alun Michael wrote in a Labour Party document entitled, Building the Future Together, that,
"It is not the job of Government or Opposition to determine the future of the voluntary sector. That must be for the sector itself".
I agree with that view. However, I am sorry to have to report to my noble friend that I have heard the view expressed in the voluntary sector that the proposed compact will be an attempt to get the voluntary sector to speak with one voice while in partnership with the Government. I hope that my noble fiend will be able to reassure me that that is not the intention of the working group; and that he will acknowledge that diversity in the sector is its strength and that many voices are needed and many channels of communication. If true partnership is to develop between government and the voluntary sector, then the sector should be involved not only in assessing the likely effects of policy changes but

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also in the policies themselves. It will be a challenge to go down the road of partnership between government and the voluntary sector while at the same time recognising the voluntary sector's diversity and independence. I believe that the Government have started on that road with openness and ambition and I wish them well for the future.
Finally, as demonstrated this afternoon, there is a special relationship between this House and the charitable and voluntary sector. I urge that, whatever changes are seen in this House in future years, we try to preserve that special relationship. It is to the benefit of both the charitable sector and this House.
5.36 p.m.
Lord Westbury: My Lords, I congratulate my noble friend Lady Fookes on her maiden speech. Sadly, she has left the Chamber. I had intended to tell her that it would be her worst experience of speaking in this House, but that it would be fast.
I thank my noble friend Lord Astor of Hever for calling attention to the work of charities. I have been involved with various charities for the past 30 years, and therefore feel eligible to give my views. There is no doubt that the existence of charities saves any government an immense amount of financial relief in welfare for the needy.
Today, charities have become big business, and I do wonder whether the voluntary contribution is diminishing and the paid sector is taking over. For instance, if you pay a fundraiser, the volunteer in the organisation will not feel so keen to raise funds as somebody else is being paid to do it. In addition, the cost to charities is escalating as a result of the high wages paid to administrators. Headquarters are becoming too large and are therefore not servicing the organisations that they exist to serve. Money raised is therefore spent on administration, not on the specific needs of the charity.
Fundraising has changed a great deal from personal giving to corporate giving, whereby big businesses are prepared to support charities through sponsorship, which is invaluable. I believe that trusts and organisations are prepared to give money for specific projects, rather than money going to general funds—in other words, overdrafts.
There are too many charities carrying out almost the same activities. There should be more amalgamation of charities doing similar work.
Sadly, covenant giving is not being encouraged by Her Majesty's Government; nor was it by the previous government. It is all right for the charities, but not good for the donor. In the United States, the individual receives good tax relief when he or she supports a charity.
The great cry has gone up that charities have suffered as a result of the lottery. I do not believe that; I think it is an excuse. The person who buys a lottery ticket has never been a big spender to the benefit of charity.
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A great accolade should be given to volunteers. They are the salt of the earth and receive so little recognition—for instance, in the Honours List. Why should people who have made an enormous amount of money be honoured, and not the volunteer in a charity who has worked so hard for the organisation to which he or she belongs? Her Majesty's Government should give a great deal more money and consideration to charities to encourage the continuation of their wonderful work.
5.40 p.m.
The Lord Bishop of Hereford: My Lords, I add my own thanks to those expressed to the noble Lord. Lord Astor of Hever, for initiating this debate on a subject which is of enormous importance, as is obvious from the speeches so far made. We can, as a country, be rightly proud of our remarkable commitment to charitable giving and charitable work.
I echo what the noble Lord, Lord Astor, and my right reverend friend the Bishop of Lichfield said about the enormous burden on cathedrals, churches and church schools of VAT. Noble Lords may know that last month there was a debate on this subject in the General Synod, when a motion was passed overwhelmingly, by 423 votes to 2, calling on the Government to reduce this intolerable burden.
The Church is not in a privileged position, receiving money from English Heritage, but is in fact disadvantaged. The figures have already been given. Despite considerable support from the faithful and the wider community and the help from English Heritage, churches up and down the land are heavily penalised for maintaining the nation's heritage and community treasures. This punitive taxation affects rural and poor urban parishes and church schools alike. All repair work and improvements are subject to VAT. While local education authorities can reclaim VAT, church school governors cannot. That is unjust and unreasonable. Although the Church of England is famous for having room within itself for eccentrics, I find it remarkable that in that debate two people were so enthusiastic about VAT that they voted against the motion.
I wish to speak about something much more general. Four years ago I became a trustee of a new trust set up to serve mainly Herefordshire and West Worcestershire, established by the generosity of a farmer's widow who left an estate worth £49 million and who had seemed in her lifetime to be unaware of the fact that she was, even by lottery standards, a remarkably wealthy woman.
My first and overwhelming impression as I tried to discharge the work of a trustee, inevitably being on the receiving end of a large number of applications for help, was of the scale and range of charitable activity in our communities. I thought that, after many years in the Church's ministry, I knew a good deal about voluntary and charitable effort; but it was an absolute revelation to me to discover the vast number of excellent projects which exist in our area alone, sustained by the energy, imagination and devoted work of tens of thousands of good people, part of that army of 3 million mentioned by the noble Lord, Lord Astor. Every conceivable

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disability and need seems to have elicited an appropriate charitable response. Whether it is physical or mental illness, whether it is social deprivation, exclusion or homelessness, whether the victims are young or old, whether it is a case of ambulance work to pick up the pieces or preventive work to try to stop a disaster happening, the network of voluntary agencies is immense and deeply impressive.
Of course, some of these agencies may be misguided; many are under-resourced; almost all are under-funded; but the existence of these organisations is a magnificent tribute to human generosity and good will. That was my first and strongest impression. It is not only the Lord Mayor of Plymouth who has been amazed and humbled to discover the level of generosity, devotion and good will.
The second conviction which has been strengthened by my recent experience is that some good things are best done, ideally done, by voluntary, charitable effort rather than by statutory agencies. I should like to mention briefly two examples.
One is the organisation called Lifestyles, a remarkable charity which seeks to release disabled people from the imprisonment of their disability, where the normal, decent level of care provided by the welfare state would leave them. Lifestyles has depended on the vision and pioneering and innovative imagination of one or two people who have seen that it is possible to give disabled people real choices, to enable them to start to come back into the mainstream of life rather than remain on its fringes.
The second is that excellent body Homestart, which celebrates its silver jubilee this year, which recruits and trains volunteers to accompany struggling young parents, support them, befriend them, encourage them, give them time, in a totally relaxed and unthreatening way, and teach them, where necessary, the basic skills of parenting, budgeting, or even cooking and housekeeping. Homestart needs to work in partnership with the statutory agencies because most referrals come by that route; but Homestart volunteers are real friends in a sense that social workers cannot be and probably should not try to be.
That is a word of praise and appreciation for those projects as two examples among many of the need for charitable activity and voluntary effort. It is extremely cost-effective and prevents untold misery and exceedingly expensive social disasters.
My third point is a very different one. If Lifestyles and Homestart represent examples of charitable and voluntary work at its best and in its element, other demands which have increasingly been made on our trust funds have been seriously worrying for us. In the past three years we have been asked for £900,000 for purposes which should properly be part of core National Health Service funding. Stroke rehabilitation, cardiac after-care and head injury rehabilitation are matters of such importance and urgency that the trustees, having to weigh these applications against hundreds of others that we receive, and assured by the health trusts that no statutory funding exists for these purposes, have felt bound to make at least some of the grants requested of
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us. We have allocated nearly £400,000 to the acute and community trusts in Hereford and £100,000 in grants to hospitals in Birmingham and Dudley.
We feel deeply uneasy about that and about the fact that nearly 10 per cent. of hospital equipment is paid for by charitable giving: that in 1994–95 no less than £500 million of total NHS income came from charitable sources. It is true that many hospitals were originally charitable institutions, and there are still many areas where extras can properly be provided by voluntary giving, through the league of friends or some such organisation; but core funding for urgent and essential treatment should not have to come from charitable sources. I very much hope that the noble Lord, Lord Hoyle, will be able to respond with some assurances that that position will not have to continue, not least because reliance on charitable funding for basic healthcare turns the National Health Service into even more of a lottery than it is already, with widely differing standards of treatment available in different places.
We are, of course, glad that we have been able to offer much-needed help to the victims of strokes, heart attacks and head injuries, help which, disgracefully, was not previously available in anything like adequate form. We are in the fortunate position of being able to help. There are many places where such funding does not exist. My urgent plea is that such basic needs should not in future have to be met from charitable funding.
5.48 p.m.
Lord Hayhoe: My Lords, I add my thanks to those expressed to my noble friend Lord Astor of Hever for initiating this important debate, not least because it gave me the opportunity to hear the splendid speech of my former honourable friend in another place and now my noble friend Lady Fookes.
I begin by declaring an interest. I am a somewhat inactive president of Help the Hospices and a trustee of medical charities, the Liver Research Trust and the British Brain and Spine Foundation, as well as being involved in other charitable activities.
I wish to concentrate today, rather narrowly, on fund-raising and financial questions. I deal first with taxation. Successive Chancellors have in the past helped charities with favourable tax breaks, but they have also hurt and handicapped them by the imposition and incidence of VAT and the changes in advance corporation tax in the Chancellor's first Budget last year, which was referred to by previous speakers.
I warmly welcome the Government's review of the taxation of charities announced last July and I look forward to the consultative document promised for publication in spring this year. I hope that this review will not preclude favourable measures being included in this year's Budget on 17th March.
The National Lottery, as has been said by others, has been very successful, some £4.5 billion already raised for the five good causes. As a former Treasury Minister I confess I am not surprised that Treasury eyes look covetously at this largesse. Pressures to replace or enhance Exchequer grants with lottery money will grow and must be resisted. I must say that the Government's

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provisions in the National Lottery Bill, which comes before this House at its Report stage next Tuesday do not augur well. In a similar vein I recall the special trustees of charity funds at London hospitals being expected to take on projects which should rightly have been covered by NHS funding.
Without doubt, the National Lottery has led to some switching from direct charity giving to the detriment of the charities. As a result of these pressures many of the larger charities seem to be employing more professional fund raisers and techniques than ever before. The whole business—and it really now is big business—of charity fund raising embracing sponsorship and merchandising is growing and expanding. Computer based direct mail appeals, coupled with what one could call direct blunderbuss type deliveries of charity appeals in selected postal districts where the residents are thought more likely to give than in others, are already in danger of becoming self-defeating.
While I appreciate the technical problems, I wish those concerned could clean up their computer lists so as to avoid repeated postal requests to the same family at the same address—very irritating indeed. Sometimes one needs great strength of will to overcome that irritation and go on contributing to that particular charity.
But this is a relatively minor gripe which must be set against the enormous efforts of so many dedicated and concerned individuals who organise and support charitable fundraising for so many different and worthwhile causes in so many different and appealing ways.
I mentioned the Government's National Lottery Bill a moment ago. I want now to refer to the draft Lotteries (Frequent Draws) Bill, which was issued by the Home Office for consultation on 7th January, although I notice that this draft Bill carries an endorsement "10 December 1997 (Second Print)". No doubt there is some quite reasonable explanation of the difference of date from 10th December when it appears to have been printed to 7th January when it was sent more widely for consultation. I should be grateful to hear the explanation from the Minister in his wind-up speech.
While I welcome the publication of this Bill in draft I wonder if more detailed evidence of the views of those organisations consulted by the Home Office before publication could not have been made available. The information given in the Draft Regulatory Appraisal document dated 7th January which accompanied the draft Bill is helpful but rather sparse and not all that persuasive. For example, I note that the views of the Methodist Church, the Church of England, and the National Council for Social Concern are prayed in aid of a statutory limit on the frequency of on-line lottery draws. I seem to recall that these important bodies were not all that enthusiastic about our National Lottery, yet that has become a great success. Just imagine how much would have been lost to good causes if the National Lottery plans had been strangled at birth.
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I am now very concerned, as was my noble friend the Duke of Norfolk in his important contribution to the debate, about the potential loss to many charities. I have a list here of some 70 or so humanitarian charities which could be affected by the Pronto! lottery. That was referred to in considerable detail by my noble friend Lord Mancroft. Incidentally, I hope that the procedural point that was raised by the noble Lord, Lord Ponsonby, will not in any way detract from the very powerful arguments that my noble friend Lord Mancroft made in his speech. I am worried by the potential loss to the charities if this scheme is effectively killed off in its infancy by this Bill. Help the Hospices, as has been said, hoped to receive £200,000 but the prospect of this highly restrictive legislation has knocked this down to about £50,000. The end result, if the restrictive "one draw a day" is implemented, could be nothing at all.
Government sympathy, as expressed in paragraph 7.5 of their Draft Regulatory Appraisal, is of little comfort to the charities who were expecting substantial funding from the Pronto! scheme. I am not much impressed by the Government's attempts to justify this proposed legislation. The arguments are tentative and smack of special pleading on behalf of the National Lottery, though I understand this is denied.
I hope that Government Ministers will have second thoughts, that they will listen to the voices of the charities directly affected. Surely the legislation should not be rushed. Rushed legislation, as we know to our cost, is nearly always bad legislation. At the very least a longer period of consultation should be allowed. It has been far too short. From 7th January to 13th February was quite inadequate to give full consideration to the "one draw a day" proposal. Why not establish a carefully monitored trial so that hard evidence can be collected and assessed and a proper and fair balance struck between benefits and difficulties? Why "one draw a day", an arbitrary limit without any solid basis behind it? Why not one an hour or more frequently, as Pronto! promoters propose? Let us have a sensible trial and a realistic decision.
I very much doubt whether this Bill would make any progress in another place if free votes are allowed. No doubt Government Whips could drive it through in another place but perhaps not in your Lordships' House. I hope that the Government will think again about their plans. It would be a grave omission not to say something about fundraising for charities without mentioning the Charities Aid Foundation. I endorse entirely what my noble friend Lord Astor said about that remarkable body, splendidly conceived, extraordinarily effective. It allows people to have their charity giving enhanced by simpler tax rebates and allows a more flexible operation by the use of CAF vouchers, their credit card, or their charity card.
Let me end as I began by referring to taxation. Perhaps the Chancellor will give greater encouragement to charities in his Budget or perhaps, like some of his predecessors, he will wait until nearer the General Election to exercise the Treasury's compassionate concern, if that is not a contradiction in terms.
5.58 p.m.
Lord Weatherill: My Lords, I, too, should like to begin by congratulating the noble Lord, Lord Astor of Hever, and also my noble friend Baroness Fookes on her admirable maiden speech. Like her, I spent some 15 years in the Chair but I am afraid I am not as confident as she in being able to deliver my speech today without a note. I am far too nervous for that. It is a great attribute, but I think both she and I, as former occupants of the Chair in the other place, will know that the trouble with those who speak without a note is that one brilliant thought tends to lead to another.
Some 15 years ago 1 presided at the annual general meeting of the Croydon Council of Voluntary Organisations. Wondering what on earth I was going to say to that excellent body, I picked up the Evening Standard and found a leading article which proclaimed, "Utopia—you may be surprised to know that you're living in it now". The article went on to draw attention to all the good things going on in society and said that we should not be bamboozled by the reports of all the bad things that the newspapers so regularly report.
When I was in the other place I used to keep a note of speeches which had particularly pleased me—and there have been many today. One speech, by the honourable Member Ron Brown, who had the misfortune to drop the Mace one day, was on the press. He summed up his speech with this quip: "You can sum up the modern press in three short phrases; make it brief, make it juicy and make it up". In this debate we have an opportunity to redress that balance between good and bad.
In my alleged retirement I am connected with a great many charities, some of them of national standing and others very small, such as Bridges in Edenbridge, which the noble Lord, Lord Astor, has so generously supported. In particular, I am very proud to be a vice-chancellor of the Order of St. John of Jerusalem. It has been a special pleasure to hear the speech of our Lord Prior, the noble Lord, Lord Vestey, this afternoon, and the speech of the noble Baroness, Lady Emerton, who spoke about the order's worldwide activities. But in this debate I should like to use my few minutes to draw attention to the work of the Prince's Trust.
Most of us take for granted the opportunities we have had in life—a good home, a good education and security—hut we all know that this is not the experience of everyone, as we have heard this afternoon. The Prince's Trust aims to help and to inspire young people, particularly the disadvantaged, to develop their full potential and to serve the community. For 21 years it has had a track record of considerable success. For example, it has established 500 study support centres where young people can go to do their homework. We all know, particularly those of us who have been in the other place, that young people can have great difficulty in going home, frequently to council houses with very few rooms, and finding a room in which they can quietly do their homework. These study centres enable young students—there have been 80,000 of them—to study and to be helped in their homework in order to increase their chances of getting good 0-levels and A-levels and entry into universities.
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Then there is the Prince's Trust Volunteers, which I was privileged to launch with His Royal Highness the Prince of Wales in 1990 in my capacity as Founder President of the Institute for Citizenship Studies. The Prince's Trust Volunteers has helped some 20,000 young people to develop their characters and personal leadership qualities and potential by serving the community, working together as a team. Sixty-five per cent. of them subsequently have gone on to get good jobs.
Next there is the Prince's Youth Business Trust, with which I am most actively associated. In the past 11 years, 40,000 young people between the ages of 18 and 30 have been helped to establish their own businesses, thereby creating some 60,000 new jobs. Because the trust provides them with a godfather or a godmother to whom they can go for advice, 60 per cent. of them remain in business after they have been trading for three years. This is far better than the track record of the banks.
The trust, through the PYBT, is able to take young people off the unemployment register and help them to establish their own businesses for an average of £3,000, which is far less than the annual cost of individual unemployment benefit. Of those we help, 60 per cent. are long-term unemployed, 10 per cent. come from the ethnic communities, 10 per cent. are young offenders and 20 per cent. come from other backgrounds, notably the disabled. Although many of the businesses remain small businesses—some of them do fail but we do not go in for failure in the PYBT because we know that a large number of those who do not continue trading find other employment—we have had a track record of setting up some large businesses. Indeed, our largest businesses have a combined turnover of £20 million and employ more than 1,600 people.
Time does not allow me to mention other charities with which I am connected. In his admirable opening speech the noble Lord, Lord Astor, mentioned that charitable giving is in decline. I am in no doubt that this is partly due to the National Lottery, and I agree with the noble Lord, Lord Mancroft, that lottery money should not be used for activities which are properly the responsibility of government. Furthermore, application for lottery money is very difficult to make, largely because the application forms are so complicated. In the Committee Stage of the National Lottery Bill I joined with the noble Lord, Lord Howell, in moving an amendment which would establish a fast-track procedure for small applications—up to, say, some £5,000 for small charities, which would be a pot of gold to many of them. I hope that this will be successful.
The noble Baroness, Lady Emerton, mentioned the motto of the Order of St. John: pro fide, pro utilitate hominum—"In the service of mankind". We politicians regularly draw attention to getting the balance right. We shall hear a good deal about the balance of trade, the balance of payments and other balances on 17th March, which is Budget day. But we all know there is another balance which is even more important—the balance between material welfare and spiritual welfare. There must be a balance between what the state can and should do and the obligations of citizens in a free society to

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make their contributions. That balance, as we have heard today, is made by the activities of the 180,000 registered charities in our country.
There is an old Punjabi proverb:
"Good words will earn you honour in the market place:
Good deeds will win you friends among men".
I thank the noble Lord, Lord Astor, for giving us this opportunity to pay tribute to the many good acts and good deeds of the charities of our country.
6.8 p.m.
Viscount Mackintosh of Halifax: My Lords, I should like to thank my noble kinsman Lord Astor of Hever for initiating this debate. The variety of contributions from noble Lords so far has drawn our attention to the importance of the role of charities. I should like to make a short contribution this afternoon about some of the ways in which charities raise money. However, before doing so, I should like to congratulate my noble friend Lady Fookes on her maiden speech. It was a most impressive contribution to this debate and we look forward to many more speeches from her in this House.
The amount of good work which any charity can do is dependent upon how much money it can raise, by whatever means and from whatever source. Charities nowadays must, and have, become increasingly professional and resourceful in facing the challenges of fundraising. There is much competition for the charitable pound and charities know this. Whilst there is the danger of "charity fatigue", generosity is also sometimes overwhelming when the cause is appealing and when, importantly, the request is made in the right way. New ideas abound—even a glance at some of the charity post which comes through the letterbox shows this. The variety of charitable events, too, has increased enormously in the past few years; much imagination has been at work, and it has been needed.
One very interesting development in the field of charitable fundraising, which has tapped a new pool of money, has been in relation to the giving of unwanted small change left over from foreign trips. The odd coin is of no use to its owner; it cannot be exchanged back. Who has not found themselves keeping jars or envelopes at home of coins in various currencies, in the vain hope that they will be remembered for the next trip? British Airways, in its "Change for Good" campaign, has raised huge sums of money for charity by pooling these individually useless small coins.
In theory, the same could be done for other leftover or otherwise unwanted assets—shares for example. Many many millions of pounds are tied up in shareholdings too small to be worth selling; the cost of commission would be higher than the value. The biggest source of these odd lots is scrip dividends where the underlying shareholding has been sold.
The hitch is that, unlike a coin, one cannot simply give a share away, to a charity or to anybody else. Documents must be signed; registrars provided with the proper pieces of paper. Even destroying an unwanted share certificate does not do any good. The shareholder
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remains on the register and will still receive all communications from the company. Tiny dividends are received and must be scheduled on tax returns. Companies spend large sums of money servicing holders of perhaps a single share, many of whom would rather not own it at all.
In a word, these small shareholdings can he a nuisance to all concerned. In aggregate, though, they represent an enormous reservoir of potential cash, which could go towards charities, if unlocked. Many an owner would be only too delighted if their useless bits and pieces could go to good causes.
But transferring small holdings direct to a charity is often not the answer. The charity, though grateful for the generous intention, may find itself equally unable to deal with a holding worth less than the minimum commission.
A charitable scheme now exists (Sharegift) which can collect these small parcels of shares and make something of them, unlocking their value. If the cost of selling a shareholding is, say, £20 (it can be much more!), and one holds shares in that company worth only £15, one has nothing. By donating them through the Sharegift charity, one's small holding can be combined with others in that company, making enough to be sold.
Here I should declare an interest. The scheme was devised and is run by my wife, after a career in the City in pension fund management and stockbroking, and I am a trustee of the charity which administers it.
Sharegift functions by aggregation. Though laborious, it works because there is a critical mass of many donations. Holdings of shares are re-registered, then pooled and sold when they are large enough and the proceeds are distributed to a growing number of charities. Donors are invited to suggest their favoured charities for consideration if they wish. Charities are encouraged to enter into partnership with Sharegift by mentioning the existence of the scheme in their newsletters to supporters and so on.
The beauty of it is that there is no conflict with any other form of charitable fundraising. Donors have, at a stroke, got rid of something which is a nuisance to them, and given to charity, without relinquishing any hard-earned, tax-paid cash at all. Charities are benefiting from the releasing of otherwise frozen assets.
There are so many admirable causes, but there is never enough money. What is important for charities is not just to continue to raise funds from the same or similar sources, though this is vital of course, but to be aware of the possibility of new ways altogether—entirely different sources of revenue.
6.14 p.m.
Lord Dholakia: My Lords, I also wish to add my congratulations to the noble Baroness, Lady Fookes, for her excellent maiden speech. The last time I heard her was in Cheltenham at a memorial service for Sir Charles Irvine, MP., the great charitable worker and she has lost none of her sparkle.
I came to this country 42 years ago. On the very first day, walking with my host in Brighton, I was confronted by a number of people rattling tins. For a minute I was

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puzzled. I then saw my host put his hand in his pocket, take out some money and put it in the tin. I said to him, "Why did you do that?" He said, "I have enough: others don't and there is great joy in giving".
I came from the third world, which was always the recipient of such help. For the first time I realised that it is not only receiving aid, but also giving that gives great pleasure to a great many people. From that day onwards I have been associated with a number of charities in this country. The three that I value most are Save the Children—I am a trustee—the National Association for the Care and Resettlement of Offenders and the Mental Health Foundation.
On many occasions people give money without realising what precisely some of the charities do. Quite often we are confronted with television pictures within which we see some of our resources being used. That gives the opportunity for a few minutes to highlight the work of just one of these charities, Save the Children. Perhaps I may quote the director-general of that fund, Mike Aaronson. He said in the last annual report of the charity,
"In a world which is changing at a breathtaking pace, the gap between rich and poor is now wider than ever before, and it is children who are, as always, the first to lose out".
It is not a new charity: it began as early as 1919. It has done pioneering work with, and making a difference for, children. It has grown to become the United Kingdom's largest international children's charity which works to help to meet the needs of children around the world, regardless of race, creed or nationality. The programme for this charity covers over 50 countries including the United Kingdom, which is often forgotten. The work is highly regarded not only in terms of effective emergency relief programmes, but much more than that the focus of the work is long-term development. Save the Children helps governments and communities to bring about long-term improvement for children and their families.
The situations that we work in around the world may be very different, but our aim is always the same; namely, to ensure that the rights of children are met. For example, the rights of children to healthcare and education; to be protected from harm; the chance for children to express themselves and to be listened to are at the heart of all the work that we do. Our programme is enhanced by the fact that we are an international agency so that we are able to learn from our experience with working with children in different settings and we can draw on our experience and expertise from around the world.
The work in the United Kingdom includes helping children and young people to represent their views, giving them a chance to have a say on how services are provided in their area and helping parents from low-income families gain new skills so that they have a better chance of finding work and breaking out of the poverty trap.
I shall give one or two further examples in a minute. Our work overseas also includes projects designed in terms of improving healthcare and education services; schemes that address the poverty experienced by
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families or that address the impact of HIV/Aids and also programmes that reunite children who have become separated from their families during war.
As we move towards the new millennium, the needs of children and young people are as pressing as ever. In the UK, poverty now attacks one in three children, and that figure rises significantly in some parts of Scotland, Northern Ireland, Wales, larger cities and post-industrial areas of England. Save the Children believes that is unacceptable, given the wealth available to our society.
Poverty is only part of the problem. Save the Children believes that it is unacceptable that many children in the UK suffer from homelessness, sexual exploitation and abuse, addiction, inadequate care when separated from their families, bullying, school exclusion and discrimination. All too often, society labels children as a social problem and feels that they must be controlled. Save the Children believes that children should not be labelled that way and sees it as part of its role to challenge harmful preconceptions about children and young people.
In many developing countries in which Save the Children works, war and conflict have, following the ending of the cold war, taken on new forms. Such wars are frequently caused by a struggle for resources and are rooted in ethnic conflict and environmental change. The legacy of previous conflicts continues to damage the lives of millions of people through uncleared land mines, refugee movements, the dissipation of families and the destruction of social institutions. The 1980s and 1990s saw the dominance of the model of economic and social development across the world whereby market forces were seen as the answer to alleviating poverty and social problems. Many former socialist countries are in the process of making an often painful transition to a market-led economy. At the same time, the integration of the global economy has led to fierce international competition in previously under-developed parts of the world.
The Save the Children Fund has found that substantial economic growth goes hand in hand with rising levels of poverty, ill health, homelessness and insecurity. Women and children form the majority of the poor in developing countries in which the fund operates and are increasingly consigned to the margin of society, with few adequate safety nets to protect them. I will give two examples.
The St. Mellons project in Cardiff is an example of the fund's work to help local communities tackle problems by promoting the benefits of involving children and young people in the planning and implementation of projects and by supporting community initiatives in demonstrating how that approach can produce sustainable solutions. An international example with which your Lordships will be familiar is Sialkot in Pakistan, where the fund is working to influence child labour practices. Save the Children joined an international initiative to phase out child labour in Pakistan's football manufacturing industry, to prevent an immediate ban on child labour that could dangerously lower family income and force children into more hazardous jobs. The ultimate

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objective is to review what can be done in relation to children, to make sure that they enjoy their right to a childhood and that we contribute to the better development of the world around us.
6.23 p.m.
Lord Quinton: My Lords, I want first to thank my noble friend Lord Astor of Hever for raising the work of charities as the subject for debate, which is just the sort of thing for which this House is partly designed. Its other role is to instruct the government of the day, but its Wednesday role is to air topics with which the other place is far too busy to deal but which can enjoy some rational consideration in the less hurried atmosphere of your Lordships' House. I too want to congratulate my noble friend Lady Fookes on her maiden speech. I hardly like to say "maiden speech" because she was, so to speak, previously married to the other place. I feel that I have to say that that showed. The seven-year Trappist vow as Deputy Speaker to which my noble friend referred seems to have had nothing but a beneficial effect on her oratorial powers. I look forward to hearing her often.
When I saw my name rather far down the list of speakers, I thought that the matter that I want to talk about would be utterly obliterated by the time that my moment came. In fact, the topic has barely been touched upon. I refer to the method by which tax relief is accorded to charitable donors. The covenanting system reminds me of egg rationing, gas mask cases and 98 per cent. income tax at the higher rate—a relic of wartime thinking. What are the main objections to the system? First, it is complex for the donor. Here is where one speaks from the heart. There is quite a lot of filling-in of forms to do. In some versions, small pieces of paper regularly appear at certain times of the year, which one has to sign and return—I cannot remember whether to the charity or the tax office—guaranteeing that one is paying tax in the current year. I am often aware of having incurred an obligation to a charity but the piece of paper does not appear. I am too lazy and disorganised to pursue the matter. Whether the charity is seriously disadvantaged, I do not know. It seems fatuous that I should have to worry about it and fatuous that the charity—if it is the charity—should have to pester me with little pieces of paper. It is like those offers that one sees in evening newspapers, for extraordinarily inexpensive meals at very good restaurants. One needs resolution something like that of the Princess Royal, if one is to manage to make any kind of charitable donation in the face of a distraction of that kind.
That is not the only thing wrong with the covenanting system. The administrative inconvenience to the donor is no doubt matched and multiplied by that caused to the Inland Revenue. It may be that authority feasts on it but, if so, it is an unhealthy diet and the Inland Revenue should be cured of it. All that is absolutely unnecessary. Also, entering into gift aid is, for persons of relatively straitened means, a relatively large commitment. The minimum payment is £250 and one may not want to dish out that sum in one dollop to a particular charity. Covenanting is too much like marriage, not like a
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friendly weekend relationship. It stretches out much too far into the future. I say that because I am recommending, proposing and deeply hoping for a shift to something like the system in the United States. There, one makes a charitable donation and the charity sends one a receipt. No doubt that is an authoritative-looking form bearing the charity's registration number, so that one can present the document to the tax inspector. Like any allowable or non-allowable expense, it has to be scrutinised and if the tax inspector does not like the look of it, he will not allow it. If he does, the sum given should be subtracted from one's taxable income.
I would not want to recommend some of the more baroque extravagances of the American system, whereby one can have a 500 dollar dinner at some swish hotel, about 40 dollars of which goes to charity. The allowance should be confined to that part of the payment that goes to charity. I am entirely happy with the restriction of that kind. There is always a slight, weird fringe in charitable activities, with incompetents giving themselves huge meals and the prime beneficiaries being neglected.
On the three grounds of complexity for the donor, presumed administrative inconvenience to the Inland Revenue and the way in which the covenanting system is so oddly shaped, temporarily speaking, that it discourages middle-range donations, I strongly urge that the system be abolished and replaced by a simple deductibility system.
I believe, for reasons that I shall outline briefly, that doing such a thing would considerably enhance charitable donation. After all, the social structure of this country has very materially changed in the past 50 or so years. We now have what one might call a very large mass of middle income people. We no longer have a great cone with the noble Duke, the Duke of Westminster, on the top and the underclass, poor souls, at the bottom. As everyone says, our social structure is now a blob, like some sort of fruit, with a largish number of very badly off people at the bottom, a fair number of pretty well off people at the top, and a huge number of reasonably well off people in the middle. Many of those people would be prepared, like Americans, to make larger contributions to charity than they are currently accustomed to doing. There seems to be plenty of charitable impulse about in the world, but it is not adequately provided for by the covenanting system. However, your Lordships have probably heard enough about that.
I now want to move briefly to a topic of enormous generality which is not unrelated to what I have just been talking about. There seems to be a frame of mind behind the persistence of the covenanting system, which is somehow a statist hostility to the institution of charity as such. Perhaps I should describe it as a Benthamite hostility to it which says, "It must be inefficient, so surely it would be better for the state, through the tax system, to raise the revenues required for all these eleemosynary purposes". I hope that Hansard can spell that! It seems to be felt that all the money could be raised by tax and be competently and efficiently distributed to the points of need.

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A number of serious points have been made this afternoon which together add up to a refutation of that. First, I believe that it was the noble Baroness, Lady Young of Old Scone, who said that charities pioneer. They operate on a smaller field than some huge ministry and can thus identify small areas of need.
Secondly, charities can act much more rapidly than can a government. After all, government represent the community. They have to be sure that there is a very broad consensus in that community behind spending tax revenue on certain sorts of abstractly desirable things.
Thirdly—in a way, I think that this is the most important of all, but I hope that I do not sound too edifying in saying that because a number of other noble Lords have mentioned it—charities are important because of the voluntary principle. It is not just money that is given to our charities. There is also an enormous amount of unpaid work involved. Many people are in a position to give quite a bit of unpaid work who may not be able to give substantial donations. However, when costed out, what they are giving in the way of unpaid work adds up to a very substantial donation. We should not think of the vast donors as being the only heroes of charitable giving; we should also remember all those people who give unpaid work. I was thrilled to hear the number of 27 million people mentioned. I shall say it once more and then sit down-27 million. It is extraordinary.
6.33 p.m.
The Earl of Sandwich: My Lords, I too extend my thanks to the noble Lord, Lord Astor of Hever, and congratulate the noble Baroness, Lady Fookes, on her maiden speech.
As the noble Lord, Lord Quinton, has just said, promoting the voluntary sector is a bit like advocating fruit, fresh air or clean water. There is a lot of it about, and it is good. The voluntary sector is now one of our major employers, turning over an estimated £13 billion last year. Fortunately, we have not yet institutionalised it and I, too, hope that our charities will safeguard their independence during the forthcoming review.
Periodically we hear from charities, just like any other sector, that their income has fallen, that the public have lost interest or that the Government are doing too little to help them. I worked in charities for 20 years and it was part of our job to beat the drum and to draw attention to ourselves, especially when a new government came into office.
The new Home Office Minister, Alun Michael, has recently spoken of the "active community" in which there is to be a new triangular partnership with business and the voluntary sector. This happy honeymoon is to be welcomed, but the charities remain cautious because they are still unsure of the Government's intentions. This is a time of uncertainty, and whatever the achievements of the charities, their staff remain vulnerable to policy changes, public opinion, and the market. That is perhaps the price of preserving their identity.
Charities' general income has been falling in recent years, as we have heard, although there have been some increases in trading, investments and legacies. Some
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studies point to a decline in regular giving. I have seen that happen in the overseas aid sector—now a substantial proportion, representing one-fifth of the top 500 charities' voluntary income. The three or four largest aid agencies have recently had to make drastic cuts in their staff and their overseas programmes.
The lottery has played a role in that, although it is hard to quantify. However, the lottery has also brought considerable benefits. The international grants element of £25 million was a good start and it has been responsibly administered, but I am sorry that it was a Cinderella fund representing only 5 per cent. of the charities board distribution. It is hoped that that will be made up in the forthcoming round.
I am not convinced that the public are any less interested in charities simply because, partly owing to tax changes, they seem less able to support them. The Live Aid and Princess Diana phenomena showed how far people willingly respond to emotional but well planned appeals. The Henley Centre survey two years ago showed that the public have more confidence in charities than in the law or the Church. One could hardly expect more. Charities are highly valued for their contribution to education. The principle of volunteering remains intact. There seems to be no shortage of volunteers. As has been said, 4 million are involved formally with a further 23 million working informally. The problem lies in ensuring that charities' employees are fairly rewarded and that anomalies in pay scales are minimal. The recent difficulties encountered by VSO in attracting younger volunteers relate mainly to the high quality of the professionals that are now being sought.
One factor in the decline in income may be a loss of identity and purpose. Some of the most innovative social work—in education, prison reform and foreign aid—has been pioneered by charities, often with the intention that government should take it over. However, there is a danger that local and central government will swallow up that work and bureaucratise it. Government funding can be a mixed blessing unless the integrity of the work and the relationship with the community can be preserved.
There are two sides to the Government's policy towards charities. The first, which is long term and philosophical, is to improve relations along the lines of Professor Deakin's Commission, and to go beyond service-providing towards a more equal partnership, with the special aim of reducing mistrust between the voluntary and private sectors. We should all pay more attention to that. It need not cost the charities any money and is already being well received.
The second is short term and financial. I refer to the improvement of the tax environment, as already signalled by the review of charitable taxation and a reform of the Trustee Investments Act 1961. That will be some compensation for the phasing out of the ACT tax credit which is bound to harm charities with investment income. High street trading by charities—demonstrated by the noble Baroness, Lady Ryder—has become a source of grievance to the private sector, but it should not be penalised where there is a genuine charitable purpose. In fact, if anything, it should be

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further simplified with the business rate relief being fully protected. As has been said, VAT on genuine charitable trading should also be revised in favour of charities, especially churches. More consideration should be given to the tax system so that tax relief can be shifted from the charity to the donor.
There is an almost permanent debate, not to say tension, between the voluntary nature of most charities and the growing professionalism and accountability demanded of them. In every sector there is now a high level of expertise, envied by many countries abroad, some of which now seek the advice of our voluntary associations. I believe that we have great potential in exporting our long experience of charitable work and that that has an important function in terms of imparting democratic values. I hope that the noble Lord, Lord Dahrendorf, will mention that.
The links between charities and politics have become more sophisticated and less threatening than they used to be. The two can be closely entwined as the high quality professional briefings now provided to parliamentarians demonstrate.
In my experience political education is much more powerfully conveyed through charities than political parties—which is one reason why I have not joined one. To work inside a charity gives one a sense of motivation and direct contact with the public which the political parties rarely provide, least of all in an age of political consensus. In my own field I have noticed the gradual transformation of overseas aid charities. It began as an emotional response to need and gradually acquired skills in public affairs, information, education and what is now recognised, as the noble Baroness, Lady Young of Old Scone, pointed out, within the limits of their charitable status as lobbying and advocacy. However, I disagree with the noble Baroness that the large charities are likely to be more efficient. Supporters have come to grips with topics such as enhanced structural adjustment and post-Lomé negotiations. The NGOs have come to realise that they are themselves no angels and must be much more self-critical in their work overseas.
The number of aid charities has grown as has their relationship with government. In 1993 the organisation British Overseas NGOs for Development was formed by 61 charities. That number has now grown to 166. Simultaneously, as the noble Lord, Lord Dholakia, has pointed out, smaller networks of aid agencies have been formed on issues such as debt, fair trade and child labour. The DfID, having encouraged greater evaluation of its NGO programmes, now involves NGOs at a high level in the department.
The Government are committed to new international development targets. They will need the aid charities not just as a channel of funds but increasingly as a means of informing public opinion. Another encouraging example of partnership is the ethical trading initiative. All of these matters are evidence of the dialogue encouraged by the Home Office, but I hope that the Government will not overreach themselves in their ambitious programmes and involve charities too intimately in the policy process. Charities have proud traditions and sometimes their staff on the ground are
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less enthusiastic than their executives in the rush to the corridors of Westminster and Whitehall. The best presents that the Government can give in the review or the Budget are more, not less, tax reliefs and greater mutual respect for and understanding of the objectives for which the charity was established.
6.42 p.m.
Lord Rotherwick: My Lords, who can doubt that we live in an era of communication? The Radio Times lists 31 television channels and 19 radio stations. Car telephones, mobile telephones and fax machines in the air and on the railway contribute to—some may say detract from—our daily lives. But what of those who cannot partake of this orgy of self-expression—those who are physically and/or mentally isolated by the rigours of work, unemployment, depression or illness? My theme today is helplines—national, regional and local—known countrywide, nay even internationally, like the Samaritans or those struggling to gain the trust or recognition of the people they seek to help, like the Victim Support helpline launched only last week by the Princess Royal.
I should first paint a brief picture of the charity sector on which I believe some noble Lords have already touched. At the end of January 1998 the Charity Commission's register listed 180,000 charities with a total annual income of £18.3 billion. Most of that money is raised privately but local authority support has risen steadily in absolute money terms from about £606 million in 1983–84 to over double that figure 11 years later in 1994–95. That is equivalent to about 2.9 per cent. of total revenue spending.
The National Council for Voluntary Organisations covers about 2,500 charities. Of these, 263 are helplines. Additionally, the Telephone Helplines Directory published by BT lists over 800 helplines, some national, some regional and some local, but they do not include the smaller helplines operated by larger charities. The use of helplines has increased dramatically over the past 10 years, and they are still coming on stream. They are manned either totally by volunteers or by a combination of salaried staff and volunteers. In either case there is a need for intensive initial and on-going training. Funding is required to meet the cost of the premises, the phone line installation, rent, usage and publicity. In many cases to attract funding from various sources the helpline provides anonymised data to health authorities, researchers and planners, thus incurring computer costs. Most lines operate on the basis of local call rates and have to meet any differences between those and national rates. Some lines offer a call-back service.
One national line established in 1992 has attracted core funding from the Department of Health to the tune of £125,000 in 1996–97, falling to only £5,000 in the third year (1998–99), after which it must be self-supporting. Over half its callers suffer from mental illness. One quarter are carers and two-thirds are aged between 25 and 44 years. There are about 40,000 calls a year, and the charity Saneline provides the health services with analyses of the calls to identify unmet needs and to aid planning.

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Probably the most famous helpline of all is that of the Samaritans. That helpline receives 4 million calls a year and combines various initiatives to meet specialised needs in particular sectors or regions. For example, increasing isolation and financial pressures in the countryside led to local outreach programmes supported by videos aimed at the farming community. In Leicestershire such an initiative was partnered by the NFU and the diocese. In December 1996 the NFU in response to statistics showing that the rural suicide rate was higher than its urban counterpart helped to set up the Rural Stress Information Network to co-ordinate the efforts of some 13 to 14 charities working to publicise the level of deprivation in the countryside and ameliorate its effect on the rural population.
At a meeting in mid-February of this year these charities confirmed that demand for their help was still rising. If these demands are not met the resultant mental and physical breakdowns which must be dealt with by health and social services departments will rise. Funding comes from government agencies and bodies like the Lotteries Board. Each operates within a set of rules and according to a timetable that normally allows for diminishing financial support over three or four years. Moreover, most of the help is available for work at the cutting edge which leaves the logistical support short of money. This results in the failure of helplines, sometimes just as they are achieving the recognition and trust of the community that they try to serve. It is particularly difficult in rural areas where the public's perception of charities like the Samaritans, Sane and MIND is not conducive to discussing with them incessant, mind-numbing worries.
There is also a conflict between the ethical position of health and legal bodies who cannot discuss an individual's situation with a third party and the fact that many of the callers to the helpline are carers, partners, neighbours or relations of a sufferer. It is surely more cost effective to put relatively small sums of money into preventative services that are manned largely by unpaid volunteers than to have to cope with full-blown crises in hospital and use paid staff. I ask Her Majesty's Government to review the rules for the support of helplines and give consideration to increasing the proportion of funding that goes on logistics, lengthening the duration of support and recognising that the problems of the countryside can be summarised in one word, "isolation", which may be defined as the absence of communication.
6.50 p.m.
Baroness Pitkeathley: My Lords, I must apologise for being absent for part of the debate. I hope that I will be excused in that I have been engaged in charitable activity both in my role as Chief Executive of the Carers' National Association and as a trustee of the newly formed The Diana Princess of Wales Memorial Fund which is about to announce its first lot of grants. This excuse for absence will, I hope, also serve as a declaration of interest in what I have to say in the debate. I confess that, as somebody who is involved at the sharp end of fund-raising and constantly trying to bring more money in. I am tempted to spend my few
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minutes tonight whingeing about how difficult it is, in the hope that at the end of the debate noble Lords would offer me large amounts of money. However, rest assured that I do not intend to do that.
I will concentrate on only two of the many virtues of the charitable sector—its ability to campaign for and facilitate social change and its ability to help disadvantaged people to speak for themselves.
We have heard about the increasingly important role which the charitable sector plays in our society and we know that charities face many changes because of the shifting role of the state and the fact that voluntary organisations are increasingly being drawn into provision of services.
But we should never forget that there are many charities which do not undertake service provision and which only focus on helping individuals gain access to information and helping them to develop. Sometimes this development can be quite spectacular, as it was with Doris, a carer who, finding it impossible to obtain any support in her local area in her caring role, set up her own carers group. At first the group was simply focused on mutual support, a chance to share troubles and find someone else who had the same difficulties as herself. Gradually, Doris found that she was developing her own knowledge about benefits and services to such a degree that other members of her group were turning to her for advice. As their strength and confidence grew, the group, led by Doris, began to look outside and to get its voice heard in the local media and by the local authority. They became a branch of CNA and, with advice from our head office, began to operate very effectively as a campaign group. At this point Doris's husband, for whom she was caring, died and she withdrew for a while to cope with her grief and bereavement. Later on, she returned to the group, and as she was no longer caring, was free to do even more work and to attend even more evenings. She became a representative of carers on the social services committee and, eventually, having joined a political party, successfully stood for election to the council. The last time I talked to her she told me she had hopes of becoming an MP. Lest any of your Lordships feels I am making a party political point, I should point out that she hopes to represent the Conservative Party in another place.
Noble Lords will be aware of many similar examples where self help activity leads to active citizenship—thus benefiting not only the individual but society itself. Not every individual can represent themselves and it is for them that the campaigning charities exist. As well as alleviating distress, the campaigning charities have a proud record of bringing social, health and environmental issues to public attention. Abuse of children, protection of endangered species, the plight of the homeless, and rights for people with disabilities would not have come to public attention without the work of charities. I hope it is not immodest to claim that the contribution of the 7 million carers in the UK and their recognition now in public policy is almost entirely due to the work of Carers National Association and our colleague organisations in the Carers Alliance.

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I am sure that noble Lords were moved, as I was, to hear the noble Baroness, Lady Fookes, speak of her own caring experience in her splendid maiden speech.
It is frequently claimed that the campaigning role of charities is threatened by the so-called contract culture. If you are dependent for your survival on the local authority contract, can you really be pro-active in criticising that local authority for the quality of services? It is, I believe, a problem we must acknowledge and it is the reason why my own organisation, CNA, has set its face very firmly against becoming a service provider.
I confess that I used to be very depressed about this situation. I used to think that the campaigning aspect of charitable work would be unable to grow and develop because the only way in which charities would be able to survive financially would be by taking on service provision contracts. I am happy to say I am more sanguine about this than I used to be for three main reasons.
Charities are realising that contracts can be withdrawn as quickly as they can be agreed—indeed more quickly. There are around us too many sad stories of charities which are on the point of closure or bankruptcy because contracts have suddenly been withdrawn. The staff of the charity has been increased to cope with the demands of the contract, but income and staffing levels cannot be maintained unless the contract continues.
The second reason is that campaigning charities are finding that money is available to fund these activities, contrary to the popular wisdom that no one will give money to campaigning activities because of their so-called political connections. Charities, however, are increasingly learning that if you become politically sophisticated you can be "small p" politically active and politically effective while remaining "large P" politically neutral. Increasingly, partnerships are being developed between charities and the commercial sector which will provide funding for campaigning activity, because the thing which campaigning or, as we often call it in terms of private sector partnerships, "awareness raising", can provide is public profile which companies need.
These partnerships are proof that the relationship between charities and the private sector is increasingly a two-way street. The days of charities just expecting a donation from the private sector are perhaps coming to an end and I for one will not mourn that if we gain, as a replacement, a more equitable situation. I am extremely grateful for the support CNA receives from many companies in the private sector. Increasingly I negotiate with these companies with much more confidence about what CNA can bring to the table too. A company may wish to have a caring image, to be seen to be supporting a group in society which is well regarded, to meet politicians and policy-makers at events. There is no problem with that because CNA needs access to the companies' consumers to help them recognise that they may be carers, and we need funding for our publications and our events. The end result is better information and more profile for carers. I am glad to say that CNA's partnership with Centrica (British Gas) to help us reach
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more carers has been sealed recently with the appointment of its chief executive, Roy Gardner, who is our president.
The third reason why I am increasingly confident about the role of campaigning organisations is the increased emphasis on user control of charities. Let us admit that many charities are still paternalistic, even patronising, in the way they are run, but the move to user control is gathering pace and most people would applaud that.
User control is not without its challenges, indeed conflicts, for charities. On the one hand, we are all told we must operate effectively, efficiently, compete in the market place and use business techniques. Trustees are expected to bring skills in these areas, but they must also be prepared to take on the serious responsibilities which the Charities Act made explicit. On the other hand, as the movement to user control gathers pace, it may soon be difficult to raise any statutory, trust or lottery funding without being able to prove that users are adequately represented, if not in control.
For most charities the challenge of user involvement can be viewed as developing particular kinds of partnership, rather than a take-over by users. The exciting thing is that we can view it as a model for society itself for pushing forward the agenda which will enable hitherto socially excluded groups to become empowered and to become real stake-holders in our society. Charities must embrace this concept as they show every sign that they wish to do, otherwise they will lose the support of the very people they are there to serve, their own beneficiaries.
I have every confidence in the ability of the charitable sector to make these changes, enabling charities to continue at the forefront of social change, as they have been for over a hundred years.
7 p.m.
Earl Haig: My Lords, I would like to add my thanks to my nephew, the noble Lord, Lord Astor of Hever, for initiating this debate. He has rendered great service to a number of charities and has not escaped the mantle of his grandfather in ex-service organisations. I am sure those organisations will benefit greatly from his participation. Charities must ask themselves three questions: does our charity do a job that is necessary; does it do it well; and do the public respond? All charities have to look at the situation and consider whether some of their systems and institutions need to be reformed, or whether some of their initiatives need expansion and others need to be quietly withdrawn due to the change in habits and needs of contemporary society. They should always aim at improvement. My purpose in joining in the debate is to portray some of the work of the Haig Foundation and in particular its work north of the Border. Although it is the smaller sister of a much larger organisation south of the Border, it has its own autonomy. It plays a role which is smaller than that of what we term the "other legion". Any figures which I give for Scotland are approximately one-tenth of the figures for the rest of the UK.

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In Scotland, the legion and the Haig Fund have shouldered jointly much of the heavy task of rehabilitating ex-servicemen since the First World War. They were set up slightly differently from our sister organisation south of the Border. Our benevolent funds, our grants to individuals and to institutions, our buildings and properties, our poppy factory and our homes are the responsibility of the Haig Fund and independent of the legion. They are administered by committees throughout Scotland upon which serve people who are good at business matters—lawyers, accountants, bankers and so forth. Thanks to their guidance, the benevolent money has always been well supervised.
Although the Poppy Appeal is not their responsibility, much of the poppy collection is organised by legion branches. The legion's share of that collection is used to assist in legion welfare and pension work which is conducted on behalf of all ranks in conjunction with the War Pensions Agency. The structure of war pensions, which is the responsibility of the state, must always be maintained. They are awarded to veterans of past wars and the many younger men coming out of the services who find difficulties when they enter civvy street.
As the numbers of ex-servicemen decrease, our three organisations have to concentrate available funds where the needs are greatest. There are many cases of hardship. I am always impressed by the courage and dignity of those in need. They are part of a population of service and ex-servicemen and women which currently numbers in Scotland 0.6 million. A further 0.9 million dependants are eligible to seek assistance from all or some of our charities.
Although the Scottish ex-service population is likely to fall in the next 10 to 15 years, demands on the charities' services and resources could increase if we assume that the remaining veterans of World War Two and National Service will be in their 80s by then. The joint secretariat was established 15 years ago under my presidency in order to streamline our three organisations and to avoid wastage due to duplication of staff. That system enables our management to plan ahead and to receive maximum information about the cost of our various enterprises.
Apart from our income from investments, the main source of our funds is the Poppy Appeal which brings in over £1 million a year. Part of that is allocated, as I have said, to the legion and the Officers' Association. All three organisations have their own capital, their own accounts and their own constitutions. The main difference between the legion and the others is that it is democratically elected.
From time to time outside advice is obtained about cost and salaries and ways to streamline the three organisations. The cohesion between them is satisfactory, and there is little duplication and wasted effort. But in Scotland there is a need for closer co-operation between all the various ex-service organisations, of which there are over 80. Those different organisations are not always aware of the way sister organisations are handling similar problems to their own, work in some cases being duplicated, particularly in matters concerning housing and homes.
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There is a need for ex-service people to have a single point of contact, from which government departments could also benefit. With the changing political structure in Scotland, ex-service charities will need to be able to address issues directly to a Scottish parliament. One point of contact does exist, although still in embryo; namely, an amalgamated body called SESCO (the Scottish Ex-Services' Charities Organisation). An expansion of that agency would be beneficial with the setting up of Select Committees on housing, healthcare, welfare, benevolence and finance.
I understand that there will be a tightening up of the law and accounting rules governing charities in Scotland to bring us more in line with the Charity Commission in England. I understand also that SESCO is considering making an application for charitable status to the Inland Revenue. Although I am in favour of developing that system of centralisation, I would not want to undermine the present system where individual organisations retain their autonomy. Much strength is gained when people involved in committee work have their own particular concerns at heart, and their individual experiences enable them to address those concerns.
The links between the Royal British Legion Scotland and the Royal British Legion south of the Border are strong. We have a co-ordinated policy for the benefit of ex-service people throughout the UK. Those policies are helped by office bearers from both legions attending one another's meetings. We also share membership of the British Commonwealth Ex-Service League which helps to succour men and women who fought under our flag and who suffer severe hardship.
The two legions marched together on the VE 50th Anniversary parade when the Scottish representatives flew down in a jumbo. The national coverage of the ceremonies at the Cenotaph and in the Albert Hall on TV enhances our image. The publicity work of both legions helps the public to maintain a generous response to the Poppy Appeal. The fact that so many people wear poppies in indicative of that response.
My father's appeals for legion membership retain their meaning today, although the numbers of disabled and the extent of the suffering is mercifully less. In a speech in 1919 he said:
"We feel convinced that unless there is a great society in this country whose business it is to watch over the interests of the disabled, the orphan and the widow, their interests will suffer at the hands of the state".
The other legion's membership stands at 620,000 which, together with our membership of about 60,000, constitutes what my father described as a "great society".
Headquarters, down to the rank and file, can communicate with one another by computer. The legion's reorganisation has made possible the removal of one tier from the national structure. It has installed a specialist fund-raising division to broaden the scope of its fundraising. In order to support the increasing demand on its welfare services, fundraising is now an all-year round activity. Like us, it has improved the efficiency and cost-effectiveness of providing welfare. It has created a full-time county field staff to make the

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process faster and more direct. It has stepped up its campaigning on ex-service issues and increased its standing with government and Whitehall.
The British Legion has thrown off the perception that it is an outdated institution devoted mainly to beer and skittles. It is, as it always has been, a caring institution, inspired by its motto "Service not Self". This debate will help to promote the purpose of its work in the minds of the public.
7.7 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Astor of Hever, for initiating this important debate, enhanced by the excellent maiden speech of the noble Baroness, Lady Fookes. Your Lordships' House must be the biggest reservoir of knowledge about charities in the world. Today's debate has illustrated that. It gives us an opportunity to bring to your Lordships' notice some of the concerns facing many charities at present.
Charities can often provide small scale, specialised services, particularly in the field of personal care, which would be technically more difficult, and thus uneconomic, for public sector social services to provide. They can also respond rapidly to changing social conditions in a way that governments sometimes cannot. Charities can respond quickly to changing patterns of need. The volunteering factor adds value to the charitable sector, not just in terms of time but in the commitment and enthusiasm of volunteers.
I have a very serious plea to make to the Government. The countryside, with its enormous march in London on Sunday, has been in the headlines. Today, I wish to bring to the notice of your Lordships the problems of very severely disabled people who live in the country and who cannot even walk. I have not heard that mentioned in any countryside debate. They cannot use public transport if it exists and sometimes cannot even use a car.
There are in some local areas small charities providing buses or minibuses with ramps for wheelchairs which, with volunteer drivers, give severely disabled people some means of getting out of their homes or hospitals. If more tax is levied on petrol it will put that much extra expense on to the small charities which provide a meagre amount of transport for blind and disabled people. I hope that the Government will realise the extra expense which will be imposed on transport in rural areas and the loneliness and isolation which, if they are not helped by those local charities, some disabled people suffer.
The variety of disabilities is very complex. Over the years, many disabled organisations have emerged which are organisations of disabled people rather than for disabled people. These self-help, specialised organisations can promote their members' unique needs. This has been one of the changing faces of charities. Of course, some people with certain illnesses or disabilities have to have able-bodied people speaking for them. Therefore, there has to be a clear definition and constitution for each charity and the individual needs of
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members should be taken into consideration by the Charity Commissioners. An example of that has been the Charity Commission being tough in demanding in annual company returns details of the expense claims of all governing council members. Yet it appears to have been lax on some big issues. That matter has been brought to my attention by the Spinal Injuries Association, whose council members have all had broken necks or backs and are paralysed and whose travelling expenses will therefore be greater, as often public transport cannot be used.
Trustees of charities seem to have piled on them many worries and fears that they will be liable if their charities get into serious debt. Therefore, charities have had to change into very professional organisations.
The tragic death of Diana, Princess of Wales, has left a deep vacuum in many of the charities dealing with drug addiction problems and HIV and Aids. Not only did she bring understanding and compassion to the unfortunate sufferers, but she gave an important impetus to the charities' fund raising. These charities are very important, but they often have difficulties in procuring funds. As was said by the noble Lord, Lord Mancroft, there is concern about the funding through special lotteries. I hope that the Minister will give sympathetic consideration to this issue.
Many charities which undertake residential or nursing home care for a variety of severely disabled or ill people, such as people with HIV and Aids, are having particular difficulties making ends meet. If health authorities or social services withdraw their funding for beds, those charities will go under and then the patients will be returned to statutory care. That may lead to hospitals without palliative care and a home-like atmosphere, and hospitals returning to having their beds blocked by patients with a long-term condition. I hope that the Government will realise this as the charities' residential homes come under threat of closure. Indeed, some have already closed.
What worries me is that many excellent projects which have had money given to them by the Government and from voluntary fund-raising in a pump priming three-year exercise will then have their funding withdrawn. A great deal of time and effort goes into planning. When the funding ceases and the charity has to close its doors, the patients are thrown back on to the statutory services. The needs then re-emerge and the whole cycle starts all over again.
That does not inspire confidence in people who give their time, money, energy and expertise to these projects. It also wastes much needed public funds. Many charities have struggled on for some time, going from crisis to crisis. Will the Government look into these combinations of providing residential care and find a better long-term solution, so that the serious matters can be better provided for without so much wastage of human resources? Charities providing accident prevention do an excellent job in highlighting many dangers which emerge in a fast-moving society. They should work very closely with government departments.
I conclude by asking the Minister whether he will give an undertaking that charities will be listened to. I am sure that society can benefit when charities and

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government help each other, so long as the charities can keep their individual freedom in order to develop creative and inspired projects which fulfil the needs of communities.
7.17 p.m.
Baroness Hooper: My Lords, I, too, welcome this timely debate and congratulate my noble friend Lord Astor on the clear and positive way in which he introduced the topic. It is clearly important to many of your Lordships, but also to the many people up and down the country who generously give time, energy and support to an amazing variety of activities which enrich and improve not only the lives of other people, but also the welfare of birds, animals and other creatures, and, indeed, the preservation of our heritage, whether buildings or the natural environment.
Like many other noble Lords, I am involved in a variety of charities and voluntary organisations. Therefore, I have had the opportunity to see at first hand the efforts of those who freely give service in this way. That has been recognised by all noble Lords who have spoken today and by none more so than my noble friend Lady Fookes in her excellent maiden speech.
I agree with and support so much of what has been said about the treatment of charities, the functioning of the National Lottery and the PRONTO initiative of my noble friend Lord Mancroft. But these issues have been well discussed and spoken to. Therefore, I wish to concentrate on a particular educational charity. It is the GAP organisation of which I am a patron, as are other Members of your Lordships' House.
GAP stands for Gap Activity Projects. It is an educational charity which assists young people to broaden their perspective and experience by travelling overseas and working as volunteers in communities where they are needed. In most cases, the young people or their parents make a contribution to the costs.
The GAP organisation is essentially run by volunteers for volunteers and is currently sending 1,300 young people overseas to assist in such areas as teaching, caring, conservation and outdoor education. On arriving in the Falkland Islands last December, 1 was rather surprised to discover that there were no fewer than eight GAP students working in various ways; for example, in the local museum, on farms, and so on. In addition, GAP will be bringing over 300 volunteers from overseas to this country and wishes to increase and develop that aspect of its work.
From the stories that those young people are able to tell of their experiences, it is clearly a personally enriching period in their lives and one which prepares them, in many cases, for making more of their university and other career opportunities. However, it is also a scheme which can provide help and service to people in remote countries and communities throughout the world. This is greatly welcomed.
There are three issues which I have been asked to raise. I appreciate that the Minister may not be able to respond to everything that has been said in the debate. If that is the case, I should be grateful if he felt able to write in reply to my questions. The first issue is the
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need to encourage the broader educational experience to which I referred and which the GAP programme represents. I think, in your Lordships' House, that the need and importance of this is self-evident, especially when there is increasing anxiety about young people and their disengagement from society. There is a need to encourage them to play a more active part in citizenship. However, notwithstanding the fact that I believe that that is generally appreciated, it would be most welcome if the Government (who campaigned so successfully during the election last year under the banner, "Education, Education, Education-), felt able to recognise that this type of broader educational experience is important and should be encouraged and developed.
The second issue is the subject of post qualification application to university, which, again, the Government are currently considering. The main concern is that the current time-scale allows young people to apply for a GAP year one year in advance, giving time for selection, training, fund raising, and so on. In that way, a young person can make his or her commitment to the organisation or community in which he or she plans to spend the GAP well in advance. Currently, most decisions about applying to university and the GAP organisation are made concurrently and that works.
Therefore, it would be helpful if the Government, in moving to a system of post qualification application, would provide those in the GAP organisation with a clear means of communication to the Department for Education and Employment in terms of being able to provide information from their experience and being able to explain clearly their needs. They should also be included in the consultation process which is taking place as well as being involved in any pilot schemes that are envisaged.
My final issue relates to the Government's announcement of their Millennium Volunteers programme, which is a most welcome initiative. I hope that the Minister will be able to reassure me and the GAP organisation that the Government will be flexible in their approach to that programme and that they will incorporate overseas volunteering in part of that programme.
I am not asking for funding this evening, although all that has been said about that, about tax and about other issues will be of interest to the GAP organisations. I am asking for understanding and appreciation of what organisations such as GAP are doing and for the role of volunteers in giving time and the benefit of their experience, as my noble friend Lord Quinton so clearly emphasised earlier. As my noble friend said in his opening remarks, charities are about giving and that does not only mean giving money. I fully support the Motion.
7.24 p.m.
Lord Chorley: My Lords, as the noble Baroness, Lady Masham, observed earlier, today's debate has shown that we are discussing a subject of which we in this House have quite unrivalled experience. I believe that every noble Lord who has spoken has had an

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interest of one sort or another to declare. I am no exception in that respect. For nearly six years I was chairman of the National Trust, and I am currently deputy chairman of the British Council. I believe that they are probably Britain's two biggest operating charities. Although the British Council is about twice the size of the trust, they both constitute quite big businesses.
As I listened to the debate, two points struck me most forcefully: first, the sheer size of the charitable sector; and, secondly—this is perhaps more interesting—the sheer variety in terms of size, especially in terms of activity, and the way that charities are, so to speak, leaders in innovation as regards penetrating and opening up new areas.
The latter was forcefully brought home to me when I visited the European Commission in Brussels. The continental concept of a charity—and the noble Lord, Lord Dahrendorf, will correct me if I am wrong—seems to be much narrower. Indeed, I am not even sure whether they have a proper concept of charity as we do. Perhaps for that reason, and also because, typically, the continentals rely much more on state provision than we do, the range of activities pursued is far less rich than is the case in this country. At any rate, people in Brussels found it a little difficult to come to terms with the size of the National Trust—for example, the fact that we own nearly 2 per cent. of the land of England, Wales and Northern Ireland and that we have today over 2.5 million members or 3,000 permanent staff—and the sheer range of our activities. Indeed, they found it most difficult to understand how we fitted in with the rest of the United Kingdom.
I make that observation solely to make the point and emphasise the need to keep a close eye on what goes on in Brussels, so that policy formulation and prospective directives are not inimical to us due to ignorance of the charitable sector in Britain. I do so also to draw their attention, and sell to our continental colleagues, the sheer richness and vibrancy of the sector as it has developed in the UK.
The second preliminary observation that I wish to make is to note the importance of the sector's regulatory body, the Charity Commission. The 1992 Act in that regard was a major milestone, and this House played a significant role in the passage of the legislation. The Charity Commission was given new and much clearer powers and purposes and, to match its new responsibilities, much greater resources. There has been a huge increase in the number and range of charities. Therefore, the legislation was timely and the revamped Charity Commission has, in my view, operated both effectively and sensitively. It has been a positive force seeking to help the sector develop sensibly and properly rather than creating a bureaucratic straitjacket, as so easily could have been the case.
The other arm of government which concerns us and about which we have heard much this evening is, of course, taxation. Frequent reference has been made to VAT. I shall add but one slightly different observation. The Byzantine nature of the VAT legislation is quite
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extraordinary. I shall give your Lordships one example. If we in the trust incur VATable expenditure on the maintenance of our open space properties, we pay that at the 17.5 per cent. rate. However, if a local authority carries out exactly the same work (and sometimes such authorities do so as our agents) no VAT is incurred. If that is not an anomaly, I do not know what an anomaly means. We have taken this matter up on several occasions with the Treasury but have got nowhere. Coupled with that is the sheer complexity of the VAT legislation which creates a huge administrative burden on the taxpayer. For example, our internal VAT manual in the National Trust runs to 200 pages.
The withdrawal of ACT has been mentioned. I shall not say any more about that except that it will cost the trust about £3 million a year. I am confident that if a cost benefit analysis was done it would show that the loss of revenue to the charitable sector—or the gain to the Treasury, shall we say—would be more than offset by the additional expenditure that, one way or another, the Government would be bound to incur to fill in as it were the hole that is left.
I shall turn briefly to two quite different aspects of running large charities: the use of volunteers and the remuneration paid to staff. Volunteering has been touched on in the debate. It is often associated with charities and has grown enormously in recent years. It is an important part of our social and economic life. I do not suppose that it figures at all in the GDP statistics as it is unpaid. Yet in the trust well over 30,000 people, young and old, give a significant amount of their time each year to a whole range of activities. No doubt the British Trust for Conservation Volunteers has even more volunteers.
Using volunteers is not always a straightforward matter if one is to get real value from them and they from the volunteering. First, they need to do proper and necessary jobs. Therefore their work needs to be planned and they need to be managed. They work alongside and are supervised by paid staff. So there is always a relationship which is very different from that in the normal workplace. This can demand careful handling. But if one gets volunteering right, it is hugely productive and satisfying to both sides. The voluntary effort is worth millions of pounds a year to the trust.
I now wish to touch on the remuneration of staff who run a charity. I believe that point has not been mentioned this afternoon. I have particularly in mind the senior staff of large charities. They need to be properly paid. That may sound a blindingly obvious statement but it is nonetheless surprising how often otherwise sensible people have absolutely no idea of what this means. Partly this is due to ignorance as they often have little idea of what is involved in running large organisations, or of pay levels. Somehow they assume that a charity must be run differently. One detects, too, a sense that the senior staff should, as it were, be part of the charitable ethos. However, we have to recognise that the larger the organisation and the greater its complexity, the higher the calibre of management that is needed. Charities are no exception to that. One needs management that is commensurate with the nature of the job. I am not talking about commercial or City pay

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levels, but I am talking about reasonably adequate pay for people who are doing just as demanding and responsible a job as those in organisations of a comparable size and complexity in industry and commerce. It is unwise to overtrade on the goodwill of one's staff. One should always be mindful of the old adage, "If you pay peanuts, you will get monkeys".
I should also like to see these large charities show a wider acceptance that it is both proper and desirable for trustees—who devote a considerable proportion of their time to the charity—to be paid a reasonable honorarium. This applies particularly to the chairman of the trustees who carries the ultimate responsibility for good governance. The reason for this is simple; namely, to rely on people who are rich enough to do the job unpaid is to restrict the field from which the chairman can be found. There is a real risk of getting people who are either too old or past their "sell-by-date". I do not wish to labour those two points but I should like to see a wider recognition of what is involved in running these big charities. Ultimately it is for those of us who are involved in this world to educate our constituencies, but recognition and support by the Charity Commission would be a great help.
I have one final thought and that is that the relationships and constituencies involved are far more complex than those in the commercial world. I refer to the notion that because there is no "bottom line" and no profit test, running a charity is less demanding, which is, in fact, the reverse of the truth. The bottom line is a tremendous discipline. No bottom line means that performance is much more difficult to monitor and to manage. Despite this, if one manages to get things right in a charity, it is hugely rewarding to be in that business and to be responsible for running a charity.
7.35 p.m.
Lord Annaly: My Lords, I thank my noble friend Lord Astor for instigating this debate this afternoon. I also congratulate my noble friend Lady Fookes on her excellent maiden speech.
Those in this long list of speakers have highlighted a range of charities, their aims and the challenges which they face. First, I wish to say a few brief words about charities in general and the vital role they play in many cases in providing services to the disadvantaged and sick. Charities normally carry out work of a caring nature but tend to come from a different direction from government. Charities are generally willing to take risks where a health authority or statutory sector body may not dare to do so. For example, a charity may try all kinds of ways to find a cure for some illness, or they may try out a completely new service. Charities will often operate where no one else wishes to do so; for example, in war torn zones. Charities will work with client groups that others find difficult or unpleasant, for example with those who are dependent on drugs and in "wet" hostels.
Charities are often experts in a highly specialised field; for example, like SIGN—Campaigning for Services in Mental Health and Deafness. It is the charity for which I am a trustee. I here declare another interest
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as I have a sister who falls within the SIGN client group. My late father and my stepmother were responsible for setting up this charity. SIGN aims to offer a range of services to deaf people who have experienced mental health difficulties and who are striving to live independently. The charity was formed in 1986 to address the needs of this neglected and disadvantaged group of people. Of some 8.7 million people in England and Wales—that is, one in seven of the population—with some degree of hearing loss, about 62,500 (that figure is supplied by the British Deaf Association) rely on sign language as their first or preferred language. These people suffer from prejudice and discrimination. The hearing public do not easily recognise that someone may be deaf as there is probably nothing visible to show that that is the case. These people are also unable to speak up for themselves. SIGN is the only organisation which exclusively seeks to improve the provision of facilities for profoundly deaf people with additional needs.
In 1993 SIGN opened its first supported housing project in Balham, London. The large Edwardian house was converted into six studio flats with access to a communal area. Serving as a home to six residents it has been the basic model from which SIGN has developed other similar units around the country. There are two in Manchester, one in High Wycombe and a second one in south west London. Others are currently under development. The benefits to residents, many of whom have moved from long-term institutional care, are clearly measurable. With the aid and support of dedicated carers clients have learnt new life skills and, in addition to their mental health conditions having stabilised, they are moving towards a greater degree of independent living. This is an example of a charity in a specialised field working alongside government departments, providing services—care in the community—for marginalised groups for whom statutory services are either not provided or are not appropriate.
Government reports and social services inspectorate reports have indicated how poor statutory services can be for such groups. SIGN has long been concerned with the severe lack of facilities for deaf children suffering from mental illness or mental health problems. In 1995 SIGN agreed to develop a national psychiatric service for deaf children in partnership with Pathfinder, a mental health trust based in Wandsworth, London. Central to the proposal was the building of a single unit combining a psychiatric in-patient unit and long-term residential treatment centre, both specifically for deaf children, and both unique in the UK.
At the moment—noble Lords may not believe this—there is only one psychiatrist in this country who works specifically with deaf children, and he is in London. A suitable property was purchased in May 1996 and planning permission for the 10-bed intensive therapy unit and an associated six-bed residential treatment centre was granted in October 1997. That is an example of how charities can work in a collaborative way. There is currently no such service in existence and without SIGN there would still be no service. It is SIGN's expertise and money which will get this service

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developed. But in conjunction with the Department of Health, an NHS trust and other charities a new national service will be developed filling a current void. The funding of that £3 million plus capital project of the National Children's Service will be a challenge.
That brings me to my final point. I ask the noble Lord, Lord Hoyle, to convey to the Government my strong belief that Pronto!, the charity lottery, should not be restricted as proposed by the Government to one draw a day, as Pronto! would in due course be of great benefit financially to many charities. In the three months that it has been in existence, I believe that it has already raised £300,000 for five charities, with other donations due to a number more. SIGN is not on Pronto!'s list of contracted or registered charities, so I have no interest to declare although financial support from Pronto! would undoubtedly help SIGN get the National Children's Service off the ground.
I understand that the Government have some concerns about Pronto! but I have not read one which really stands scrutiny, taking into account the availability of scratch cards and the easy access to gaming machines for those under 16 years of age. I understand that Pronto! outlets would be in pubs, and only for use by those aged 18 and over. I would very much like to associate myself with the remarks in this regard made by my noble friends the Duke of Norfolk and Lord Hayhoe. It would appear that the Government's real but unstated objection to Pronto! is in fact the potential impact it might have on the National Lottery, of which they are taking, seemingly, a larger cut. I hope that the Government will think again and consider the benefits that Pronto! will provide for many charities like my own.
7.43 p.m.
Lord Dahrendorf: My Lords, we are nearing the end of a wide-ranging, important and, in some ways, rather moving debate. Perhaps I may explain why I use that word. When we reach the end of the debate, 28 Members of your Lordships' House will have spoken. With no disrespect intended, perhaps I should say that 27 volunteers and one government Minister will have spoken. Everyone has referred to charities in which he or she is involved. Twenty-eight other Members of your Lordships' House might well have spoken in addition, and many would have liked to do so. In itself it is a rather significant fact. No doubt some of us are here for the good things we have done. I assume that that is most certainly true for the right reverend Prelates on the Bishops' Bench. But it is quite striking—is it not?—that many of us are invited to take part in the life of charities not least because we are here.
In some ways it has become one of the unspoken functions of your Lordships' House that many Members should be involved in voluntary and charitable activities of many kinds. I cannot think of a second chamber anywhere else for which the same statement could be made. I for one would regard it as deeply regrettable if that strength of your Lordships' House, along with others, were lost.
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Much has been said about the motives of charities. I found memorable the maiden speech by the noble Baroness, Lady Fookes. She spoke about community formation as one of the effects of a strong voluntary sector, and about pioneering. My noble friend Lord Dholakia added an important motive: that people want to give. They do not want just to obey or make money; they have other motives. We are all complicated and have a range of motives. One is that we wish to make a contribution to the community. That does not fit readily into the language of either the state or the business sector, if I may use that essentially ugly sector language.
I can confirm what the noble Lord, Lord Chorley, said in comparing this country with others. One must be careful not to lump all continental countries together. For example, Holland has many similar features to the United Kingdom, as has Switzerland, in another way. But there is a clear distinction between what I sometimes call civil societies on the one hand and state societies on the other. It is a fact that the institutions of liberty, the rule of law, and democracy are better anchored in countries in which there is a vibrant sector of activity which does not readily fit into the dichotomy of business on the one hand and state on the other. That is why it is so important that we preserve the voluntary sector, the charity sector, with which we are concerned today thanks to the splendid initiative by the noble Lord, Lord Astor of Hever.
I can associate myself with many remarks made, notably by the noble Baroness, Lady Young of Old Scone, the noble Lord, Lord Ponsonby, and the noble Earl, Lord Sandwich. Many others have spoken in a similar vein. I wish to pick up two points on the relationship between charities and the voluntary sector in general, and Government. It is a sensitive area. Some topical developments have rightly been touched on by many who have spoken. One topical area relates to finance. I am the chairman of the Council for Charitable Support. It is a voluntary, non-representative umbrella organisation, and a place for, I hope, intelligent and useful debate. In that capacity, I have been slightly worried recently about contradictions in statements about charity income. It does not help the charities that it is not entirely clear whether there has been a decline in income in recent years. It is high time that the charities and Government got their act together and produced reliable statistics. I am pleased to hear that the Home Office is co-ordinating an exercise to find out the effects of the lottery. I understand that the first publication is expected fairly soon. I hope that organisations such as the National Council for Voluntary Organisations, and the Charities Aid Foundation (CAF) will make their contribution in getting the facts right.
Having examined the evidence, on one item I have no doubt at all. There is a gap between actual giving and potential giving. It is probably quite a large gap. A recent study by Professor Pearce of University College, London, suggests that the gap is enormous. It is hard to quantify. To do so, one has to use methods which need effective scrutiny. However, I am convinced that there is such a gap. The question is: what can those

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of us who believe in a vibrant charitable sector do to close that gap; and is there anything we can ask the Government to do to help?
A great deal has rightly been said about the tax review. The Minister will correct me if I am mistaken, but I understand that the current tax figure in so far as it relates to charities is fairly technical. It is quite unlikely to come up with proposals which even close the gap that will be opened up by the losses from advance corporation tax. However, apart from the current tax review, there is now an increasingly lively debate on more radical changes in the taxation system. Those of us who would like to see significant changes should not fix our attention on the immediate review, but should contribute to a wider debate which, as sometimes happens, may lead to results earlier than a detailed examination of a whole lot of Customs and Excise questions.
In that connection I want to associate myself personally and without reservation with the remarks of the noble Lord, Lord Quinton. If we want to close the gap between potential and actual giving, the easiest way to go about it is to turn the incentives for institutions into incentives for individuals, and enable individuals to deduct from their own tax the donations that they wish to make to charities. Like the noble Lord, Lord Quinton, I am well aware of the abuses of that system in the United States, and also of the difficulties of transition from one system to another. Nevertheless, one could make a start. I hope that the notion of a start of this kind will be high on the agenda for the wider discussion of tax reform in relation to charities.
Another point that is topical and important has to do with the famous "compact"—in other words, with an agreement, a text, a treaty almost, between government and the charitable sector. I am in favour of a compact, but of one which is light and generous. By "light", I mean that the text must be short; it should contain a few principles; it should not be detailed. And by "generous", I mean that it should be liberal; it should recognise what so many noble Lords have said—namely, that charities need the air of independence if they are to get anywhere at all. They must not become para-governmental institutions.
I know enough about the charitable sector to realise that there are charities which are very close to government. I understand that certain rules have to apply to them which do not necessarily have to apply to many of the others mentioned. I hope, therefore, that the compact will not be forced on unwilling charities. I hope that, when it is concluded, it will be possible for charities to opt in and opt out, so that we retain the large number of independent, perhaps idiosyncratic, charities—those based on an idea which not many people share but which nevertheless has its place in the free country in which we are fortunate enough to live. In other words, I should like to see a compact that respects the basic principle so generally supported in this House that charities are, after all, as I described it in a previous debate, a world of creative chaos. They are not, and should not be, wholly organised; they are a
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creative ferment in a free society. I very much hope that the compact will not change that, and that the tax debate will help it.
7.55 p.m.
Lord Henley: My Lords, as the 27th and final volunteer before the noble Lord, Lord Hoyle, comes as a conscript to the Dispatch Box, perhaps I may say what great pleasure it gives me to thank my noble friend Lord Astor of Hever, and to congratulate him on introducing the debate and persuading so many Members from all parts of the House to offer their experience of the charitable world. The noble Baroness, Lady Masham, talked about this House having the largest reservoir of expertise on charities anywhere in the country or anywhere in the world. She is absolutely right. A vast array of different subjects and different charities have been mentioned.
The noble Baroness, Lady Young of Old Scone, began the debate with the RSPB, and it ranged through lifeboats, the RSPCA, Christian Aid, to the Church Urban Fund, hospices, Butterstone School, the Drug and Alcohol Foundation—I could go on. We have covered a very great deal in four or five hours of debate.
It is right that a great many noble Lords have brought their own personal experience to the debate. I particularly commend my noble friend Lord Mancroft giving the House his views. I have to say to the noble Lord, Lord Ponsonby, that it is absolute nonsense to suggest that in doing so my noble friend breached the rules of the House. He quite clearly declared what his interests were, and made those interests clear to the House. If we followed precisely the noble Lord's interpretation of the Companion to the Standing Orders, we might be deprived of the expertise of salaried chief executives of charities and many others. I do not think that is the wish of this House.
As many noble Lords made clear, the moving of this Motion by my noble friend is highly timely. He stressed the importance to all of us of the charitable sector. Other noble Lords stressed its size and the sheer number of directly salaried employees—the figure was quoted as some 440,000. We then heard that there are about 3 million voluntary workers. My noble friend Lord Quinton referred to the 27 million others who were involved. That is an enormous figure of which we can be proud.
The charitable sector is of vital importance not only for economic reasons but for social reasons too. My noble friend Lady Fookes, in an excellent maiden speech—if we can call it a maiden speech from someone of such expertise and distinction coming from another place; but perhaps it was a maiden after so many years of self-imposed silence in the other place when acting as a Deputy Speaker—stressed just how much charities can do, at both local and national level, in fostering community values. She also spoke very firmly of what they can do given their flexibility. The noble Baroness, Lady Young of Old Scone, also stressed that their very flexibility, and—dare I say it?—disorganisation on some occasions, gave them advantages against which governments could not compete. We all accept that

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governments have a great deal to do. The vast mass of these matters must be dealt with by government. However, there are a great number of matters that are not best addressed by governments but by charities.
Perhaps I may give an example from my own personal experience in these matters. I remember taking round the collection tin for poppies for the British Legion in my own village. Perhaps in passing I may tell my noble friend Lord Haig how greatly I enjoyed working with him, and with the Royal British Legion and the Royal British Legion Scotland during my time as war pensions Minister some years ago, and just what an excellent job is done by the Royal British Legion. It is sad that we were deprived of the presence of the noble Lord, Lord Molloy, on this occasion. He would have been able to inform the House in detail of the excellence of their work.
When taking the collection tin round on that occasion I was greeted by a gentleman who agreed to put some money in but who said that he felt it was something the Government, rather than the voluntary sector, should be doing. He asked why the Government were not helping war pensioners and those disabled in the various conflicts of this century. Fortunately, being the war pensions Minister at that time, I was able to assure him that the Government did a great deal for war pensioners. I believe a little over £1 billion a year is spent on war pensions. But I had to say that, however much the Government do to help those in need, a great deal more needs to be done by the more flexible organisations which help war pensioners throughout the country. It is not just the Royal British Legion: a host of other organisations provide help and support of the kind that it is not always possible for governments to provide.
The other reason why I believe this debate is timely, as was mentioned by my noble friend when introducing the debate, and by others, is that we are perhaps seeing a long-term decline in the incomes of a number of charities. A study by the Institute for Fiscal Studies published in 1997 confirms the long-term downward trend that has continued for a number of years, but is not related to the lottery. For example, the proportion of households making charitable donations every fortnight has shrunk from 34 per cent. in 1974 to 29 per cent. in 1997.
As is also evident from last year's National Audit Office report, to which I shall briefly refer later, as a result of the decline in donations from the general public, charities have increasingly had to rely on grants from government, contracts with government agencies, tax reliefs, the sale of goods and services and especially investment income.
Investment income has also suffered, as a number of noble Lords have said. I hope that the noble Lord, Lord Hoyle, will deal with the question of how charities can make up the £300 million or £400 million that they have lost as a result of the changes to ACT announced last year. That is an enormous sum of money for individual charities. As the noble Lord, Lord Chorley, said, £3 million was lost to the National Trust purely as a result of that change. I believe that that is a matter for the noble Lord to address.
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This is, rightly, a timed debate, and in the time available to me there is a limit to the number of points I can put to the Government; and, as my noble friend Lady Hooper made clear, there is a limit to the number of points that the noble Lord, Lord Hoyle can answer. In fact, I do not believe that very many questions have been put to him but, even so, I suspect that there are far more questions than he can answer in the time that the House will allow him or the present composition of the House will tolerate at this time of night.
The first question I wish to put to the noble Lord relates to the charitable status of schools in the independent sector. This is an important matter on which we should like assurances. I should like to know whether the Government have any plans to change the status of the provision of education as a charitable object. As far as I know, education has been a charitable object since the charities Act of the early 17th century. I forget the date of the Act, but no doubt the noble Lord's officials can look it up and confirm that education has always been a charitable object. I should like confirmation that that will continue to be the case.
Secondly, I should like to underline the points made by my noble friend Lord Mancroft and many others. Do the Government intend to ban the Pronto! lottery? If so, when will they do it, and why will they do it when it is seen to be raising so much money for charity? That money is much needed when we have seen other sources decline or dry up over the years and when there is likely to be a further decline as a result of the changes to ACT.
I now come to questions of taxation and other revenue matters. The noble Lord will be glad to hear that I shall not deal with the question of VAT on churches. I have had the dubious pleasure of answering questions on that subject from the Dispatch Box opposite and I know what a tricky task it can be. The noble Lord has been asked that question and no doubt he will wish to respond to the right reverend Prelate in due course.
I should be grateful if the noble Lord could say something about the Government's review of charities tax law, which was announced in last year's Budget, and whether there is likely to be a response in the Budget on 17th March. The noble Lord will not be able to comment in detail but I should be grateful for any assistance that he can provide.
I wish to raise one other detailed point, which was touched on by the noble Earl, Lord Sandwich, relating to the Trustee Investments Act. As the noble Lord will be aware, that Act was introduced in 1961 to compel charities to spread their investment risks across a range of different investment vehicles. It was recently described by the Association of Charitable Foundations as a costly and out-dated straitjacket, which it claimed cost charities some £40 million a year. Before the election the previous government announced plans to scrap that Act, but because of the constraints of the 1997 election was unable to get the measure through the various parliamentary processes. It is my understanding that what was announced at that time was not considered

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to be politically controversial and I should be grateful to hear whether the Government are prepared to move on that matter.
My last question relates to funding. From the National Audit Office report of May last year we see that some 18 per cent. of funding for charities comes from the Government by way of contracts and tax reliefs and some 16 per cent. from grants. Much of that obviously comes in the form of core grants. There has been a degree of concern over the years that there has been a gradual shift away from core funding, on the occasions when government or local government provide support, to funding by use of specific grants. I very much hope that in any review of charities the Government will consider that matter very carefully indeed. I believe that it has considerable implications for charities.
8.8 p.m.
Lord Hoyle: My Lords, like other noble Lords, I am grateful to the noble Lord, Lord Astor of Hever, for securing this worthwhile debate. In view of the number of Members of your Lordships' House who have participated, it is unnecessary to say how much attention the debate has attracted. The noble Lord, Lord Henley, was right to point to the number of charities which have been referred to; it shows the wide interest of noble Lords in charities. That is important, and it has been a very valuable debate.
The noble Baroness, Lady Fookes, and I were colleagues in the other place. I did not realise that she was maintaining a Trappist silence whenever she was in the chair; we all trembled when she got up and addressed us! I am delighted that she has joined us and I look forward to hearing many more speeches from her from those Benches. They will all be worthwhile contributions. We all admired her contributions in the other place—when she was allowed to speak—and the great work that she does for charities. I am pleased that she took this opportunity to make her maiden speech on the subject.
The noble Lord, Lord Henley, was right, of course, that I cannot answer all the points that have been raised with me. In fact, I cannot attempt to answer all of them. But I would say to him that I have no intention, and neither would he if he were on this side, of pre-empting the Budget in any way. Nor would he expect me to do so.
I will try to answer some of the specific questions which have been asked, but first I should like to deal with general points. I think there has been general agreement, certainly shown tonight in the debate, that voluntary organisations and volunteers are vital to the United Kingdom. They are not fringe activities but are central to the fabric of our society. We all owe a debt of gratitude not only to the full-time employees, who number over 300,000, but to the volunteers, who number over 3 million. I am sure I carry all parts of the House with me in saying that we all wish to thank them for the work they do.
I now come back to the Government's position in relation to charities and volunteers. We believe that volunteering and community involvement are essential
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acts of citizenship. The role charities are playing in the modern world, and the demands placed upon them, are ever increasing and changing. We, in the Government place great value on their work: their contribution to the lives of millions of people has been immense. I think everyone would agree that they are essential, not only in the provision of services, but also because of the vital role they play in society. The voluntary sector has an enormous range and diversity. In the past, many of us have rather taken that role for granted. We aim to redress the balance as a government and to give it the recognition that it so richly deserves.
That is why, as in many other areas, we are committed to a partnership approach. We are developing a compact with the sector on this basis, as has been referred by many speakers tonight. Our belief is that the Government and the voluntary sector share many values and goals and that we can achieve far more by working together than by working apart.
The compact will be a statement of the principles which will underlie the relationship between the Government and the voluntary sector. Initially, of course, it will apply to central government but we hope that ultimately it will extend to all public authorities.
What I can say, here and now, is that that will be a very light touch on the rudder. There is no intention of interfering with charities as such. Charities must be independent. What we are offering them is a partnership between them and the Government. But, as has been emphasised so often, we have to take into account the diversity, and the difference between charities. That has to be recognised. I would hope that the benefits of the compact will be seen and that most charities, having seen what is happening, will want to join.
All speakers have agreed that the Government, in drawing up a framework, must encourage and support voluntary activity. A part of that framework must be provisions that ensure that, where appropriate, policy affecting volunteers and voluntary organisations is co-ordinated across Whitehall. On the other hand, as I say, charities' independence must be retained, and they must remain at arm's length from government. That will be achieved by good working relationships both informally—and I stress informally—and by regular bilateral liaison. Formally, a ministerial taskforce and working group will be set up. That will be chaired by my right honourable friend the Home Secretary. It will oversee and monitor the way in which the principles of the compact are put into practice and the way in which the principles of partnership are implemented across all departments. That is very important. The responsibility cannot rest with one department: it spreads across quite a number of departments. The working group held its first meeting two days ago.
For charities, a legislative framework is required. It only takes one scandal affecting a well-known charity, one question mark over the propriety or even efficiency with which voluntary organisations are run, to put in jeopardy the public's support and money. So we must bear that in mind as well.
Our aim is to ensure that the legislation meets current requirements without overburdening charities with unnecessary requirements. That is a matter which has

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been raised time after time by speakers. We do not want, in any way, to interfere with the particular nature of charities or the diverse work that they do. So we have set up the Better Regulation Taskforce. It has been established as an independent advisory body and will advise the Government on measures which improve the effectiveness of government regulation in relation to charities. The task force has a sub-group for charities and the voluntary sector. The main thrust of its current work is to review rules and regulations relating to government funding of the voluntary sector. We look forward to receiving its recommendations later this year.
I move on to the review of charity taxation. There, I may say that I take issue with the noble Lord, Lord Mancroft. It is not just a technical matter. It is the first time a comprehensive look has been taken at all charity taxation. The review includes both VAT and direct taxation. It has been widely welcomed by the charities themselves. Its aim is to see whether there is scope for the simplification of charity taxation.
Secondly, and again this relates back to the Churches, I understand what the noble Lord, Lord Henley, says in talking about this as a European matter and our difficulties in relation to VAT, which, once put on, cannot be reduced. But we are aiming to make Europe aware of our position on VAT as applied to charities and to see where we can go from there. We are hoping to publish a document for consultation in the spring. Obviously, and I say this to Lord Henley, I cannot pre-empt the outcome of the review, but the points that have been made in the debate will, of course, be brought to the attention of the review body. That review body is an inter-departmental one. It includes the Treasury, Customs and Excise, the Inland Revenue, the Charity Commission and the Department of the Environment, Transport and the Regions. So we are intent on helping the charities themselves. The main thing is to ensure that all the matters are considered in depth and the report will go out for consultation with the charities.
I shall now try to reply to some of the points that have been raised with me. The noble Lord, Lord Astor, and the noble Baroness, Lady Linklater, asked whether the Government will compensate charities for the losses in relation to ACT. I may say in relation to that—and again the noble Lord, Lord Henley, was another who asked me—that the reason for the abolition of tax credits on UK dividends was that it was part of a wider budget package, including a substantial cut, as has been said, in corporation tax rates. This was designed to promote economic stability and rebalance the tax system in favour of investment and long-term stability.
However, the Chancellor recognised the impact of the change upon charities in two ways. First, it was deferred for charities until April 1999. Secondly, we have provided for special compensation payments on a sliding scale over a further period of five years which will be worth nearly £1 billion. I know that it is a blow, and we do sympathise, but charities have nearly seven years to adjust to the change.
Many noble Lords asked about independence. I have already said that independence must be at the forefront in relation to the compact. The noble Lord, Lord Astor,
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reaffirmed the uncertainty of the law in the area of political activities. The law may be complex but the Charity Commission has published guidelines explaining within these rules what charities can and cannot do. The guidelines themselves were prepared after consultation with the charities.
The noble Lord, Lord Mancroft, and others asked about the lottery position. We sought advice on this and asked people for their views. Noble Lords have asked why there can be only one draw per day. All the views we received are being considered at the moment. The noble Lord, Lord Mancroft, is aware that his views will be considered before the response comes out. Many noble Lords have asked about the Pronto! lottery and have pointed out that it brings great benefits to many charities. I will ensure that all your Lordships' views are brought to the attention of the Minister and his advisers when they are considering this matter.
The noble Baroness, Lady Young of Old Scone, asked about the compact and partnership. I cannot say too often that the Government recognise the need to balance support for voluntary organisations with their independence. But, again in relation to the tax review, I cannot pre-empt anything that will come out of it.
I have already referred to the maiden speech of the noble Baroness, Lady Fookes. She said, like many others, that government help must not be in the form of a straitjacket. I think I have made the Government's position clear. In attempting to help charities, we must do nothing that interferes with them or puts them in a straitjacket.
The right reverend Prelates the Bishops of Lichfield and of Hereford asked about VAT relief. I shall attempt to go over some of the ground which the noble Lord, Lord Henley, covered. The Government are sympathetic to the problems the Churches face with such costs but there is no possibility of removing VAT. Under European legal agreements, in the form of the sixth VAT directive, the UK does not have the option to create any new zero rates or to extend the scope of existing zero rates. To change European law would require the unanimous agreement of all finance ministers of the European Union. However, one of the main aims of the Government's review of charities' taxation is to inform the Government of the views of the charitable sector prior to any future debate with our European partners on VAT social reliefs. The concerns of the Churches have been clearly expressed not only here today but during the first phase of the review in which ideas and suggestions have been asked for. We will he taking up the matter again to see whether we can secure any way forward. I recognise the tremendous difficulties in which this places churches and cathedrals.
The right reverend Prelate the Bishop of Hereford referred to the charity funds raised and to the core services that ought to be rendered by the National Health Service. I shall certainly see that the point he was making is brought to the attention of my right honourable friend the Secretary of State. However, in saying that, I think he would agree with me that the demands on the health service are many and varied. We have put extra funds into the health service, but there will always be great demands on the service.

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Many noble Lords said that the ban on the on-line lotteries is hitting small charities. However, I have said that the views expressed so forcefully tonight will be brought to the attention of the Minister drawing up the Bill. We have heard many varied speeches in the debate. It was right that noble Lords who are involved in charities and are proud of them should bring that to the attention of the House.
The noble Baroness, Lady Emerton, referred to the Order of St. John and asked what is medical and what is not medical in relation to the review. The case of St. John has been raised as part of the review and it will certainly be looked into. We did not bring the problem about but inherited it from the previous government. Nevertheless, that does not make it any less painful to the noble Baroness. She is right in saying that an appeal has been made to the VAT tribunal. We are awaiting a date for the appeal. We shall have a comprehensive look at it because there is a need to clear up this matter. I hope that we can get a satisfactory outcome.
My noble friend Lord Ponsonby asked about the compact between the Government and the voluntary sector. I have dealt with a good many of the points of concern in that area. He also asked about core funding, a matter which was mentioned by a number of speakers. It is certainly something that needs to be looked at. It is not much good going for a project and, when it ends, the charity being left without the funds necessary to carry on its normal business. That can be a hindrance to the charity and it is certainly one of the points at which we shall be looking.
The noble Lord, Lord Westbury, referred to administrative costs. The Charity Commission monitors administrative costs and it will challenge any charity whose costs seem unjustified or markedly out of line with similar charities. That is an important point. It is very necessary that we keep these matters under review. The noble Lord, Lord Hayhoe, raised similar points and asked about "Pronto!". I say again to him that he would not want me to pre-empt what may come out of the review. He has raised the matter with me before tonight. I shall ensure that his views are brought to the attention of the people concerned.
We seem to be well-fitted as regards ex-Speakers of the other place tonight. I admire all the work done by the noble Lord, Lord Weatherill. He was quite right to talk about the Prince's Trust which he represents which helps the under-privileged and also the Action Trust which sets up young people in business. I know that the matter has been looked at, but we need to see whether there can be a fast track procedure. Once again, I shall bring that to the attention of those concerned.
I now pass to the noble Earl, Lord Sandwich, who raised quite a few points. He asked what were the aims of the review and I have already explained that. He asked about the simplification of charity taxation and to inform the Government's negotiating position in any EC review of social relief. He raised a number of points. The noble Lord, Lord Rotherwick, asked about telephone helplines. I may be able to give him some good news because the Home Office will be providing a
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grant towards the core costs of the Telephone Helplines Association, which as many noble Lords know, is the umbrella body. I hope that is welcome news to him.
I now refer to the noble Baroness, Lady Hooper, who asked me a number of questions. She spoke quite rightly about the efforts that go into educational trusts and taking people overseas. That is very important indeed. She spoke about the Millennium Fund. I say to her that at the moment discussion is taking place about that. I hope that those points of view will be made known and put in the paper. It is a matter that should be looked into. I certainly undertake to bring it to the attention of my right honourable friend the Secretary of State for Education and Employment.
I shall now try to deal with several matters raised by Lord Chorley. He asked why local authorities have tax advantages which are not available to charities. Local taxation has to bear the costs of many services which local authorities undertake. Council taxpayers also have to bear the burden of those services. If what the noble Lord suggests was done, it would reduce the services which local authorities can provide. The only alternative would be to increase council tax to cover that. However, charities have a different range of tax concessions unique to them, which are designed to support their valuable role. Charities also undertake some activities in which they are in competition with the commercial sector for local authority contracts. Therefore, it would be difficult to treat charities differently for tax purposes.
I hope that I have dealt with as much as I can in the 25 minutes that I have had to address the House. There was a great deal of common ground among all speakers. I hope that I have said enough tonight to demonstrate that the Government are determined to play their part in making charities not only important and a cornerstone, but to work with them in order to create a better climate for them to work in. We hope that we shall make this vision a reality. I once again thank all noble Lords for their very valuable contributions.
8.34 p.m.
Lord Astor of Hever: My Lords, this debate has clearly highlighted the size of the charitable sector and the important work carried out by so many different charities. I thank all speakers, each one an authoritative and knowledgable speaker, who have contributed to the debate. I also thank the Minister who addressed so many of the points that we made. Finally, I congratulate my noble friend Lady Fookes for her excellent maiden speech. My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Millennium Celebrations
8.35 p.m.
Lord Tanlaw Lord Tanlaw rose to ask Her Majesty's Government what is their response to the claim made by the National Physical Laboratory, the British Horological Federation and the National Mapping Agency of Great Britain that the third millennium is to be celebrated at Greenwich on the wrong meridian with the wrong time-scale and in the wrong year of the second millennium.
The noble Lord said: My Lords, I am most grateful to the House for allowing me to bring before it once again some of the complexities of time, perhaps to make the public more aware of just how complex they are and also perhaps to give an opportunity to the Government to correct them before the millennium starts.
I must make clear at the outset that this Question has not been raised as an indirect means of criticising the Dome at Greenwich, its costs or its contents. I see the Government's objective regarding the Dome as a genuine attempt to divert, satisfy and educate the general public in the year of the millennium—a goal which I heartily support.
Am I not correct in saying that it follows a long tradition in populist government, which was commented on as long as 2,000 years ago by the Roman poet Decimus Juvenal? Did he not use the immortal phrase, pane et circenses to describe bread and games of the circus with which the Caesars used to divert the people from the anxieties of everyday life?
I believe that the Dome is something along the same lines. As I say, I support it but with two possible provisos to this approach. By all means let the Government help us enjoy the occasion to the fullest, but does a government of today, in order to remain popular, have to feed the people with scientific facts, as they are perceived, rather than with the scientific truth? I believe that the majority of noble Lords are aware that the sun is perceived to revolve around the Earth. The scientific truth is otherwise, as we all know. Galileo Galilei in 1633 risked his life and virtually lost his reputation by making the public statement,
"And yet the Earth moves".
I shall return to this question later.
Meanwhile, there is another problem, of how best to maximise the national income from the promotion of these celebrations. How can this be achieved successfully if Britain remains outside the European time zone? Is the noble Lord, Lord Haskel, not aware of the loss of potential franchise income to the British communications industry, which is just one example, which will arise by celebrating the arrival of the new millennium at least one hour later than the rest of Europe? I am sure that the noble Lord is aware that the world may be unable to watch the celebrations in the Dome, as has been predicted by the Minister without Portfolio, because Europe will have gone to bed and the Americas will not yet be awake.
Is the noble Lord also aware that the world may be surprised that the so-called "modern" Britain still apparently wishes to retain an outdated time scale on its statute book and that the Dome displays an architect's model with the historic rather than the correct prime meridian?
The focus of my Question is to try to ensure that visitors to Greenwich and the Dome are given correct rather than perceived scientific and historic facts about the millennium celebrations on 1st January 2000 and in particular the co-ordinates of time, place and date with which Greenwich has been historically linked for the
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past 300 years. For example, the prime meridian, or the longitude line zero, is not—and I quote from the new Millennium Experience pamphlet,
"defined by the line drawn on the eye-piece of the large 'Transit Circle' telescope in the Old Royal Observatory",
as it was defined in the Treaty of Washington 1884. That information is out of date. The Ordnance Survey customer information sheet of September 1997 states more correctly that the new prime meridian for the millennium will be defined by the IT and ET reference frames of 1989.
I am asking the Government to ensure that the new prime meridian—now calculated to an accuracy of centimetres by global positioning system satellites—will be clearly indicated on the ground to visitors to Greenwich and the dome. Furthermore, I am asking the Government whether they will have the courage and imagination during the term of the British presidency to persuade the European Union to adopt a new European time zone based on the ETRF89 prime meridian at Greenwich.
After all, is not time intended to be the main theme of the dome? Was not Greenwich selected in preference to Manchester, Edinburgh or Cardiff because of its 300-year history of accurate timekeeping? Then why does there appear to be so much confusion over this subject? I wonder whether it is because the Government apparently require two senior Ministers to be responsible for time—the Minister with responsibility for science and technology, for the leap second of the national time scale and the Minister of State, Home Department for summer time? Is not that the equivalent of having one Minister responsible for the big hand and another for the small hand of public time? Does that anomaly explain why noble Lords, including myself, received a negative response to suggestions in previous debates? Is it incomprehension or the duality of departmental responsibility that is the root cause of that silence?
Will the Minister confirm that the Prime Minister has stated on a number of occasions that it is his intention that the New Millennium Experience should bequeath a permanent legacy to not only the citizens of Greenwich but the nation? Does the Minister consider that the rebirth of GMT as Greenwich meridian time, as a new local time for both Britain and Europe, would be a fitting legacy after the celebrations are over? Would not that be a more permanent legacy than the empty marquee on a desolate mudbank that will await the removal vans on 1st January 2001?
As the Government are aware, 1st January 2001 is the real beginning of the third millennium, but most people have indicated that they wish to celebrate the occasion from 1st January 2000. I do not argue with that because I shall be joining them. The difference in dates is historic rather than scientific and was recognised as such at the beginning of this century. The newspapers of the period reported that the 20th century was to be publicly recognised as starting on 1st January 1901, not 1900. That was because the official date of Christendom should have been 0 AD not 1 AD—whereas the historical birth is put at between 4 BC and 7 BC, according to Lambeth Palace.
The first year of the new Christian calendar, which I think was designated by Pope John I, was 1 AD—anno domini, in the year of the Lord—rather than 0 AD because the zero was not available in Europe until about 200 years later. Interestingly, the term BC, meaning before Christ, to register the years prior to 1 AD was not created until about 1,000 years later, in 1681. The terms BC and AD to define the years of Christendom are, I understand, about to fall out of use. Perhaps the right reverend Prelate will put me right, but that is what I have been told. I understand that new terms—BCE and CE—might be possible replacements, with BCE standing for Before Christian Era and CE for Christian Era. Non-Christian countries and, I suppose, agnostics may prefer to interpret the letter C as standing for the "common" era of all humanity.
Might not the Christian Churches call a special ecumenical committee to agree those terms before the start of the new millennium, so that the year 1 CE could be internationally recognised as the official start of the Christian or common era? The years before 1 CE would be known as BCE—before Christian or common era. My concern is that if there is no general clarification or standardisation, software organisations such as Microsoft might select terms of their own choosing. It is unlikely in my view that such terms would pay deference to Church history. The millennium bug, which is causing so much trouble in IT systems in Government and the private sector, has been caused by the failure of designers correctly to identify the co-ordinates of time and date. I hope that clarifying BC and AD to BCE and CE will allow them to become a standardised IT protocol that will see us through to the next millennium.
I understand that more than £1 million per day is being spent and will continue to be spent on the dome celebrations, until 1st January 2000. They are primarily intended to illustrate in dramatic form "modern" Britain's achievements past, present and future. Can the noble Lord the Minister say why we as a nation will not be celebrating that momentous occasion together with, and at the same time as, the rest of Europe? Why will so-called "modern" Britain still have an outdated time scale on the statute book, when the rest of Europe and the industrial world have accepted as the default time scale since 1975 atomic or co-ordinated universal time? Is not this the moment, while there is still time before the new millennium, to ask the Select Committee on Science and Technology to form a special sub-committee to investigate the question of how British time is presented to the public, Europe and the outside world?
Does not the noble Lord agree that if such a sub-committee were to be formed, it should have the widest possible terms of reference? They would of course include the ability to recommend rationalisation of the responsibilities of the two departments currently responsible for time into one—the most suitable being the Department for Trade and Industry, which has a scientific section. Does the Minister agree also that such a sub-committee could investigate the best methods of harmonising British civil time with European time—either by introducing a new civil time scale, as I have
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suggested, or equalising the values of the existing time zones between Britain and Europe? Does the Minister agree that the sub-committee could also have powers to recommend whether or not the referendum on entry to the European monetary system should include the question of time harmonisation?
I hope that the noble Lord will not be advised by his department to ignore suggestions, as has happened on previous occasions, and that he understands that matters of deep principle underlie the specific questions that I have raised in this Unstarred Question. If I receive a negative response regarding recognition of the scientific facts, that will merely confirm the situation for me this evening—just as it did for Galileo Galilei some 365 years ago. The date of 1st January 2001 CE may mark the birth of a new Dark Age—an era of virtual reality in which Church and state could find it more convenient to replace factual reality with their own perception of what is real. I hope that I am proved wrong.
8.48 p.m.
The Lord Bishop of Lichfield: My Lords, I am sorry to say that I have not had the benefit of listening to previous debates or discussions on this subject, but I had been made aware that a word from the Churches would be welcome. I believe that there would be general agreement among the Churches that we may not know the precise date of Christ's birth at Bethlehem. It is very possible, therefore, that we may celebrate the third millennium on the wrong meridian, with the wrong time scale and in the wrong year. But perhaps the wrong year may not be that far out.
My friend and colleague the Dean of Lichfield, in my own diocese, is both an eminent New Testament scholar and an ancient historian. He informs me that, as the noble Lord said, a date between 4 BC and 7 BC is favoured by many scholars for the birth of Christ—4 BC being the same year in which Herod the Great died. If 4 BC is correct and if we are concerned about the particular year of Christ's birth, it means that the 2,000th anniversary of His birth already happened in 1996, so the Dome is therefore already four years behind schedule—if 4 BC is correct.
Other scholars within the Churches and Christendom generally would look at it from another point of view. Although the event of Christ's birth is of great importance to Christianity, there would be general agreement that the climactic events recorded in the New Testament are not Christmas Day, but Good Friday and Easter Day. In those events, so the Church believes, death itself was defeated and evil routed. But, again, those key events probably took place in AD 30 or thereabouts, so that a strong body of opinion which sees those events as the centre of the Christian era would hold that there is still a generation to go before an even more important celebration is due.
My real point is this: such issues as the precise dating of Christ's birthday—I shall be interested to hear what the Minister says about the suggested committee to consider the scientific issues—as raised by the noble Lord's Unstarred Question are secondary to the

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Church's understanding of the heart of the matter. The heart of the matter for a Christian mind is the coming of Christ. I must advise the noble Lord that I have no news or evidence of a discussion in the Churches about switching to BCE and CE. The key issue for a Christian mind is not whether we can put an exact date on the coming of Christ, but the meaning which the coming of Christ gives to human history in terms of new personal purpose, new direction and new hope.
Recently at Question Time, a Member of your Lordships' House asked bluntly, "Whose birthday is it anyway?" A lot of heads turned towards these Benches. The answer now from this person on this Bench is that, in the Church's view, it is the birthday of the Son of God into the course of human history, thereby giving to all time and all history, including our own individual lives, new purpose, new priorities and new hope.
On a Christian view, time is not to be killed. Time is a highly precious commodity. Even a new millennium is a time not merely to be celebrated, which is why arguments about dates and domes are secondary in the Christian view. Instead, all time—not just millennium time—is precious because it can be used for the greatest benefit to mankind and for the loving purposes of God.
All the Churches in England have therefore set themselves this task as the millennium draws near: to forge a living link between the fact of Christ's birth, the year 2000 and, even more importantly, the possibility of personal meaning and public hope. In the Churches' strategy there are three clear messages, which have been widely accepted by all the Churches in these islands: "A New Start at Home"; "A New Start for the World's Poor"—that is the practical issue relating to the preciousness of time—and "A New Start with God".
In my own West Midlands diocese, for example, we plan to make "A New Start At Home" in those areas of the diocese which have suffered the large collapse of manufacturing industry. I refer to places such as Wolverhampton, Walsall and Black Country communities such as Tipton and West Bromwich. In those areas brave efforts have been made by agencies such as the Black Country Development Corporation with regard to land reclamation, the detoxification of old mine shafts and the creation of new prime sites to attract Japanese, European and American investment. Those are examples of using the preciousness of time to benefit people's lives. However, as the Church sees it, in my area, urban regeneration with its new roads and prime sites leaves one huge task unfinished. I refer to the task of "people regeneration" and to the regeneration of community life, family life and personal life. That is what, for us, the millennium is about.
In my own diocese, therefore, the year 2000 does not mean arguments about dates and domes; it means developing the splendid work of Christian truancy workers, guiding truanting children and neglectful families back to the community of the school. The millennium in my diocese means the strengthening of our partnership in relevant industrial training schemes. It means the opening of community care centres, like the one I opened last Sunday in Bilston with the local Member of Parliament, where life-long learning,
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industrial retraining and care for the well being of families and children can grow. For us, that is what the millennium is about.
Finally, aside from the scientific debate which is important in its own way, if the millennium truly is to honour the one whose birthday it is, we need to set up another signpost—of greater freedom for the world's poor. We need a new start not only at home, but also for the world's poor. More than a century after slaves were officially freed, millions in the world are now in bondage because of crippling debt, compounding itself over and over in a dark spiral. I lost a daughter in a place near the Equator in East Africa where no medical facilities were available to save her life. There are still no medical facilities there—and that is because that country is too busy repaying its debts instead of spending its money on those vital issues.
In conclusion, I am suggesting that our minds need not be too greatly preoccupied with precise questions—but I wish the noble Lord, Lord Tanlaw, good fortune with his scientific committee—concerning the right meridian, the right time scale and the right year. Rather, at this new millennium, I suggest that our minds might be more profitably addressed to the deeper implications of whose birthday it is in terms of more effective action for justice, peace and the greatest benefit for mankind.
8.57 p.m.
Lord Haskel: My Lords, I must first congratulate the noble Lord, Lord Tanlaw, on the ingenuity of his Unstarred Question. He asks about the claims by three different bodies about three different things, so in theory there could be nine different answers. However, I think it important to state at the outset that at least some of the bodies in question have not made a claim in quite the way he expresses it. Noble Lords have gone beyond the apparently conflicting physics of the millennium into more spiritual considerations and deliberations on society.
However, the noble Lord, Lord Tanlaw, raised serious points of science and I should like to deal with those first. I start with the question, "What is the year when the next millennium starts?" The noble Lord is absolutely right that the next millennium will begin on 1st January 2001. The Government are aware of that, but the decision has been taken to concentrate millennium celebrations across the country throughout the year 2000 as all inquiries indicate that that is the year in which the public wish to mark it. There is some logic in this. One might say that the year 2000 is an extended New Year's Eve for the year 2001. After all, it is on 31st December of each year that we see the maximum amount of celebration, not the first day of the new year. I say to the noble Lord, Lord Tanlaw, that the remainder of Europe also appears to be celebrating the new millennium with us in the year 2000.
I move to the scientific question of what is the right or wrong meridian. Certainly, there are two meridians at Greenwich but, unlike lines of latitude where nature provides us with an obvious reference in the equator, the reference point for lines of longitude is arbitrary. I do not say that all lines of longitude are equally good

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because it is important that the reference is well defined and capable of being measured, but within these constraints we have a choice.
The noble Lord has mentioned the prime meridian. This is the most familiar meridian which is indicated by a brass strip in the courtyard of the observatory. But this is not the only meridian at Greenwich. To demonstrate that this does not matter the noble Lord will be aware of what happened about 50 years ago when the Ordnance Survey repeated the triangulation of the country which originally took place in the late 18th and early 19th centuries. As part of the new survey, observations were taken to connect other stations with the instrument sitting on Airy's meridian, the one indicated by the brass strip. To the surprise of the surveyors there was a discrepancy in longitude equivalent to about eight metres—far greater than could be attributed to errors in observation, even in the 18th century.
The discrepancy was explained by the Royal Observatory's then chief assistant. In 1840 the seventh Astronomer Royal, Sir George Airy, had decided to install a larger meridian instrument and wished to operate both instruments for a while to ensure continuity of measurement. As a result, Airy's instrument was installed six metres to the east of Bradley's. To this day, Ordnance Survey maps still use Bradley's meridian. But the fact that different meridians are in use does not matter as long as we know the relationships between them. Physics has moved on in the past century, and it continues today. Because the earth's crust is constantly moving, a meridian line firmly fixed to the ground in one place is not ideal for work of the highest accuracy. The scientific community therefore now uses for practical purposes a frame of reference known as the Terrestrial Reference Frame of the International Earth Rotation Service. This reference frame is based on observations of satellites and celestial radio sources known as quasars made from various co-ordinated stations around the globe. It is designed so as not to rotate as the tectonic plates move around with respect to each other. The effect of this is that any meridian fixed to the surface of the earth will move with respect to the reference frame.
At the latitude of Greenwich the meridian of the International Terrestrial Reference Frame is about 100 metres to the east of Airy or prime meridian. The movements of the tectonic plate on which we sit are quite small—only a few centimetres a year—and do not explain the 100 metre difference. However the International Terrestrial Reference Frame was a successor to an older reference frame that used about 80 observatories around the world. The positions of these were determined using the astronomical methods and time measurements available at the time, and it appears that an error crept in somewhere along the way. But, as with the meridian used for Ordnance Survey maps, it does not matter which meridian is used provided we know where it is. I hope that that deals with the noble Lord's concerns about the meridian.
I turn to the question of time. Time and longitude were for centuries intimately connected. The noble Lord is an expert on time. He will be aware that for most
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practical purposes we now use a time scale based on atomic clocks. In theory this is independent of position. I say "in theory" because the time scale in question, Co-ordinated Universal Time, is not pure atomic time, but a timescale which, by adding occasional leap seconds, has been kept to closer than one second of what I shall call familiarly Greenwich Mean Time. By these means the link between time scale that we all use, often without realising it, and longitude has been maintained.
I cannot speak for the British Horological Federation, but I do not think that either the National Physical Laboratory or the Ordnance Survey, which is the body that I believe the noble Lord means when he refers to the national mapping agency of Great Britain in the title of his debate, has ever claimed that we will be celebrating the next millennium on the wrong meridian with the wrong time scale. What they have done is to describe what happens for scientific purposes, and that may not be the same as people's perceptions. I ask the noble Lord, Lord Tanlaw, to be a little tolerant of people's perceptions. The Government have to be, and perhaps that explains some of our actions.
When and where will the 1st January 2000 begin? The basis for the beginning of the universal day was decided at the International Meridian Conference in 1884 when it was decided that the universal day would be a mean solar day beginning at the moment of mean midnight at Greenwich. Today, this can be interpreted to mean many things. On the one hand, perhaps it means that we should refer to the time according to a mean sun on the meridian currently used for astronomical purposes; namely, the one that is 100 metres to the east of the brass strip. On the other hand, perhaps we should apply the same principle as we apply to Ordnance Survey maps and Bradley's meridian and refer to it as the meridian in use in 1884. If so, we would refer to the brass strip in the courtyard. Whichever meridian we use as our reference, at most it is 100 metres from the brass strip in the courtyard at Greenwich. A difference in longitude at Greenwich of 100 metres is equivalent to a difference in time of about one third of a second. Moreover, whichever time scale we use—Co-ordinated Universal Time or one of the three forms of universal time—we would be within one second of Greenwich Mean Time. All in all, there may be an uncertainty of a second or so at the start of the millennium celebrations, but I join the right reverend Prelate in asking: does it really matter?
No one can deny the important role that the Greenwich Observatory has played in time, measurement and navigation. Greenwich is still synonymous with time throughout the world. What is a second or so in the context of something which only happens once every thousand years?
The noble Lord, Lord Tanlaw, spoke of the advantages of our being on European time. He pointed out that if we were to harmonise time across the European Union we would be celebrating the beginning of the millennium at the same time as the rest of the Continent. I understand from the Secretary of State for Home Affairs that there are no plans at present for the United Kingdom to move to central European time.

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The noble Lord, Lord Tanlaw, also suggested that the Committee on Science and Technology could look into the question of time. I should point out that that committee is independent of the government. This matter is best raised with its chairman, Lord Phillips. I met him today in the corridor and mentioned the matter to him. He asked me to write to him and although the Select Committee is very busy on other matters I am sure that he will take the noble Lord's suggestion into consideration.
The noble Lord, Lord Tanlaw, also suggested renaming Co-ordinated Universal Time as Greenwich Meridian Time, and he mentioned the Prime Minister in this context.
Lord Tanlaw: My Lords, that is not what I suggested. I suggested that a time zone, British civil time, be called Greenwich Meridian Time, based on the Meridian at Greenwich, which would cover 15 degrees east or west of Greenwich, that is the central parts of Europe. I did not confuse it with UTC.
Lord Haskel: My Lords, I thank the noble Lord for pointing out that matter. I shall write to him regarding that suggestion when I have looked at it in detail.
The millennium is an important occasion and it is only right that we look at what may happen. A thousand years ago ignorance and superstition were such that people thought the world would end at the end of the first millennium; indeed, preparations were made for that event. At the second millennium we are at least looking forward to the future. We are using the power of our knowledge, curiosity, imagination and audacity to see what the future holds in store. We can anticipate the future, but we cannot necessarily predict it. That is what we hope the Millennium Dome and the Millennium Experience will do.
As the celebration of the millennium is also a time to celebrate technological and engineering achievements, it is right that the celebration should be in Greenwich, which is the birthplace of the science of accurate navigation and time measurement; and this was achieved in a wonderful spirit of enlarging and extending science. Over the centuries it has effected every aspect of our lives.
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I urge noble Lords to look up from the strips marking the lines of longitude at Greenwich and join the right reverend Prelate in recognising what a wonderful feat of engineering and technological achievement the Dome will be. I cannot agree with the noble Lord, Lord Tanlaw, that it can be likened to Roman games because the Dome will be the largest cable and fabric building ever built, covering 20 acres and standing 50 metres high. It will reflect those things that will make a difference to our lives, not only science and technology but pride in our achievements, our ingenuity and creativity, our bravery and sense of justice and fair play, our modernity and confidence in the future.
I agree with the right reverend Prelate that dates and times are secondary. He is concerned that the Churches should be involved in the plans for a national millennium celebration. The Lambeth Group has been set up to ensure that the millennium celebrations are accessible and of relevance to all parts of our multi-faith society. The group involves the Department for Culture, Media and Sport, the Millennium Commission, the New Millennium Experience Company, the main Christian denominations, ecumenical bodies and representatives of other faiths.
The right reverend Prelate spoke of the Churches' new start. They have their own full programme of events focused on Pentecost 2000. The government are discussing with the churches the timing and location of national church services to mark the millennium.
The Millennium Commission is funding a wide variety of church projects which benefit the entire community and will help with what the right reverend Prelate called "people regeneration" in the Church and elsewhere. The necessity to create jobs and improve the environment, to which he referred, are not just matters for the millennium but for all time. The Government take that as a serious part of their task.
I thank the noble Lord, Lord Tanlaw, for putting down this Question and giving us the opportunity to explain the scientific facts. I thank the right reverend Prelate for introducing the more spiritual aspects of celebrating the millennium. That is a topical and important matter. I thank noble Lords for their contributions.
House adjourned at fourteen minutes past nine o'clock.

Official Report of the Grand Committee on the Bank of England Bill
Wednesday, 4th March 1998.
The Committee met at half-past three of the clock.
[The Principal Deputy Chairman of Committees (Lord Tordoff) in the Chair.]
Clause 12 [Specification of matters relevant to objectives]:
Lord Peston Lord Peston moved Amendment No. 20:
Page 5, line 30, leave out ("the House of Commons") and insert ("Parliament").
The noble Lord said: Amendment No. 20 is grouped with Amendment No. 21, but I shall speak only to the amendment in my name and that of my noble friend. I hope there is nothing controversial about this, and I am not accused of being very prickly. However when I read "the House of Commons" in the Bill I assumed this was simply an oversight rather than a deliberate attempt on the part of the draftsman to insult your Lordships. It seems to me that the Government must have meant "Parliament", and therefore I put down this amendment in order to make the Bill say what the Government must have meant. I beg to move.
Lord Mackay of Ardbrecknish: I support the amendment in the name of the noble Lord, Lord Peston, and the noble Lord, Lord Barnett. Indeed, if I had noticed it I would have added my name to that amendment.
My amendment, Amendment No. 21, which is grouped with Amendment No. 20, is simply an attempt to draw out from the Minister the timing involved. One could imagine laying a copy of this letter before the House of Commons or Parliament some considerable time after it had been written, so I have put in,
"as soon as practicable after the notice has been issued to the Bank".
That is very broad. I accept that it may not be practical to do that the next day or the next week, and there may be compelling reasons for not doing so, but I would like some indication from the Government, even an assurance on the record, that the Government would lay the letter before Parliament as quickly as possible.
Lord McIntosh of Haringey: Let us start today's proceedings in a good spirit. We accept my noble friend's amendment. Whoever it was—and I do not know—who put "the House of Commons" will be taken out to the courtyard in the centre of the Treasury building and publicly flogged, and your Lordships will be invited. However, I emphasise that we have not yet found out who it is, and probably will not.
The amendment of the noble Lord, Lord Mackay, deals with the same subject. It would not otherwise have been grouped with Amendment No. 20. However, it is unnecessary. Typically, we stated that we would be
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announcing changes of this sort, as has been the practice, in the Budget and, as the noble Lord knows, the Budget is accompanied by full documentation—excessively full documentation—which is made available as soon as the Chancellor sits down. We do that in the context of strenuous efforts by the Government to improve the transparency of policy-making. We have introduced the Pre-Budget Report in which many of the issues which will arise in the Budget are discussed. In particular, in the Pre-Budget Report we have announced our intention to publish a code for fiscal stability, which will enshrine in legislation rules for reporting on the public finances. It will also include a statement of how the Government intend to operate fiscal policy, both in the short term and in the long term. I believe the Committee would agree that we are not being negligent on the issue of transparency.
With the assurance that we will always do this as soon as practicable, and when, as is normal, it is done in the Budget it will be done immediately. I hope that the noble Lord will feel able to withdraw his amendment.
On Question, amendment agreed to.
[Amendment No. 21 not moved.]
Clause 12, as amended, agreed to.
Clause 13 [Monetary Policy Committee]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 22:
Page 5, line 37, leave out from ("Bank") to (", and") in line 38.
The noble Lord said: We now move to Clause 13, where the Bill outlines details of those who will be the members of the Monetary Policy Committee. This is one of three amendments which are linked, which are all concerned with the method of appointment of the members of the committee. As I pointed out on Second Reading, the appointment of all the members of the committee seem to involve the Chancellor's hand, either directly or indirectly. I have tabled a number of amendments which I hope might achieve a slightly more independent look to the Bank—that is, independent of the Chancellor.
Amendment No. 22 is the first of those amendments. It deals with the two members who are to be appointed by the Governor of the Bank after consultation with the Chancellor of the Exchequer. Those two members are described in Clause 13(3) which states:

"(a) one shall be a person who has executive responsibility within the Bank for monetary policy analysis, and

(b) the other shall be a person who has executive responsibility within the Bank for monetary policy operations".

I am puzzled as to what point in time the Chancellor will have a hand in the appointment. Will he have a hand in the appointment of the executive whose responsibility within the Bank is for monetary policy analysis, or will he have a hand in the appointment of taking that executive, or perhaps another, and putting him on the MPC, or will it he done simultaneously? It seems to me that if the Bank is appointing somebody who will have these executive functions, appointments

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will be made from a fairly narrow field of experts, and I do not think we need the words,
"after consultation with the Chancellor of the Exchequer".
After all, if the Chancellor of the Exchequer has appointed the Governor and the deputy governors, he has decided that they are sufficiently reliable men and women to be able to appoint these two executives to these two senior positions and the Monetary Policy Committee, without the Chancellor having a further role in their appointments. It is not much of a change, but it would go some way towards taking out the hand of the Chancellor as regards those appointments. I can see no harm in this, given that the kind of people who will fill these two posts will clearly be defined by their need to be experts in monetary policy analysis and monetary policy operation. I would like to think that the Government might be able to make some sympathetic noises to that amendment.
The next amendment, Amendment No. 23, deals with Clause 13(2)(c). I shall call these the away members of the team as opposed to the home members—the Governor, the deputy governor and the two employees. I have no problem with the four current away members, aside from a problem which I shall draw to your Lordships' attention later, in that they are drawn from a fairly narrow band of people. They all share some common factors, and I shall address that later with the noble Lord, Lord Montague of Oxford. However, here I am concerned with how they are appointed.
As the noble Lord, Lord Eatwell, is here today, I shall not quote him on the different kinds of monetary theorists and how they have changed our mind over time so that yesterday's received wisdom is today's heresy and vice versa. However, the way in which the appointments are made is important. They could indeed come from the same stable of economic thought—perish the thought—which has the Chancellor's ear, or worse, they could come from the stable of the members' supporters or donors of the Labour Party.
The last government decided, with the total support of the Opposition—and indeed, some may say under pressure from the Opposition—to change the whole way in which people are appointed to quangos. The report of the noble and learned Lord, Lord Nolan, certainly brought that about: adverts are placed, interviews are conducted, and names are suggested to Ministers. It is a simple fact that Ministers can no longer appoint people to quangos in the way they once did: namely, from a list of the great and the good. They have to go through a selection process. The same should be done here.
There is not a more important quango in the land than the Monetary Policy Committee. It has been given a very special and important role by the Government, and we ought to look at the possibility of the appointments being made along the lines suggested by the noble and learned Lord, Lord Nolan. Indeed, in Committee in the other place, Mr. Geoffrey Robinson, after congratulating my honourable friend Tim Boswell, who introduced a similar amendment there, on the manner and tone in which he had moved his serious amendment, indicated that the Government would like to consider
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the matter and if my honourable friend would not press it to a vote they would consider what had been said, without commitment, and I appreciate that he said "without commitment". I should be interested to hear what the Government now think about the way in which we should appoint the four away-team members of the Monetary Policy Committee, and whether we should be using a more Nolan-like procedure with adverts and appointments. The adverts, of course, would clearly state the skills and expertise that would be required of anybody who applied.
The last point returns to a matter I talked about yesterday regarding the court, but here it is more important and more serious than the court; that is, whether or not members of the away team—if I may continue to call them that—should be appointed for only three years, or if they should have appointments lasting five years, as do the members of the home team—the Governor, the deputy governor and the two deputy governors who are appointed for five years. I am putting this down because, again, it reinforces the independence of the four outside members. As noble Lords know, the Fed, for example, is a 14-year appointment—and I should not dream of suggesting anything as long as that—the Bundesbank is eight and the Bank of France is nine. Therefore, I am being quite modest in my suggestion of five years. I know we discussed yesterday that perhaps in five years the person appointed might get out of date, or might leave the employment or the field of expertise that led to the Chancellor appointing him. However, that is very unlikely and. if we are not appointing those people along the lines of the Nolan Committee, I hope that the suggestion will not be prayed in aid that other committees of non-executive directors last for only three years before they are re-elected, or, in this case, reappointed.
The Minister told us about the staggering of appointments yesterday and I presume the four appointments will be made in exactly the same way in order to have some kind of rolling programme. Perhaps he might say something about that because there are only four members here, unlike the courts where there are 16 members, and it is easier to have a rolling programme with 16 members than it is with only four.
It would certainly look better and more independent if, first, the Governor could be relied on to appoint the two employees of the Bank appointed for their expertise; secondly, if the Government would consider using the Nolan procedures for the appointment of these important people; and, thirdly, if they would consider a five-year term rather than a three-year term, which, as I said yesterday, would take people beyond the length of the lifetime of one Parliament, or indeed one Chancellor. It would also mean that it would not be so easy for a Chancellor to clear out the whole lot if he did not particularly like what they were doing, and put in his own men over the space of only three years. I beg to move.
Lord Peston: Much of what the noble Lord, Lord Mackay of Ardbrecknish, has said strikes a chord with me as being something one would not obviously wish to oppose. If he is mistaken, I certainly would like to hear from my noble friend why he is mistaken.

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As regards five years, it seems to me quite reasonable that five years rather than three years is the sort of period for which people should be appointed to the Monetary Policy Committee. My general view is that people serve on committees for far too long. The last time, many years ago, that I had an influence on these matters, I learnt that people could serve on committees for 20 or more years and it was still felt that it was premature to suggest that someone should replace them. Therefore, I am not one who believes in indefinite membership of committees. As noble Lords will know, in connection with at least one of the things I have done in your Lordships' House, I am a great believer in resigning before people ask, "Why is he still doing this job?". I would, therefore, prefer five years rather than three years. I am not going for an indefinite period and I certainly do not believe that there should be any presumption, having appointed someone to this committee, that he should be reappointed.
With regard to Amendment No. 23, I have taken it for granted that from now on all future appointments will be precisely along these lines. It is sad that our society is such that we need all these Nolan guidelines, but I have certainly taken it for granted that that would happen generally across the public sector and so on. Even if it has not happened in this specific case, bearing in mind the informality (because the Bill is not yet law), I had assumed that in future—we are talking a little way ahead now—these posts would be advertised. Again, I shall be interested to hear what my noble friend says about likely future arrangements.
Let me emphasise that the reason for this is not that I distrust the Chancellor, nor for one moment that I would have thought he would be choosing people who had the same view of the way the economy works as he has—assuming that he has such a view to start with—but simply that nowadays we have to behave in that way. I am not suggesting for one moment that the people currently appointed are not properly appointed and would not meet the Nolan guidelines, but I should like to think that in future we would do it anyway.
If those views are mistaken, I should like to hear from my noble friend why they are mistaken, but they do strike a chord.
3.45 p.m.
Lord Cobbold: I should like to support the amendment. I believe very strongly that the wording of subsection (2)(b) suggesting that the appointment of the two members by the Governor should be after consultation with the Chancellor of the Exchequer compromises the desire for independence of the Bank. It implies that the Chancellor has the ability to interfere with executive appointments within the Bank. That. I believe, must be wrong, and it would be detrimental in any large organisation. It is certainly important that the Bank should be seen to be generally independent and that the Governor should have full rights to appoint, together with the court, the executive directors.
Lord Eatwell: Could I urge my noble friends to reject Amendment No. 22 in the name of the noble Lord. Lord Mackay of Ardbrecknish? One of the
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characteristics of the Monetary Policy Committee is that the payroll vote, so to speak, of the Bank of England has a majority on the committee. That is what I consider one of the more unfortunate aspects of the committee in the sense that it diminishes the impact of independent members. To accept Amendment No. 22 will simply reinforce the position of the Bank of England in the control of the payroll vote and diminish the committee's perceived independence.
Lord Montague of Oxford: I remind the Committee that yesterday I mentioned that I had been present at the Treasury Select Committee when it cross-examined the members of the Monetary Policy Committee. The Governor, when asked whether it was likely that members from the Bank would always vote as a block, said that was absolutely inconceivable: there were bound to be occasions when they would differ.
That is very healthy. I suggest that we might mute that if we were to accept the noble Lord's amendment. The fact that those people are secure in the knowledge that they have been appointed by the Chancellor and are not beholden to the Governor will ensure that there is a degree of independence on their part and they will be far less likely to vote as a block.
Lord McIntosh of Haringey: I shall preface my remarks on these three amendments by saying that this is not a Bill to provide for the privatisation of the Bank of England. If it were, we could in theory have repealed the 1946 Act. That might have done the trick and we would not be spending time here. What we are doing here is introducing a rather more complex procedure for establishing a degree of independence where it is important to maintain the ultimate responsibility that the Chancellor has to have on behalf of the people of this country for monetary as well as fiscal matters.
The Bank has a statutory responsibility to conduct monetary policy to meet the Chancellor's targets. The Bank is accountable to the Chancellor and, through him, to Parliament, so it is appropriate that the Chancellor should be involved.
I recognise, in response to Amendment No. 22, that it is a fine line. What we are saying is that the ultimate decision on the two home-team, inside members is that of the Governor. We are providing only that there should be consultation with the Chancellor, rather than that he should make the decision.
Incidentally, in case of any confusion over this, it is not necessarily that one or both of these should be directors of the Bank of England. The Bill states only that they should have executive responsibility. They are at the moment the executive directors but they could, in fact, be any one of a number of Bank employees. I say that to the noble Lord, Lord Cobbold, who made a related point. It is up to the Governor to decide who to appoint to the Monetary Policy Committee. The purpose of the requirement to consult is to ensure that the Chancellor can express a view about which of the officials the Governor wishes to appoint. It is. therefore, a fine line hut we have arrived at the right side of it, rather than the wrong one.

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As far as Amendment No. 23 is concerned, the noble Lord is, in general, pushing at an open door. He is well aware that we have objected for many years to the practice which did exist of Ministers saying, "Well, we've got a vacancy here": preferably a nicely paid vacancy, "and we will go to the Whips' Office", by which I mean the Government Whips' Office, "and see who is available to fill this vacancy". We are determined that that should not be the case. The Cabinet Office did publish a paper opening up quangos, which I recommend to your Lordships, proposing the extension of the remit of the Commissioner for Public Appointments to nationalised industries and public corporations. At the moment, he oversees appointments for executive, non-departmental public bodies and for executive National Health Service agencies. This is out for consultation. We are expecting to respond to the consultation document in the course of the next few months.
The important point is that any proposal which extends the remit of the commissioners and, therefore, might affect the issue of the Monetary Policy Committee, does not and would not need primary legislation. It could and would be dealt with by an Order in Council. Indeed, it would be thoroughly undesirable to deal with it in primary legislation, because no doubt literally hundreds of Acts of Parliament would have to be amended in the way that is proposed now. Given our firm intention to open up public appointments generally, we think it inappropriate to put on to the face of this Bill a particular requirement for this particular committee at this particular time.
The argument for Amendment No. 29 was covered when we considered the earlier amendment relating to the court. My arguments will be similar to those I put forward then. Again, it is a matter of judgment. There are those—including some of my noble friends—who are sceptical about the Hampel Committee and the Cadbury Committee and whether they have performed any useful function. In so far as there has been consideration of this issue of corporate governance, the conclusion has been that three years is a suitable term. I recall that the noble Lord, Lord Mackay, tabled an amendment which would provide for the Chancellor to cut the salaries of members of the Monetary Policy Committee if they misbehaved. I prefer a shorter term of appointment and the possibility of not being reappointed, to the more violent means apparently preferred by the noble Lord. I am, though, generally opposed to unnecessary conflict if I can possibly avoid it!
I can confirm that, as with the court of directors. there will be staggered timing of appointments and there is the possibility—hut no presumption—of reappointments. Thereby, members could remain on the Monetary Policy Committee for three, six and—dare I say to my noble friend Lord Peston—nine years or more. I am quite sure that he would think that thoroughly undesirable.
In striking the balance between a term long enough for members to gain experience and learn the job and ensuring that members who do not pull their weight do
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not serve excessive terms, we have come down to three years and, on balance, we feel that that is the right judgment. I would urge the noble Lord, Lord Mackay, to withdraw all the amendments.
Lord Stewartby: May I ask the noble Lord, Lord McIntosh of Haringey, a couple of questions? Regarding subsection (2)(b) he referred to the non-executive directors and their being appointed. Are they directors of the Bank? The second question is that if they are internal experts within the Bank of England and are appointed, and their responsibilities within the Bank change, is there a mechanism for them leaving the Monetary Policy Committee, perhaps to be replaced by the individual who took up their previous job which was specifically connected with monetary policy?
Lord McIntosh of Haringey: The answer to the noble Lord's first question is that the requirement in the Bill is that they should be persons who have executive responsibility. They could—but need not—be directors of the Bank.
The answer to the second question is a matter for the Governor. If he takes the view that somebody is appointed to the Monetary Policy Committee in virtue of his particular appointment and that appointment changes, he could no doubt prevail on that person to resign his appointment and hand it over to his successor. That is not laid down, and I am not sure it ought to be laid down, as a matter of internal management on which the Chancellor would be consulted—provided that Amendment No. 22 is not carried.
The executive directors the noble Lord refers to are on the court at the present time, but they will not be on the court when the Act comes into force.
Lord Mackay of Ardbrecknish: If I may deal with the three amendments, taking the second one first, on the Nolan Committee, I am grateful to the noble Lord, Lord McIntosh, for his explanation of where the Government are, and I appreciate that they are waiting for responses to a consultation. It sounds rather like another review, but one must not complain about that—
Lord McIntosh of Haringey: I should hope not.
Lord Mackay of Ardbrecknish: I am not sure. I think I heard the first review of a review this afternoon at Question Time, but I will leave that to one side. I appreciate what the noble Lord. Lord McIntosh of Haringey, has said and I hope that if the commissioner decides in the consultation to point in the direction of using the Nolan principles for major appointments like this, the Government will accept that when it comes to the Monetary Policy Committee.
Regarding the length of time members serve, I would be attracted to five years with no possible reappointment. I was worried when the Minister said that the appointment should be for three years and they could be appointed for another three and yet a further three, making it nine years. We are getting towards the Bank of France, the Bundesbank and even after another three years it is the Fed. I would be concerned about that. I indicated in my introduction that I did not feel

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that 14 years was sensible. We may have to explore this further. Even if one went along with the three years, I would be unhappy if somebody sat on the Monetary Policy Committee for more than six years considering there are only four members from outside.
Turning to the first amendment, I am not sure whether I should not rename this the "Chancellor's Bank". It is certainly not the people's bank. The defence of the way it was worded by the noble Lord, Lord Eatwell, was interesting. They did not want it to look like the Governor's Bank, yet we have just learnt that the Governor will appointment the pool from which the Chancellor will select, with the Governor's approval, the member of the Monetary Policy Committee. That is what I understood from the answer of one of the people who has executive responsibility in the Bank for monetary policy analysis—that there are a number of people in the Bank responsible for monetary policy analysis and they will have been appointed by the Governor and the court over time. The Governor will decide, "We shall have one of those on the Monetary Policy Committee", and the Chancellor will say "Yes, I am quite happy with that". That I believe is what the noble Lord said, which was in response to my question about whether the Chancellor would have a say in the original appointment to the job in the Bank, not the Monetary Policy Committee. I hope I am making myself clear about that, but I believe I understood what the noble Lord, Lord McIntosh, said.
I am a little disappointed that we did not make a little progress on even one of those amendments. All of them are designed to do the same thing, and even the Government's acceptance of one of them would help: but with the small crumb of comfort that perhaps the Nolan Committee's rules might apply to the four members of the away team, I shall rest my case.
4 p.m.
Lord McIntosh of Haringey: Before the noble Lord withdraws the amendment. I am sure it is benign, but he was putting words into my mouth which I did not say. I did not say that the Chancellor can say yes or no. The Chancellor can express an opinion but ultimately it is the Governor who decides.
It seems to be a feature of this Committee that a number of noble Lords, particularly those on my side, attempt when they are summing up the amendment to put words into my mouth or to encourage me to re-phrase what I have already said. It reminds me of this. Anybody who has ever been interviewed by "World in Action" knows the trick is to ask you the same question 10 times and then use the most damaging answer. I will try to refrain from saying things more than once.
Lord Mackay of Ardbrecknish: I am grateful to the noble Lord for that clarification. I look forward to the day when we have a leak where the Governor has told the Chancellor to go and jump in the Thames but is carrying on with his suggested appointment despite the Chancellor's objection. Having expressed a certain
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amount of cynicism about the noble Lord's last reply to me, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 23 and 24 not moved.]
Lord Peston Lord Peston moved Amendment No. 25:
Page 6, line 8, at end insert (", especially in connection with the likely impact of monetary policy on the regions of the United Kingdom").
The noble Lord said: In speaking to Amendment No. 25 in my name and that of my noble friend Lord Barnett, I note that it is also grouped with Amendments Nos. 26, 27, 31 and 32. I say to my noble friend the Minister that I am a firm believer that if something is worth saying, it is worth saying at least 10 times during the course of your Lordships' Sitting as a Committee, but I always say it in exactly the same way.
With respect specifically to Amendment No. 25, I was aiming to hit two targets at the same time. I originally thought that something of this sort should go into Clause 11(b) where the words,
"including its objectives for growth and employment",
appear. I was trying to find wording that would refer to growth and employment in the economy as a whole and in the regions of the United Kingdom. However, listening particularly to our Second Reading debate, I reflected that many of us had views on the composition of the Monetary Policy Committee, so it seemed to me that if I put this amendment in where it is, I could both emphasise the importance of the regions of the United Kingdom and the importance of members of the Monetary Policy Committee having that kind of experience.
On the straightforward economic policy, what we have here is that if monetary policy is working, as it seems technically to do, in this country via, say, raising interest rates, that has at least some effect via the exchange rate, which in turn has some effect—adversely, of course—on manufacturing industry, which in turn then has differential effects on different parts of the country. Therefore anybody formulating monetary policy and trying to take account of Clause 11(b) must have a view of the differential effects on the regions and the importance of those regions. As I emphasised yesterday, because the word "including" is there, this seemed a fair point to make under that rubric.
It also struck me, as it may have struck other noble Lords, such as the noble Lord, Lord Mackay of Ardbrecknish, and my noble friend Lord Montague, that at the present time the four that have been chosen look both narrowly chosen in geographical terms and also in experience terms. By geographical terms, I do not mean their country of origin or their place of birth, because I do not know either of those, but where they have lived and worked.
If I had ever been an inhabitant of some of the outer regions of this country, which I define as anywhere on the other side of the M.25, I would be somewhat resentful, not only here but in many other areas, about the sorts of people who are chosen in terms of their location.
Equally, I am sympathetic to both Amendments Nos. 26 and 27, even though it might mean less employment for academic economists and more employment for other people. One of my main criteria in deciding anything is whether this is good for academic economists, particularly those whose view of the economy is the same as mine. If we were to proceed along these lines, it might not be good for academic economists and it might not be good for old-fashioned Keynesians in particular. Occasionally, in the national interest, some of us have to rise above these things, so that I have at least some sympathy with Amendments Nos. 26 and 27. The crux of my contribution, however, is Amendment No. 25. I beg to move.
Lord Montague of Oxford: I ask the Committee to be patient with me as I rehearse. yet again, some of the points that I have made earlier in support of the belief that the Monetary Policy Committee would be best served if there were a requirement on the part of the Chancellor to appoint two people who have practical experience of business and industry. Indeed, I am slightly more in favour of that view after what my noble friend Lord Peston has said. I thought he was going to say that there are plenty of economists who have practical experience in business and industry. But he did come forward to say that he is sympathetic to the view that perhaps some practical experience would be helpful.
I would just remind noble Lords of two incidents in relation to the existing Monetary Policy Committee which have worried me. The first is in respect of its view regarding increases in interest rates and the effect on wage inflation. I should point out to the Committee that, running factories as I have done up and down the country, my experience of increased interest rates is that the moment they arise, particularly when there is a subsequent increase in mortgage rates, the unions are in with a case for an immediate increase in wages. I did not like to read what I read in the last published minutes of the Monetary Policy Committee.
Because I was disturbed by that, I attended the penultimate meeting of the Treasury Select Committee when it was examining the Monetary Policy Committee. Once more, based on my practical experience, it left me confused because it was being said that one of the reasons for the possibility of an increase in interest rates at the present time is the effect on asset values. I sat there thinking that that must mean housing. The members of the Treasury Select Committee were as bewildered as I was, and, when they asked for clarification, they were told that what this particular economist had in mind was the then rising price of shares. The implication was that one of the things that would help curb inflation would be a dramatic reduction in the price of shares, which I again found a little mystifying.
The Bill does not say that the Chancellor should only appoint economists. However, it might be argued that he is likely to do that anyway and, if so, it would be just as well if he were obliged to do it and then there could be no misunderstanding.
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We have heard reference to the Fed. One-third of the Fed's existing membership are not economists. They come from all different strands of business and commercial life. The equivalent committee in the Fed works very well. Those are the reasons behind what I hope will have the support of your Lordships and the Government.
Lord Mackay of Ardbrecknish: In speaking to Amendment No. 27, I shall reinforce the points already made by the noble Lord. Lord Peston, and the noble Lord, Lord Montague of Oxford. There is no doubt that the Monetary Policy Committee will be important and that it will have an important impact on manufacturing industry, on business and on all parts of our country. As I said in the last debate and at Second Reading, it seemed that the furthest northerly member of the current Monetary Policy Committee came from whichever was further north. Oxford or Cambridge—in my view, neither is very far north, and certainly neither goes into the industrial areas of England, the Midlands or into Scotland or indeed Wales. We should address this problem, as the Government should address it.
The noble Lord, Lord Montague of Oxford, homed in on the question of manufacturing industry and business. Two letters which appeared side by side in The Times on 18th February caught my eye. One was from Professor Sidney Pollard, who is not in the magic circle, living as he does in Sheffield. I will read the first and last paragraphs:
"Once again the productive sectors of the economy are waiting to see whether a small committee meeting at the Bank of England will inflict further damage on them by another rise in the interest rate … The object behind it being to hold down inflation".
He concludes:
"Altogether, the picture of a small group of people sitting around a table and raising interest rates by a minute amount, and then looking in the following weeks to see whether that has lowered inflation by a similar minute amount, must seem among the most bizarre spectacles visible in London these days".
I am not sure how many other spectacles might fall into that category.
The other letter was from a noble Lord opposite—not opposite me today in the Committee—the noble Lord, Lord Thomas of Macclesfield. On 18th February he wrote that the Monetary Policy Committee:
"appears to be gearing itself up for a further interest rate increase of a quarter per cent to 7½ per cent on the basis of guessing rather than hard evidence".
He went on to talk about the question of wages, and what impact a stronger pound would have on the rate of inflation and on more and higher wage claims—exactly the point that the noble Lord, Lord Montague, has made.
There is a reasonable case for the Government to address on the question of somebody on the Monetary Policy Committee having some knowledge and experience of the business sector and manufacturing industry. But more than that, as I have said, there is much more to the United Kingdom than the triangle of Oxford, Cambridge and London, especially when we are moving towards a new geography in the United Kingdom of having a government in Wales and a

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government in Scotland. It is certainly true that the government in Scotland will have much more power and responsibility than the government in Wales.
The problem over many years has been that Scotland, Wales and the north of England have certainly suffered in times past when decisions have been made on matters such as interest rates entirely because of the position in the south-east of England. It was said in Scotland that when the south-east of England sneezes, Scotland catches a cold. It was certainly true for a number of decades after the war that the Scottish and Welsh economies would be at different stages of their economic cycle than the south-east of England. The economies of Scotland and Wales would be attempting to recover, but if the dampers were put on in the south-east of England the net result was that the recovery in Scotland and Wales would be stopped dead in its tracks.
I am happy to say that in the last five years the Scottish economy has done rather better than that and the evidence in this decade and towards the end of the last would suggest that the Scottish economy had broken free. However, I am not sure that that evidence is continuing. As I said yesterday, unemployment in Scotland on the last monthly figures had begun to increase, after having decreased month after month and year after year. So there is a problem there.
I have a similar problem with the single currency and a single interest rate over the whole of Europe. I know from my personal experience and interest in politics in Scotland over many years that a single interest rate for the United Kingdom has sometimes been of considerable disadvantage to Scotland. I have put down a marker about Scotland and Wales because much of what I have said for Scotland can certainly also be said for Wales.
I accept that monetary policy may be a bit of an academic expertise. If that is the Minister's answer, I must tell him that the universities of Scotland certainly have more than their fair share of high-powered economic dons. I am pretty certain that the Chancellor could pick from one of the Scottish universities an academic expert in those matters who would be equally able to take a place on the Monetary Policy Committee. Coming, as he would, from a Scottish university, he would have knowledge and experience of what was happening in the Scottish economy at first hand.
I hope that the Minister will not try to say that the only decent academic monetary economists are to be found in Oxford, Cambridge or London. I am sure a few are, but I am sure that other universities have the same.
I have to find the appropriate page in order to introduce my other two amendments. According to Schedule 3, a person is disqualified,
"if he is a Minister of the Crown. or a person serving in a government department in employment in respect of which remuneration is payable out of the money provided by Parliament".
I have suggested in Amendment No. 31 that it should not only say "is" but also "has been". That clearly indicates that I do not consider myself as a candidate for the Monetary Policy Committee, no matter the
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number of hours I have spent listening to the noble Lord, Lord Eatwell, telling me about the economy and how the last government were getting it wrong.
The second amendment, No. 32, is more important—if,
"he is a member of the court of directors of the Bank or has been".
My worry stems from this. I am sure the current members of the Monetary Policy Committee are all excellent people and I have no problem about that. However, when one looks through them, apart from the geography of where they live, there are some interesting common factors. Professor Goodhart, for example, is now the Norman Sosnow Professor of Banking and Finance at the London School of Economics, but he worked in the Bank of England for 17 years as a monetary adviser and became the chief adviser in 1980. He is hardly one of the away players, having been that closely involved.
Dr. DeAnne Julius does not have any kind of baggage of that nature. However, Sir Alan Budd has been the Chief Economic Adviser at the Treasury since 1991. That is quite interesting and on anybody's guess he is not an away player. Professor Willem Buiter I think I can excuse as well because I do not believe he has any experience. However, there are two out of the four: one who has been closely involved with the Treasury and the other closely involved with the Bank of England. Those are the four members of the away team to balance the five in-house people.
Without reflecting in any way on those gentlemen—the lady does not actually come into it—I believe I have made my point about the closeness of the team of people who are the nine members of the Monetary Policy Committee. I started off just being concerned about Scotland's manufacturing industry, but when I read the press release from the Treasury telling me who the four members were, I became even more concerned about the independence—if I can call it that—in more general terms of the away members of the team.
I hope that the Minister can give me some comfort on all of those issues. They are important, and if the Monetary Policy Committee has to make difficult decisions—which indeed it will have to do, otherwise the Chancellor would not have passed the buck to it; if the decision about interest rates was easy he would have kept it for himself—these important decisions have to be made, in my view, by people who are seen by the whole of the United Kingdom to be knowledgeable and broadly based.
4.15 p.m.
Lord Newby: I should like to express support for Amendment No. 25 in relation to broadening out the experience on the Monetary Policy Committee. There is absolutely no doubt that one's view of the economy, if one has based one's entire existence in the south-east of England, is very different from if one is based in the north, in the Midlands and certainly in Scotland and Wales. There is always a temptation in this kind of appointment, it seems to me, that people appoint people that they know, who tend to be people with whom they come into contact, who tend to be geographically

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concentrated in the same region. Therefore, I support that amendment. Incidentally, it is common practice with other central banks that equivalent committees often have a formal requirement of a regional base—far more of a formal requirement than proposed in this amendment.
I do not, however, go as far as the noble Lord, Lord Mackay of Ardbrecknish, in suggesting that there should be a Scot and somebody with an understanding of Wales within this group. We have here four appointments. If two are taken up by Scotland and Wales (says he, speaking as a Yorkshireman!) I suspect there will be virtually nobody appointed from the English regions, or indeed from Northern Ireland. That seems to me an unnecessary constraint. Equally, while I support the idea of having a representative from business and industry on the committee, again if that is two out of four, somewhat tight constraints begin to arise. Were I to pick out part of the amendment of the noble Lord, Lord Mackay, it would be that one person with that specific knowledge would be sufficient.
The final point I make on Amendment No. 31, which I do not support, is that it seems that whereas there is a danger in relation to home players, as has been suggested, equally there is a danger of ruling out people who may have spent some time (in their youth, as it were) as a member of a government department. Although I do not aspire to be a member of the Monetary Policy Committee, the fact that I worked for HM Customs and Excise for a few years immediately after leaving university does not seem of itself to be an adequate bar, 20 or 30 years later, to being appointed to this kind of committee. As a general principle, we should be encouraging more people to spend time working both inside and outside government, rather than pigeonholing them into one or the other. Again, this amendment has an unnecessarily constraining effect.
Lord Sefton of Garston: The noble Lord, Lord Peston, made a statement when opening the debate on Amendment No. 25. He referred to people from outside the area of the M.25. At one time, in the north of this country, we used to say, "Those people down there don't know what is happening north of Watford". There used to be a row about which Watford they were referring to. I always subscribed to the viewpoint that it was Watford Gap—just below the Midlands—but I am glad to hear it confirmed now that it is considered to be within the M.25. For many years we forecast that if the question of monetary policy and so on was not looked at in a national sense, that is what would happen. The concentration that was beginning to occur from the north to the south would become so bad that—as I said in my first speech in the House of Lords—the south-east would become a stranglehold and a barrier to the rest of the country taking part in Europe.
The implication of these three amendments is that not enough attention is being given to the outside regions, or to sectors which will have problems arising from a decision by the Monetary Policy Committee on the Bank of England. Before we had the proposals for the independent Bank of England, the Government made the
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decisions as regards interest rates, among other things. Therefore, the Government and the machinery whereby the decision on interest rates were made were the same. But now they are going to be different. The Bank of England will be deciding interest rates. What concerns me is the effect on the regions, as the noble Lord opposite said. My experience in this springs from 43 years in which, first, I was an active member and once leader of a major city which has suffered severely from the change in industrial transport. Secondly, I was the Chairman of the North-West Planning Council. I was a regional officer in another movement dealing with regional matters. On every occasion—we have watched it happen—we have seen a change in monetary policy. Perhaps the worst was when Liverpool was beginning to recover from the depression caused by the change in transportation. We at last convinced central government that we needed some large-scale investment in a field that was not affected by transport, and the government kindly agreed that they would send in 5,000 civil servants. One can imagine the effect that that had on the city centre of Liverpool, spreading out across that particular region. Then there was a change of mind. Everyone decided that the economy was over-heating and they had to go back. The consequence was that we lost all that investment.
I am not asking, and certainly would not suggest, that we should have a committee comprised of the people mentioned in the three amendments. That would he a very big committee indeed. I do not disagree with the proposals for the Monetary Policy Committee. It would be wrong of me and would not have the slightest effect. When the Minister finally decides to reply to the amendments, which he will ask Members of the Committee to withdraw, perhaps he would consider asking whoever takes on the position of monetary policy or any other kind of fiscal policy to report to the Government any possible adverse effects their decisions might have either on sectors such as manufacturing or on regions such as Liverpool. I would then be satisfied that the matter was being looked at.
Over 45 years I have known people responsible for that policy admitting the deleterious effect their decisions have had upon the regions I have spoken about, but they have never offered any solution. They forgot all about it and waited until the next time, when they decided on their future policies, instead of looking at the adverse effects of their decisions and doing something, or telling the Government to do something to rectify the situation.
I hope I have made myself clear. I do not usually participate in these high-sounding ideas; I leave it to the experts down here. But the country should not have had the economic problems that it has experienced so often from decisions taken in the south-east of England. Would the Minister give consideration to imposing upon the Bank of England or the Monetary Policy Committee a duty to inform the Government of any possible adverse circumstances that may arise in certain sectors or regions from the decisions they recommended?
Baroness Carnegy of Lour: Perhaps I might just take one moment of the Committee's time. I should like

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to make a comment on my own experience as a member of the Scottish Economic Council over a number of years, where I represented the interests of education and training, and where I watched the procedures of that council and its study of Scottish Office figures of how the economy was moving in Scotland in relation to the economy of the United Kingdom.
I do not know whether Members of the Committee realise the extent to which separate economic analysis of the Scottish economy has been done, and the resulting effects of the particular arrangements for bringing into Scotland industry inward investment and the somewhat separate arrangements for education and training. During that time, it interested me how frequently the economy of Scotland diverged and differed from the economy of the United Kingdom as a whole. Indeed, there were frequent comparisons, for example, with the south-east where competition between Scotland and the south-east interested industrialists very much. There are enormous differences which are partly cultural. For example, for a long time it was explained that people in Scotland saved more. I am not sure they still do, but at that particular time they were saving more, which affected the economy of Scotland. Expert members of the committee will understand various differences.
It seems to me that with the advent of the Scottish parliament, it is likely that there may be increasing divergence as regards legislation and arrangements, funding and costs for local government. I can understand what the noble Lord, Lord Newby, was saying—and I am sure the noble Lord, Lord McIntosh, was thinking it. But it is very welcome to hear it said that we do not want too many people on the body from specific areas of interest. One wants flexibility to achieve a balanced body. At the moment Amendment No. 27 is saying to the committee that these interests must be there. I am sure if there is nobody on that committee who knows what is happening in Scotland—one-ninth of the economy of the country, which may be doing something a bit different—it may be neglected. It might be that one of the industrialists or one of the academics is a Scotsman, as long as somebody is there to do that. It seems to me important, and I cannot imagine such a body working without it. It is a very amateur contribution, but I hope it is of interest.
4.30 p.m.
Lord McIntosh of Haringey: Before I start on the meat of the amendments, may I take advantage of the almost chance remarks of my noble friend Lord Peston, who said that he had considered tabling his amendment to Clause 12 because he thought it was as much about the objectives of the Bank as about the membership. If I look at the debate on Clause 12, I see that I am recorded as saying,
"We are setting the approximate 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".—[Official Report, 3/3/98: col. CWH 61.]
I meant to say "We are setting the proximate target" and not "the approximate target". Indeed I believe I did say that but it was recorded wrongly, and I am glad to have an opportunity to put that right.
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I have a great deal of sympathy with the objectives of the first three amendments, which seek to provide for special expertise, knowledge and experience on the Monetary Policy Committee, and rather less with Amendments No. 31 and 32 which seek to deny the Monetary Policy Committee particular forms of knowledge and experience. I perfectly well understand why there should be concern that the interests of Scotland and Wales, and of the English regions, of business in general and most particularly of manufacturing business, should weigh heavily with the Monetary Policy Committee in making its decisions. However I am not convinced that in a body of this size, with four outside members, this should be expressed in the membership of the committee itself.
The noble Lord, Lord Newby, exposed the contradictions and constraints which are involved in a number of these amendments. If one were to have somebody with particular knowledge of Scotland and another with particular knowledge of Wales, one would only have two for England. If one were to have two with experience of business and industry, one would only have two others. The amendment of my noble friend Lord Peston is less prescriptive but leads very much in the same direction, as we all recognise. It is much more important that, rather than restricting the membership of the Monetary Policy Committee, we should be sure that this committee has the interests of the regions and of the home countries and of business and industry in its sight when it is making decisions. That is why, in Clause 16(2) of the Bill, it is provided that the court shall have the responsibility for,
"determining whether the Committee has collected the regional, sectoral and other information necessary for the purposes of formulating monetary policy".
In other words, it is part of their concern for the procedures of the Monetary Policy Committee that they should have the interests of the regions and of the sectors—which means business and industry—at heart. That is the way in which we prefer to secure that the interests of business and of the regions and of the home countries are protected in the deliberations of the Monetary Policy Committee.
Noble Lords may feel that that is an indirect approach. I know that it will not satisfy my noble friend Lord Sefton, though I am relieved to find that he concentrates not so much on the membership of the committee, but on the way in which the committee reaches its decisions. I hope that that reassures him to some extent.
The fundamental view that we take about these amendments is that we want the best people, and the more restraints we put on where the members should come from, the more chance we have of sub-optimising and having people on the committee who are not the best people.
I have another concern which relates to the way in which our society operates. Of course I see the point that we do not want to have a charmed circle of London, Oxford and Cambridge, still less within the M.25. However, people in this country have a wide range of different experiences and have lived in different places. Would the noble Lord, Lord Newby, be qualified under

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the regional criterion because he comes from Yorkshire, or disqualified because he works in London? Would Professor Patrick Minford be qualified because he used to be a professor at Liverpool, or disqualified because he now works in London, or because he has never been, so far as I know, in manufacturing business? We are not like that these days. We live in different places; we work in different places.
The professor from Sheffield who wrote to The Times on 18th February—I do not know him; he may have been in Sheffield only for this academic year—but he might come to work in London in the next academic year, in which case he would lose his qualification. The point is that people move around; they change their jobs and their knowledge and experience change throughout their lives. We have already had a debate on the membership of the court, and it was widely recognised that the court, the larger body, contains much better representation of business and manufacturing industry and of parts of the United Kingdom outside London. We should be satisfied with that and with the provisions in Clause 16(2) that the court shall ensure that the Monetary Policy Committee has the information about the needs of the regions and the needs of manufacturing industry at its disposal when it makes the decisions it has to make. However, the membership of the Monetary Policy Committee should consist of the best people in accordance with the criteria laid down in the Bill.
Lord Peston: I thank my noble friend for his answer, though I have to tell him, for once, that I am not entirely satisfied. He referred to the "best people", but the range of best people is quite large. I must be careful not to put words into the mouth of my noble friend, but I somewhat interpreted what he was saying about how we make appointments in future in a general way. If those posts were advertised, we might well gain access to a much larger group of people, which is worth reflecting on. Professor Minford, as far as I know, is in Cardiff and not London nowadays, having left Liverpool, so that even though his views on the economy and my own are slightly different, he would meet some of the relevant criteria.
I shall make two more remarks and the noble Lord, Lord Mackay, also wishes to make a remark. There was a third target for me—and one reason for my putting this down was slightly mischievous—that as the noble Lord, Lord Mackay of Ardbrecknish, pointed out, what we observe here will be observed on a much larger scale when we have the single currency and the Central European Bank. Not least for our country, the regional impact will be vital in the monetary policy that they conduct there. I support a move in that direction, but underlying my view is the fact that we will need very powerful regional intervention if it is to be made to work. So I did have a third string to my bow there.
My last point, and I would like my noble friend to reflect on this, is that a relevant word here is "credibility". Anyone who reads the press locally, and indeed the national press in the form of the Financial Times, cannot but doubt that the people out there—I do not apologise to my noble friend Lord Sefton in so
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calling them—do not believe that their interests are taken care of by this committee. Indirectly, I am trying to advise my right honourable friend the Chancellor that when making these appointments in future he should bear in mind the words "what is credible" in terms of regional interests and business interests. Credibility is extremely important here.
I will not quite withdraw the amendment until the noble Lord, Lord Mackay of Ardbrecknish, has spoken.
Lord Mackay of Ardbrecknish: Perhaps I can start on a note of agreement with the Minister. Yes, I am indeed pleased to see that the new members of the court have been widely drawn. That is very welcome. As I indicated yesterday, however, there is a difference between the court and Monetary Policy Committee. We teased out the relationship, and it did not seem to me as though the court would have any influence over the decisions of the Monetary Policy Committee. I am therefore left with the feeling that, although the court may correctly represent the wide interests in the United Kingdom, that still leaves me with a problem in the Monetary Policy Committee.
I accept the criticism that the noble Lord, Lord Newby, made of my Amendments Nos. 31 and 32 that for somebody who might have been in the Bank or in the Treasury for a year or two in their early careers, it would not be very fair to knock them out if in their subsequent career they had become quite serious players outside either the Bank or the Treasury. The trouble with the noble Lord's argument is that the two people I have prayed in aid on the Monetary Policy Committee were not just casual employees of either the Treasury or the Bank of England. Professor Charles Goodhart was the Chief Adviser to the Bank and Sir Alan Budd was the Chief Economic Adviser to the Treasury since 1991. If I may say so, they were not just middle rank people gaining some experience on their way through.
While I agree with the point the noble Lord made in criticising my amendment, I was more aiming at people who were senior or serious players in either the Bank or the Treasury then finding themselves translated—in one case an immediate translation—to be considered one of the away team. My concern still remains, although I accept that perhaps my amendment is too widely drawn.
On the question of manufacturing industry and the various parts of the economy, I would he just a little more reassured by the explanation by the Minister if the Chancellor had made one of the four appointments from outwith the particularly tight circle from which these people are drawn. Anybody reading their CV will see that they have not done much moving around. I have read their careers and, apart from time abroad—which may be important, and the noble Lord, Lord Rees, was about to correct me—because two were born abroad and two have worked in very serious positions abroad, I am actually talking about the United Kingdom. There did not seem to be much moving about in the United Kingdom by any of them in the small CV put out in the Treasury biography. They do move abroad somewhat to take great tasks, but they return to the "magic triangle" in order to undertake their tasks in Britain.

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If the Chancellor appointed somebody from Sheffield University—I know nothing about the professor who wrote to The Times, and I may thoroughly disagree with his economic position—or somebody from Newcastle (the noble Lord, Lord Eatwell, has indicated that I probably would) or somebody from Wales, I would be rather happier. Perhaps even the noble Lords, Lord Sefton and Lord Montague, would be happier if someone from Scotland were included. If there was just one person from outside this magic circle or magic triangle, I would he encouraged, but I am discouraged by the fact that there is nobody.
My noble friend Lady Carnegy is quite right about the position of the Scottish economy, and I suspect that the noble Lord will withdraw the amendments. However, I say this simply to the noble Lord, Lord McIntosh. He can take it to his right honourable friend the Chancellor, and it will nor surprise the Chancellor. Once the government of Scotland is up and running, the Westminster Government will not get away with a Monetary Policy Committee without somebody from Scotland. I give him that warning. When that day happens I shall look out for the noble Lord in the corridors and he can buy me a very large wine of my country.
4.45 p.m.
Lord McIntosh of Haringey: Before my noble friend winds up the debate, I recognise that I did not respond to Amendments Nos. 31 and 32 which were grouped with the main amendment. I should have done so because they show such a nobility of spirit on the part of the noble Lord, Lord Mackay of Ardbrecknish, that the matter should not pass. What he is doing in Amendment No. 31 is to exclude himself, as he recognises, from consideration, and so reluctantly I withdraw the nomination which I had had in mind of putting forward.
More seriously, he talked about people who have extensive responsibilities in a senior position. He has had extensive experience in a senior position and it would be paradoxical if we were to make the kind of exclusion that he is proposing. We should also have excluded John Maynard Keynes from consideration as a member of the Monetary Policy Committee as a former employee of the government.
I do not in any way want to underestimate the importance of the thrust of the amendments. It is absolutely fundamental that we should show solidarity between regions and countries of the United Kingdom and that our monetary and economic policies generally should be concerned with the support of those regions and not concentrated on the south-east and on the financial sector. That is fundamental.
It also follows from what I have just said that we must be concerned with business generally and with manufacturing industry in particular. The only query that we have with that thrust, with which we agree, is that we do not believe that it can or should be carried through into the membership of this very small Monetary Policy Committee.
Lord Peston: I thought I had summed up. I shall not say anything further other than that I look forward to what the noble Lord, Lord Mackay of Ardbrecknish, has said about the likely behaviour of the Scottish parliament and the resulting drinking to which we may all be looking forward. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 26 to 28 not moved.]
Clause 13 agreed to.
Schedule 3 [Monetary Policy Committee]:
[Amendment No. 29 not moved.]
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 30:
Page 22, line 43, at end insert (", except that, in any case where the inflation performance of the economy falls outside the targets specified under section 12 for a specified period, the Chancellor of the Exchequer may make such modifications as he thinks fit to the remuneration of members of the Committee.").
The noble Lord said: I felt I might withdraw the amendment. On the other hand, it is the only amendment that will give the Minister the opportunity to explain to us what will happen if the Monetary Policy Committee fails to meet the Chancellor's target of 2.5 per cent., plus/minus 1 per cent.
I have suggested in the amendment that if it fails to meet the target we might have some negative performance-related pay with regard to the members of the Monetary Policy Committee: they should have some of their pay docked. It is a slightly serious point because it would concentrate their minds. More importantly, it seems to me that it would be interesting to hear from the Minister exactly what will happen.
As far as I understand, the Monetary Policy Committee will send a letter to the Chancellor and say, "Whoops, sorry, Chancellor, we've got it wrong and this is what we are going to try to do about it". It does not seem to me that much will happen to the members of the committee. Will they be told to write out 100 times, "I must not go beyond 3.5 per cent."? What is going to happen? I read a book recently about the family who built Richmond Terrace where, in the now becoming dim and distant days of ministerial life, I had my office. One of the daughters married Charles James Fox and what I found interesting was the way government Ministers, or people who appointed the government Ministers, had a measure of performance-related pay. They were allowed to keep a small portion of what they collected or distributed or, while they had the money in. they invested it and were allowed to keep the interest. They built some very grand houses and ran some very grand estates on that. Unfortunately, I understand that that was all stopped early in the last century and I doubt if it would be acceptable today.
Performance-related pay is not unknown and this is a suggestion that, if the committee fails to meet its targets, it receives a little more than just a letter; a little more than just an explanation, and some reduction in members' pay might be considered by the Chancellor.
I doubt if the Minister will accept this amendment but perhaps, in turning down my amendment, he will explain to us exactly what is going to happen if the Monetary Policy Committee fails to meet its target. I beg to move.
Lord McIntosh of Haringey: The first and most obvious answer to the noble Lord is that to do that would be the most gross political interference and I cannot imagine that the Opposition would let such an occasion go by without severe censure.
The second answer is that the noble Lord is proposing a very curious management style. In my experience, having spent 30 years in business and therefore being thoroughly qualified as a potential member of the Monetary Policy Committee, if somebody is not performing adequately, we do not tell them to take a cut in pay: we get rid of them. Otherwise we are building up resentment and keeping that resentment in the team, which seems to me to be an undesirable way to approach the matter.
I am not taking the amendment of the noble Lord at face value. But I am taking his speech seriously and I am taking seriously the point that he makes about the open letter and the way in which the Chancellor would react to a letter which indicated that the Monetary Policy Committee had failed to meet its broader targets.
Monetary policy is not the same as selling cars. In particular, getting the specification of a performance-related element right would be tricky. Would it apply immediately the Bank had gone outside its limits and had to write the open letter? Given the time lags involved in setting monetary policy, it might take a year or more for the effects of the Monetary Policy Committee's decisions to be felt, though the letter has to be sent straight away. The current inflation target, through the open letter system, explicitly recognises that, in some circumstances, it may he acceptable to deviate from the target but that the Monetary Policy Committee must be explicit about how it plans to deal with such shocks.
In answer to the noble Lord, that is exactly what the open letter is designed to do. Those circumstances would necessarily be unpredictable and it would be difficult to get right the contract that the noble Lord wishes us to draw up with the members of the Monetary Policy Committee, to make sure that we did not introduce undesirable incentives for monetary policy. We might land up saying, "You will be preserved from having your salary cut provided you get back within three months". It might be that economic conditions in Europe or inflationary conditions in other countries of the world did not make that possible.
I am convinced that the open letter system, with its requirements that the Bank and the Monetary Policy Committee should emphasise not so much what went wrong, but what they are going to do to put it right, is a more effective method than that which is proposed in Amendment No. 13.
Lord Taverne: I hesitate to speak when I have been unavoidably absent from the deliberations of the
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Committee. I should just like to say that my fear is that there is too much rigidity in the interpretation of the targets. This amendment underlines that tendency and it would be better to retain some flexibility, as indeed the noble Lord indicated.
Lord Mackay of Ardbrecknish: I am grateful to the Minister for his explanation of the letter, of what he envisaged would be in it and the kind of assurances the Monetary Policy Committee might give. I am sure that the Monetary Policy Committee will be relieved at his vigorous defence of the salaries and positions of its members and equally relieved that I am not going to push it to any kind of Division either here—which I cannot do—or elsewhere when the opportunity arises. I am not sure that losing part of members' salaries would do anything to reinforce what will be a banker's caution, to ensure that they meet this target.
My concern is the one that I expressed at Second Reading: that they will attempt to make it so certain that they meet their target, that they will probably tend on the robust side when it comes to interest rates. The consequences of that for our economy may well be damaging, but that is another issue. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 31 and 32 not moved.]
Schedule 3 agreed to.
Clause 14 [Publication of statements about decisions]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 33:
Page 6, line 33, at end insert—
("() Statements published under this section shall record, in relation to any decision of the Committee, the voting preference of the members who took part in the vote on the decision.").
The noble Lord said: I beg to move Amendment No. 33 and with it I shall speak also to Amendment No. 34. Clause 14 is about the immediate publication of the decisions of the Monetary Policy Committee. The public have a right to know and it is right that there should be public accountability on the part of the Monetary Policy Committee. This particular clause is not about the minutes of the meeting, to which I will come in a second. That involves Clause 15, to which Amendment No. 34 relates.
Clause 14 concerns decisions that are made in the committee and have to be announced either on the same day—meaning the day after tomorrow, because the Monetary Policy Committee meets this week—or early next week. It refers to the announcements it has to make then, in contrast to the minutes some six weeks hence. The minutes six weeks hence, we know, show the voting preference of the members who take part in any vote on any decision. We saw that in the January meeting, when we saw which five people had voted to keep interest rates the same and which three had voted to raise them.
I may now be running out of time from my months, but I think it is right that in last month's meeting, whose minutes we still do not have—I do not know how it got out—there was an indication which I read about in the papers, that there had been a five-three division as well.

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What we do not know is whether it was the same five-three or whether there had been some movement around. I do not suppose that the Minister will confirm or deny whether it was five-three, but I certainly saw that speculation in the newspapers. I do not know the grounds for the speculation, but that was the case.
My first amendment would have the effect that, when the Monetary Policy Committee announced in February that interest rates were to remain the same, it should then have stated the voting preference for anybody who took part in the vote. The second amendment relates to the wait of six weeks. Why do we wait, in fact, for a week or two after the next meeting before we read the minutes? I am sure that they are written fairly soon after the first meeting. I hope the noble Lord is not going to say that the Committee, at its subsequent meeting, have to agree to the minutes before they are published? If that is the case, they could he published rather more quickly than in six weeks. Depending on the length of the month, they could he published in five or four weeks—rather more immediately.
I am teasing out from the Minister why it is six weeks. I know he will tell me that that is the way Kenneth Clarke decided it should be. But Kenneth Clarke was dealing with a different kind of meeting. He was dealing with a meeting between himself and the Bank, where he took a full part in the decision-making process on whether or not to increase interest rates and the minutes were then published. That was the first time the minutes of those meetings had been published. When creating a Monetary Policy Committee which is independent, on which the Chancellor does not sit, where the decisions are not made by the Chancellor any more and he is not involved in the making of the decisions, it is worth considering why we should not do the same as that which we did with the "Ken and Eddie Show", as it was called, and wait six weeks.
My two points are these: first of all, in the immediate decision announcement should we not know what the vote was and who did the voting; and, secondly, do we really need to wait six weeks, until after the next meeting, before we read the minutes of the last one? I beg to move.
5 p.m.
Lord McIntosh of Haringey: The noble Lord is quite right in saying that I intended to refer back to the "Ken and Eddie Show", not quite in the same terms in which he did but because I must confess that when the "Ken and Eddie Show" had its premier, I was puzzled by this six-week delay. As a complete outsider, and somebody who is used to having the minutes of meetings available immediately afterwards as a normal business procedure, I could not understand why this should be so. I have to say that the argument which I assume Kenneth Clarke and the Governor used at that time still applies today. The meeting is not that different. The reason is that these meetings take place on a monthly basis—they do not need to take place on a monthly basis but they do—and any further information, particularly information about the nature of the votes,
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could well be destabilising and could limit the options open to the next meeting if they became available before the next meeting.
We agree with the process started by Mr. Kenneth Clarke when he made these meetings more open and transparent, and we have extended the openness and transparency by proposing that the voting record should be published, and this, as the noble Lord recognises, has now happened. But the publication of the voting record immediately when the decision was taken might he destabilising, particularly if there is a split decision as there was in January 1998. It might well be that the publication of the voting record in January, taken before the February meeting, might have forced the members of the Monetary Policy Committee into a false sense that they had to be consistent with their previous view, even when their economic and policy judgments could have been otherwise.
The noble Lord has been reading speculation about decisions in February. They are pure speculation and to the best of my knowledge no statement has been made with any authority which breaks the six-week rule which has been set up.
The arguments are the same as they were when this first arose under Kenneth Clarke's Chancellorship. The important point is to ensure that the minutes do not come out before the meeting, or "not more than six weeks after the meeting" is the phrase. This is designed to cope with the vagaries in the calendar, but above all it is designed to make sure that the subsequent meeting of the Monetary Policy Committee takes place without any external or internally-imposed constraints on reaching the right decision. I fear that the noble Lord's amendments would damage that.
Lord Peston: Before the noble Lord replies, may I ask my noble friend a question which has only just occurred to me, for which I apologise? Clause 15(4) refers to the voting preferences of the members. I do not recall seeing anywhere else in the Bill anything else about voting, or about the internal procedure of the Monetary Policy Committee. It may be somewhere else and I have just missed it, but two questions occur to me. First, is there any obligation for this committee to take decisions by majority voting? Could they not, for example, have a rule that it has to be complete anonymity as to their voting preference? Is there somewhere in the Bill that tells us it must be majority voting? That is my first question. My second depends on the first.
Lord McIntosh of Haringey: Schedule 3, paragraph 11(4) states,
"Decisions shall be taken by a vote of all those members present at the meeting".
Lord Peston: But it does not say that it should be majority voting.
Lord McIntosh of Haringey: Sub-paragraph (5) states,
"In the event of a tie, the chairman shall have a second casting vote".
That implies majority voting.
Lord Peston: I am not sure about that and will reflect on it. I raise this for another purpose and it is one that

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troubles me wearing my academic hat. There are three possibilities at any meeting: raise interest rates, leave them the same or lower them. It is a well known proposition in voting theory that where there are three possibilities you can have cyclical preferences so that any proposition can have a majority against anything else. Therefore, the person who controls the agenda—the most well known of all the propositions—controls the outcome. The question of voting is not as trivial as I thought it was. I ask my noble friend to reflect on that.
To take the obvious point, if the voting of some people is that they most want down and they most dislike up, and there is another group who most want up and dislike down, they may both for protective purposes vote for the status quo even though that is not their first preference and is not, in their judgment, the best thing for the economy. I ought to come back to this when we meet on Report. I realise that technically this is not a trivial matter.
I thank my noble friend for drawing my attention to the part of the Bill which covers this point and ask him to get his expert advisers to brief him, and therefore in due course to brief me and other noble Lords, on whether there could be problems of serious errors in policy arising from a voting system.
Lord McIntosh of Haringey: I suspect that my advisers, with all their admirable qualities, are not academically qualified in the theory of games. I shall reflect on the point that my noble friend Lord Peston has made.
Lord Mackay of Ardbrecknish: The noble Lord, Lord Peston, makes a good point. I can see that the voting might be awkward for the Governor to conduct if there are members looking at all three options. It is probably straightforward if nobody is in favour of one of the options, but if some are in favour of all three, then it could be a difficult decision and you could achieve a muddled compromise which did not satisfy anybody. That is another matter. I would be interested to hear what the Minister has to say once the Treasury has reflected on it, as no doubt it will do.
Lord McIntosh of Haringey: There are not just three options. There is an infinite variety of options. Rates can be raised by different amounts. I know how I would handle it as the chairman of a meeting which is to attempt to secure agreement on the least objectionable alternative, but that does not give a great deal of power to the chairman of the meeting. My noble friend recognises this; let us talk about it again.
Lord Mackay of Ardbrecknish: We had better because it is beginning to sound like the lowest common denominator, which might not be the best way. I am pleased I pursued this because it has raised an interesting issue. I have listened with interest to what the noble Lord, Lord McIntosh, has said. I am not entirely sure that having a six-week gap will remove the pressures from the members two meetings ahead when it comes to looking at what they have done two meetings behind. We know who voted in the January meeting. I
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am not entirely sure we would know how they voted when it comes to the March meeting if there were no pressures on them, whereas if we knew how they voted in the February meeting, there would be undue pressures on them. I am not entirely sure that I was convinced by the argument of the noble Lord. Lord McIntosh, when it came to that part.
I see the problems. It is a matter of balance between being open and allowing everybody to see what happened, and the problems which could occur in the money market and the economy if in fact people realised too soon what was happening. They might then take steps to guard themselves against what looked like an adverse decision as far as they were concerned at the next meeting. We may well return to this in some form or another. Someone will have to devise a suitable amendment. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 [Publication of minutes of meetings]:
[Amendment No. 34 not moved.]
Clause 15 agreed to.
Clause 16 [Functions of court of directors]:
[Amendment No. 35 not moved.]
On Question, Whether Clause 16 shall stand part of the Bill?
Lord Fraser of Carmyllie: Before we move to Clause 16 stand part, perhaps I may say to the noble Lord that I certainly felt there was some attraction in the argument that he advanced in response to the group of amendments beginning with Amendment No. 25. He implied that if one was looking to the way that the committee conducted itself and one wished to ensure that it did not have regard only to opinions in London, instead of prescribing residence or domicile in other parts of the United Kingdom a more appropriate approach might be to give some direction or impose some requirement on the committee that it has regard to other parts of the Kingdom.
The noble Lord made particular play with what is found in Clause 16(2), namely, that,
"the court's function under subsection (1) shall include determining whether the Committee has collected the regional, sectoral and other information".
One thing, it seems to me, that this committee will not lack is bumf. It is unlikely to have too little information before it, and it would seem to me, accordingly, that the court of directors of the Bank would have an extremely light duty to discharge if it only had to look to see how much information was made available to the committee in coming to its view. It seems to me that we should at some point look to some strengthening of that provision along those lines that the court of directors might have some duty to ensure that "it shall have regard to" that information on regional, sectoral and other matters.
I hope that the noble Lord might reflect on that and not simply restrict it to ensuring that the information is collected.

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The other point I want to make on this clause is this. Is Scotland a region? I would advise the noble Lord to think long and hard before he answers that question. The Institute of Chartered Accountants of Scotland regards England as a region for the purposes of its activities there. I am not aware of England being described as a region in any condescending fashion other than in that context.
This is a general point but, I believe, an extremely important one. This is the first time, so far as I am aware, since the Scotland Bill got under way that we have had a chance to consider the use of the word "region" in relation to legislation. The draftsman would seem to be well advised to change this drafting to acknowledge what has been put forward by the Government in their White Paper Scotland's Parliament, which led to the referendum and has now led to the Bill. It is simply incorrect in future to describe Scotland as a region.
I shall not be very helpful in offering any alternative word other than to say that Scotland and Wales have to be included. In my time in government the vogue was to describe Ministers from Wales, Northern Ireland or Scotland as "territorial" Ministers; and a description of Scotland, Wales or Northern Ireland as a "territory" probably would provoke quite as much irritation as the description of those parts of the United Kingdom as "regions". I do not invite the noble Lord to give me an answer now. I am just putting him on notice that there is a very real issue, not only in this legislation hut more generally.
The Minister will be well aware that his right honourable friend Mr. Donald Dewar found himself in considerable difficulty recently about an alleged withdrawal of a knighthood for Sean Connery. Those issues are extremely raw in Scotland at the present time and it seems to me incumbent upon this House, in looking to the drafting of legislation, particularly United Kingdom legislation, to ensure that no unnecessary affront is caused to Scotland.
Lord McIntosh of Haringey: I do not know whether the noble and learned Lord, Lord Fraser, was here half an hour or so ago when we were discussing Amendments Nos. 22, 23 and 27. If he was, he would have observed that I very carefully used the phrase "home countries". This is a new phrase to me but it is what is used in Whitehall, and possibly even in Holyrood or St. Andrews House, to distinguish Scotland and Wales—the Kingdom of Scotland and the Principality of Wales—from the English regions. If there is a problem, as there may be, with the use of the word "regions", then we must look at this again. I shall write to the noble and learned Lord, but I must warn him that I have just written a very dense five-page letter to him about the Scottish dimension of the National Lottery Bill, and I do not think he will want another like that in short order.
The noble and learned Lord's worries about the duties of the court, and not having anything to do if that is all it does, are readily dispelled. The court has many more
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duties. It is fundamentally responsible for the management of the Bank of England, other than monetary policy.
5.15 p.m.
Lord Fraser of Carmyllie: Either I have expressed myself poorly, or the noble Lord has misunderstood me. He made great play of the fact that, if my noble friend and others were concerned that the committee would not have proper regard to regional sectoral interests, our fears ought to be allayed because there was the duty to ensure that it collected information. My point is that I have no doubt that it will have more than sufficient information about the regions, about Scotland. about England and about sectors, but it seems that that is not sufficient. If it were to look, for example, at the piles of papers to be provided to members of the Monetary Policy Committee, I am sure it would very quickly discover that there was more than sufficient information. That is not quite the answer. We are trying to ensure that there is a duty upon the committee to address the issue of the potential differences within the United Kingdom economy as a whole as it affects Scotland, Wales and the regions of England.
I am sure that my noble friend Lord Mackay of Ardbrecknish is correct in saying that we should look specifically at Scotland, because one necessary consequence of the establishment of a parliament in Scotland is that there will certainly be some features where there will be homogeneity in the economy. We want to ensure that the committee has regard to that development.
Lord McIntosh of Haringey: I was going to come to the third point made by the noble and learned Lord. I was only dealing with his concern that the court and the committee would have nothing to do if it was only a question of ensuring that information was available.
His more fundamental point, which I recognise, goes to the heart of the relationship between the Monetary Policy Committee and the court—the distinction we have made—and the responsibility for monetary policy, which lies with the Monetary Policy Committee. If he cares to read the record of the debate yesterday, he will see that, although noble Lords disagreed with me, I was very insistent that there should be no greater complication in the statement of objectives of the Bank other than that it should primarily be price stability and, subject to that, the economic policies of the Government. I resisted all attempts to extend that definition, and I would have resisted any attempt to add to it so that it should have regard to any other particular factors, on the grounds that I stated then, that you must have one proximate target rather than having a whole range of targets with the potential for conflict between them.
On the question of devolution, which both the noble Lord, Lord Mackay of Ardbrecknish, and the noble and learned Lord mentioned, political consideration will have to be given to this, as to all other matters, when the Scottish parliament is formed. I shall be interested to see how concerned the noble Lord and his party are about the effective pursuit of devolution.
Clause 16 agreed to.
Clause 17 [Power to obtain information]:
The Earl of Home The Earl of Home moved Amendment No. 36:
Page 7, line 25, alter ("undertaking") insert (", such information being solely that").
The noble Earl said: In moving Amendment No. 36, I shall speak also to Amendment No. 37. These amendments largely concern costs and I make no apology for continuing to emphasise the need that we all look for, which is that costs are kept to a minimum. There is in this clause a danger that the institutions will incur extra costs over and above what might be necessary.
Both the Bank and the authority will naturally want to have their own ideas about the form and the manner in which they collect the information anticipated in subsection (2)(a). In addition, it is quite possible that either of them might want the same information but in a rather different form. The Bank has, for a considerable length of time, been receiving information and it is only human nature that they have developed a good system which works for them and with which they are comfortable, and they will not necessarily want to change it. The requirements of the authority may need the information to be in a different form.
I entirely accept that the Bank and the authority will do their best not to duplicate, and indeed their intention not to do so is enshrined in paragraphs 5 and 6 of the MOU between the Treasury, the Bank and the authority. Those paragraphs refer to the desire to minimise the burden on companies. Amendment No. 36, however, seeks to concentrate the minds of those in the Bank to ask only for information which they really need. Ideally, I should like the words "or expedient" to be deleted from that paragraph, and indeed my colleagues in another place asked for that, but their request was rejected by the Economic Secretary. My thesaurus gives "helpful" as a synonym for "expedient-, and on that basis one can think of much information which the Bank might find helpful to have but which is not strictly necessary.
Amendment No. 37 covers the eventuality whereby the Bank asks for information which may be expensive for an institution to provide without apparent good reason. The Bank must be seen to have a good reason for requesting information but it should tell the institution why it wants it. In addition, the Bank should have some idea about what the costs are of producing that information.
Institutions take any request from the Bank very seriously indeed, and I know from my own experience that, if anything, banks go overboard and provide more information than the Bank in the past technically needed. Although the Bank might imply in a notice that it only wants a back-of-an-envelope calculation, unless told otherwise institutions will provide a lot of information and at considerable expense. This amendment would ensure that there are fewer misunderstandings on that topic.
It is everybody's intention that the City of London and other financial centres in the UK must be kept as competitive as possible and minimise costs. I fear that
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over-enthusiasm in fact-gathering, while understandable and indeed laudable, could impose extra costs on institutions and reduce our competitiveness overall. I beg to move.
Lord McIntosh of Haringey: My answer to Amendment No. 36 is very simple. My answer to Amendment No. 37, however, is rather more complicated, so the Committee will have to forgive me. Amendment No. 36 is strictly unnecessary. The effect of Clause 17 is that the Bank can only request the relevant financial information which it considers necessary or expedient for the purposes of its monetary policy functions and the amendment adds nothing to that.
The noble Earl referred to his disquiet about the word "expedient", and he talked as if "helpful" was a thesaurus synonym. I do not believe a thesaurus has synonyms; it has related words, and if we started to use a thesaurus to interpret the wording in legislation we would rapidly find ourselves in considerable difficulty. I hope the noble Earl is persuaded that Amendment No. 36 would not help his cause.
Amendment No. 37 is more complicated because it refers both to reasons for the need for such information and to an estimation of costs, and these arguments are very different. First, let me make it clear that there is no change here proposed in existing legislation. The review of statistics which was carried out in 1997, and I believe was instigated under the previous government, came to the conclusion that no change was necessary and no change is therefore proposed. Indeed. Clause 17(6) provides that if any change were proposed in the future there would be consultation on such a change before it was imposed, so I can give the noble Lord that assurance.
As to giving reasons why the information is needed, it will be clear why the Bank will need the information, because the Bank will make it clear on the statistical form which is used under which power it is seeking the information. That will give the supplier of information the undertaking, the reasons which are necessary and which are called for in the amendment.
The issue of estimating the cost is much more difficult. Frankly, the amendment is unworkable. It is unreasonable to expect the Bank to estimate for every individual institution—which is what is called for—the costs of providing additional information. How do we know what are the costs of an individual institution, as the amendment would require us to provide?
Behind these amendments, however, is the fundamental concern which the noble Earl has expressed throughout this Committee stage that somehow the costs will increase. We are fully aware of the need to keep the cost of supplying information to the minimum consistent with meeting the information needs of the Bank. The Bank's code of practice for statistics commits the Bank

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to place the minimum load on data suppliers and to keep data suppliers' costs to a minimum. I hope that gives the noble Earl the reassurance that he seeks.
Lord Stewartby: May I just ask the noble Lord one question? Will the Bank be in a position to require this information before the Treasury has made the order referred to in subsection (4)?
Lord McIntosh of Haringey: We have to make the order first, before the Bank can require the information.
The Earl of Home: I thank the noble Lord for his reply to my two amendments. I accept the rather sloppy use of the word "synonym". Even so I retain some residual concerns that overenthusiasm in asking for information could be difficult. In accepting that the Bank will make clear on its statistical form why it is needed without seeing exactly what is the shape of these statistical forms, it is a bit difficult to be able to tell exactly what that is.
Lord McIntosh of Haringey: I can answer that readily. I have already said that there was a review of statistics. No material change was recommended and no change is taking place. The statistical forms will be as they are now.
The Earl of Home: I thank the Minister for that indication. Moving on, I accept the fact that the Bank cannot know what the entire costs of each individual institution producing information such as it might ask for. However, there is a difference between the Bank saying, "Please give us some information but don't take long doing it: it really can be on the back of an envelope", and saying, "We really need a full-blown, totally documented answer to this request". I would hope that the Bank at any stage would have some idea of the importance, and therefore the amount of time and therefore cost, that the institution might be expected to spend on producing any particular piece of information for it. However, on the assurances given on that by the noble Lord, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 37 not moved.]
Clause 17 agreed to.
Clause 18 [Reports]:
5.30 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 38:
Page 9, line 5, at end insert—
("() A report under this section shall include references to any constraints experienced by the Monetary Policy Committee in discharging its responsibility under section 13(1) which inhere in other Government economic policies, including the effect of any open market operations undertaken in conjunction with the Government's exchange rate objectives.").
The noble Lord said: When I read the amendment this morning, it suddenly occurred to me that something had gone wrong with somebody's computer as I am not sure that I understand the word "inhere". It may be a good Scots word that my computer has put in for me.
The basis of the amendment is a request or suggestion that when the Monetary Policy Committee reports it should report on any constraints under which it feels it has laboured because of other parts of the Government's economic policy. Professors of economics would probably call that an interaction between fiscal and monetary policy. It seems to me that it might be useful for the Government to know, and for the rest of us to know, whether the Monetary Policy Committee found it difficult to operate within its constraints resulting from other parts of the Government's policy.
I am not sure whether there will be secret communications between the Monetary Policy Committee and the Government or the Treasury. I had the impression that there might be such secret interchanges of view when I listened to the President of the Board of Trade, who was being interviewed this morning. Unfortunately, I did not find a paper and pen quickly enough to take down her words in detail, but I rather felt that she said we would have ways of telling the Monetary Policy Committee what is happening in manufacturing industry.
The whole piece revolved round interviews with people in manufacturing industry who were concerned about the rise in interest rates and its effect on the exchange rate. It is interesting that the person was asked whether he blamed the Bank of England and he said, "No, I don't blame the Bank of England. It has only been given one tool with which to do the job". It will be interesting to see how long that lasts. Even somebody as obviously knowledgeable as that gentleman may some day start to blame the Bank of England and forget that the Chancellor and his fiscal policy played a part in the whole process.
My point is that I had the impression from Mrs. Beckett—though I may have picked it up wrongly and I stand to be corrected—that there will be ways by which the Government can send messages to the Monetary Policy Committee. I am more concerned about whether the Monetary Policy Committee can send messages to the Government. Also, I shall be interested to know whether it does it in secret or whether it does it openly in the report. I should like to think it can he done openly in the report so that Parliament can judge, when it looks at the report, what happened and hold the Government to account for any rises in interest rates that occurred because of problems caused by other parts of the Government's policy. I beg to move.
Lord Peston: Before speaking to Amendment No. 39 in my name and in the name of my noble friend Lord Barnett, let me say that after reading Amendment No. 38 from the noble Lord, Lord Mackay of Ardbrecknish, I had assumed—and I may have misinterpreted the Bill—that what he had in mind was covered by Clause 8(2)(c) which says that the report shall contain,
"an indication of the expected approach to meeting the Bank's objectives under section 11".
Following our debate yesterday on Clause I 1, though subsection (a) seeks "to maintain price stability", there is still the "subject to" hit of subsection (1-) to consider. I do not see how they can wriggle out of not covering that. It means what the noble Lord said it means and I look forward to hearing my noble friend's response.

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Turning to my own amendment, this is one which I take extremely seriously. It is not that I have not taken all the other amendments seriously, but this is at the top of my priorities. The Governor himself, who has recently been reappointed, emphasised transparency in his recent Mais lecture. He said:
"Transparency … can only encourage a better informed public debate and a more sophisticated public understanding of the issues. That in turn can only help to strengthen confidence in the process".
The Governor clearly favours transparency. The former Chief Economist, Mervyn King, who I think is or will be a deputy governor, said only a couple of years ago:
"Central banks can try to accelerate the learning process by teaching by doing, in other words, making clear their own preferences and explaining their own view of how the economy behaves … and the product of this learning should be communicated to the public at large".
Excellent economic work is done in the Bank. The Bank of England's quarterly bulletin contains some astonishingly good articles of the very highest quality. Equally, the inflation report is a document of outstanding merit. I assume that when the Bill becomes law, it will still produce documents of this kind.
My problems start from the inflation report itself. Every time it appears, the inflation report contains the Bank's inflation forecast—in an extremely sophisticated way. I might say, without remotely criticising the Treasury where I used to work as a very young man. The inflation report forecasts are much more sophisticated in form than anything the Treasury produces by way of documentation or forecast. I am not criticising the Bank, but the problem with the inflation report is that it is the only forecast it publishes, unless I have misread parts of it. Any sensible person, on looking at those forecasts, says, "What else is it forecasting? What is it not telling us'?". If you wish to take an intelligent view of what is being said—and that is vital to the whole operation of monetary policy—it is impossible to make sense of that unless you know what else it has in mind.
Let us compare this with what happens in the Fed. Let me remind my noble friend of the Fed's mandate—the so-called Humphrey-Hawkins Act, which I intended to read out yesterday, but forgot. This is an interesting contrast with Clause 11. The Humphrey-Hawkins Act provides that the Fed must,
"maintain long-run growth of the monetary and credit aggregates commensurate with the economy's long-run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates".
Notice, there is no "subject that". They are all on a par. Therefore the Fed, which many would regard as the most successful of the central banks, has a mandate not only to achieve inflation but also to stabilise economic activity.
I read that into the record but the main reason I do so is that, in connection with the Humphrey-Hawkins Act, there is an annual occasion of testimony by Mr. Greenspan to both Houses of Congress on the meeting of these matters. Again, this is not unrelated to certain remarks made yesterday about parliamentary scrutiny of all these matters.
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I now come to my final point, which is the essence of this amendment. The Fed publishes its economic forecast twice a year, precisely to meet the requirements of testimony in connection with the Humphrey-Hawkins Act. In other words, the Americans, with their great emphasis on an open society, just take it for granted that the Fed, doing forecasting, will publish those forecasts. It is a source of sadness to me that somehow we do not take this for granted, but we have to argue for it. Normally, our wish is not granted when we ask for forecasts to be published.
There is an economic theory that says that the only way governments manage economies is by misleading markets—essentially by surprising them, tricking them, and so on. I hope that is not the view of the present Government. My own view is that, although there are models that achieve that end, they are overwhelmingly erroneous. I take the view that, for all sorts of reasons, not least those concerned with credibility, we want to be able to believe that what the Bank is doing is the best for the economy. By "we" I do not just mean a few academic economists, but the public at large.
I am convinced that the Bank should publish its forecasts, but not immediately. I would not die in the last ditch for six weeks; I chose six weeks because it is the standard period which appears in the Bill. I commend the amendment very strongly to the Committee, and I hope I have convinced the Minister that as a minimum he ought to say that this is important and that he will not resist the amendment, even if he cannot yet accept it.
Lord McIntosh of Haringey: I will deal with each of the amendments in turn.
The noble Lord, Lord Mackay of Ardbrecknish, seemed to open the argument for his amendment with a conspiracy theory. He thinks that there may be secret contacts between the Bank and the Treasury. I am not sure whether he approves of that or not. Let me assure him that contacts are not secret. A Treasury representative attends all the Monetary Policy Committee meetings, and that is provided for in Schedule 3, paragraph 13, of the Bill. In any case, I am sure he will acknowledge that the Chancellor has been very transparent about all aspects of government policy, particularly fiscal policy. The introduction of the pre-budget report is evidence of that.
Lord Mackay of Ardbrecknish: I fully appreciate that an official from the Treasury attends. I just wonder what his views are and whether what he has expressed to the Monetary Policy Committee will be contained in one of the paragraphs of the minutes.
Lord McIntosh of Haringey: I think the minutes are the minutes of the Monetary Policy Committee, which he attends as an observer and not as a member. It has to be the minutes of the members of the committee. If I am wrong, I will write to the noble Lord, Lord Mackay.
When I read the amendment of the noble Lord, Lord Mackay of Ardbrecknish, quite apart from the admirable

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word "inhere", I am puzzled by whether he is saying in the amendment what he really thinks. He talks about
"constraints experienced by the Monetary Policy Committee".
I think he is really seeking to get the Monetary Policy Committee to say that it wanted to do the right thing but was stopped from doing so by "this wicked Government who set us these terrible economic policy objectives so we could not do what we intended. It is not our fault; it is Daddy's fault". I am not at all convinced by that.
Even taking the amendment literally, it is not necessary. The inflation report will cover the impact of government policy on developments in inflation and how this affects the Monetary Policy Committee's expected approach to meeting its objectives. This is laid out, as my noble friend Lord Peston pointed out, in Clause 18(2).
The whole point of the framework is to give the Monetary Policy Committee operational autonomy to achieve the target, to enhance credibility and give a long-term commitment to price stability. The Government set both the monetary policy objective and their other economic policy objectives. They certainly have no intention of making them inconsistent.
I turn to Amendment No. 39. I am afraid that my noble friend Lord Peston is not up to date. He is quite right in saying that the Bank of England has for a long time published inflation forecasts, but since November of last year it has also published forecasts of growth. The growth forecasts have probability distributions around them. In other words, they are fan charts, in the same way that inflation forecasts are presented as fan charts. That is a considerable advance on the situation that we had before and I hope goes some way to meeting my noble friend's objectives. Let me, however, recount to him the exchange of views between the Treasury Select Committee and the Bank of England, in the hope that it may reassure him.
The Treasury Select Committee, in its report, asked the Bank to clarify,
"the key assumptions which the MPC makes on foreign interest rates, the exchange rate, and domestic and international growth rates and the Bank's assessment of the likely impact (bearing in mind liming and lags) of interest rate decisions on the real economy".
This was point vi of its conclusions in its report of 23rd October. The Bank replied, and I am sorry to read this out in full but it is appropriate to this amendment:
"For the Inflation Report forecast, the Bank takes its forecast assumptions on overseas interest rates from forward market rates—ie, the market expectations of future rates (see charts 2.9 and 2.10 on page 13 of the November Report). The exchange rate profile, too, is described in the Report (see page 46 of the November Report). We are now publishing the domestic growth rate projection in the report (see page 48 of the November Report). The forecast of international growth is based on IMF and OECD forecasts, although we modify this to reflect information published after those forecasts were prepared. Our assessment of the likely impact of interest rate decisions on the real economy is reflected in the domestic growth projection mentioned above and the surrounding commentary in the Report".
That may not be a full set of economic forecasts. I have no doubt that my noble friend could find more information that he would like to have, but it does at least show that the Bank is responding positively to pressure to make public the basis of its forecasts. I am
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sure that if there is continuing expert pressure, such as that which my noble friend is well capable of exerting, it could respond further. I am not answering for the Bank but I think one can see the direction in which it is working.
5.45 p.m.
Lord Peston: This is a rather more technical point, which I should like to raise. I have the February 1998 Inflation Report in front of me, which contains fan charts of the inflation projection and the GDP projection, as well as a couple of similar charts based on market interest rate expectations. What is there, therefore, is not uninteresting but is not what anyone would call a full set of forecasts.
I want to know what underlies all that. My point is that I cannot see why I should not be able to. There is no serious reason why the Bank. anxious to establish its credibility, would be doing two things where it used to do one. I assume that is what my noble friend means by my being up to date. I have noticed chart 6.1 as one of the other charts I had, but it is not the full set of forecasts. I do not see why it should be up to the Bank whether or not to do it.
To refer back to the Fed, it should be up to Parliament—in this case, particularly as this is the only Bill we have before us—to legislate and to say to the Bank that it ought to do this. We are not requesting this in a threatening way. We are asking for it in the national interest because such transparency, which, as I quoted, is favoured by the Governor, is enormously helpful to the conduct of macro-economic policy.
Having said that, I hope my noble friend will reflect on it. I have not said at any earlier point in these proceedings that this is something I shall raise at Report stage of your Lordships' deliberation, but in this case, it is certainly something I feel noble Lords may wish to look at in more detail. I do not suggest that my noble friend has not been helpful, but I would like to return to the matter and go into it further.
Lord McIntosh of Haringey: I always reflect on things, but perhaps my noble friend would also reflect on what statutory definition he could give to the phrase "a full set" and whether he means the forecasts or the forecasts and the assumptions behind them. As he says, these are technical matters which require thought.
Lord Mackay of Ardbrecknish: I am grateful to the noble Lord for the points he made in response to my amendment. I was trying to tease out a two-way relationship, largely thanks to the interview I heard this morning from Mrs. Beckett. I appreciate that the Treasury official will be at the Monetary Policy Committee and that he will, therefore, tell it what, if any, messages he has to bring from the Government. However, the rest of us are not to know what those messages may be. Usually, all the matters that take place in the committee go into the minutes, including the views of anybody who is attending as an observer. However, perhaps that is the kind of organisation to which I have always belonged. I suppose we may be able to tease out from the rest of the minute what the Treasury official may or may not have said.

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We are clearly not going to be told in the report what we are talking about under Clause 18. However, I am interested and reassured that, in the Minister's view, any problems which the Monetary Policy Committee was having with the rest of the Government's policy and any difficulties these were causing it in keeping to its monetary policy and targets would be covered by subsection (2)(b) which refers to,
"an assessment of the developments in inflation in the economy of the United Kingdom in the period to which the report relates".
With that slight assurance, I will withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 39 not moved.]
Clause 18 agreed to.
Clause 19 [Reserve powers]:
The Earl of Home The Earl of Home moved Amendment No. 40:
Page 9, line 10, after ("economic") insert ("or financial").
The noble Earl said: This amendment relates to the concerns which other noble Lords and I expressed on Second Reading as regards the words "extreme economic circumstances". We speculated at that time on a variety of possible scenarios which might he covered by this phrase. I simply want to introduce this part of our discussion by referring to one event in the past.
During the Committee stage in another place, the Economic Secretary said that,
"all Honourable Members would hope that the powers in the clause could be used rarely, if at all".
She said further on that occasion:
"We are talking about extreme economic circumstances—a major catastrophe, for example, that affected the nation".
However, when she was asked whether the calling in of the IMF by the previous Labour Government, which immediately sought to influence the course of government policy, would constitute extreme economic circumstance, she replied:
"That is an interesting point".
Surely having to call in the IMF is an extreme economic circumstance, if ever there was one. Short of war, I can hardly think of a worse situation. I would ask the Minister not to sit on the fence like his colleague. I ask him to tell us whether that event, for instance, would have qualified as an extreme economic circumstance. At least then we should have some yardstick by which to judge that phrase.
I have added in the words "or financial" for a good reason. It is not just an excuse for a probing amendment. I returned on Sunday from South-East Asia, where some countries are suffering very badly from a knock-on effect of being grouped with Thailand. While it is true that the economies of some of these countries were over-heating, they were not in severe economic circumstances. However, they were plunged into a considerable financial crisis—much more a financial crisis than an economic one. Indeed, at least one of them is still in great financial difficulties.
A similar circumstance could happen here. Both major parties have worries that the single European currency might not work. If it does not work, it could blow up into a mammoth financial crisis, and it could blow up very quickly if there were to be a flight from the euro by central banks and investors worldwide.
There need be nothing wrong with our economy or indeed necessarily with the economies of most of the other members of the European union, or even all of them. However, such an event would have a dramatic effect on sterling. Surely that would be an extreme circumstance, albeit financial and not economic, and the Government might well have to act with great speed. In proposing this amendment, I am giving the Government greater latitude in how they might respond in these circumstances. I beg to move.
Lord Peston: Before speaking to Amendment No. 41, which is grouped with Amendment No. 40, may I make a comment on Amendment No. 40? I hope the noble Earl will not accuse me of arrogance, but I had assumed the word "economic" includes "financial", and therefore the amendment is not necessary. I was not listening as closely as I should have been when he mentioned the 1976 IMF crisis—I believe I am right in thinking he was referring to that—but it is an interesting question whether, under this heading, that would count as "extreme economic circumstances". I also cannot remember whether the noble Lord, Lord Taverne, was Financial Secretary at the time.
Lord Taverne: It was 1968, when we thought Armageddon was upon us because the Germans would not revalue.
Lord Peston: What I remember most clearly, as an adviser to Ministers in 1976, is that there was no panic at that time. It compared favourably with Black Wednesday and the débâcle of the noble Earl's right honourable friend Mr. Lamont. Although we did not like it at the time, the situation was completely under control, if I remember rightly, even though there were certain bitter pills to be swallowed. But that is just en passant. My noble friend will say whether he agrees with me that "economic" includes "financial", but that is certainly my view.
On my amendment, I do not believe that I am engaged in mischief-making. I have been sitting here wondering whether I am just making a bit of mischief. I have been trying to think to myself what circumstances we could have in mind that would be regarded as "extreme economic circumstances". The ones that would most bother me, but curiously would not be ones on which I would expect the Bank to be overruled, would be if we suddenly plunged into a major depression of the kind that Keynesian economics was invented to remove. However, given more recent developments, the world is quite capable of plunging back into those depressions, but I cannot believe that the Monetary Policy Committee in those circumstances would have to be overruled in order to engage in intelligent monetary policy. My judgment is that it would probably do that without being overruled.

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If I were asked to reply to the question, "What do you mean by extreme economic circumstances?", I am not at all sure what I could answer that would satisfy me. I thought therefore, "My noble friend is on the payroll. It is not my job to answer these questions; he is paid to answer them, and he has a lot of very sophisticated advisers. They would not have allowed the Bill to be drafted unless they knew the answer to the question". Therefore, although I am still a little worried that I am making mischief—which I would never do given my great loyalty to the present Government—I thought I would plod on a little hit just in case my noble friend can enlighten me. I assure him that neither now nor subsequently would I dream of dividing on an issue of this kind.
Lord Taverne: I am a little puzzled by this clause. First, I suspect it will not be a clause that will last very long, because it will probably have to be removed if we join European monetary union. I hope there will not be any dramatic crisis of this kind before then, and therefore I suspect this is rather an academic clause. However, what puzzles me is the fact that it has a reference to the order taking the form of a statutory instrument. Legislation, even in the form of a statutory instrument, is a most inappropriate way of dealing with monetary management by the Treasury. Although this goes rather against the grain of trying to seek greater parliamentary accountability for the Treasury, I would have thought the last thing one wants to do is to have these kinds of directions enshrined in statutory form of one kind or another, which makes the whole process much more rigid. I would much rather see this take the form of a public statement by the Treasury which could be debated, rather than a statutory instrument, which will create all sorts of difficulties.
6 p.m.
Lord McIntosh of Haringey: Let me deal first with Amendment No. 40, and reassure the noble Earl that my noble friend Lord Peston is entirely right. I am advised, at least as far as the Treasury is concerned, that "extreme economic circumstances" in this sense would incorporate extreme financial circumstances. In the example that he gave of the collapse of Asian economies, if that were to cause the collapse of the financial services industry in this country that could be an extreme economic circumstance.
I should be careful about saying that sort of thing, because the nature of extreme economic circumstances is that we cannot predict them and we cannot define them. That is why the Economic Secretary to the Treasury replied, in response to the question about the intervention of the IMF, "That is an interesting question". I suppose I should have said that it is an interesting question. However, there is no doubt that the collapse of the financial services industry in this country would have an economic effect which could produce extreme economic circumstances and could, under certain circumstances, trigger this clause. The noble Lord need have no fear that financial economic circumstances would be ignored for the purposes of Clause 19.
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My noble friend Lord Peston is not making mischief with his amendment. He is technically wrong in the sense that the order that is called for is a legal instrument and is therefore not the right place to set out the factual circumstances which, in the Treasury's view, would justify the making of the order. However, I cannot conceive of any circumstances in which the Government would wish to be, or get away with being, silent about the nature of the extreme circumstances and why it would be in the public interest to give directions.
Turning to the point made by the noble Lord, Lord Taverne, the Government might well do so by introducing the order. The order itself will be very simple. It is not complicated or technical. It seeks parliamentary approval for what is a very important step. Parliament has justifiably been very twitchy recently about making sure that parliamentary approval is sought for major policy changes. I myself have been under a misguided attack for seeming to breach that principle.
I can give my noble friend the assurance that the Government would be keen to make such a statement in the unfortunate event that the use of this power was ever contemplated. I can give the noble Lord, Lord Taverne, the assurance that the way in which that would be done would be by the statement which would accompany the order that is provided for in Clause 19. The two go together.
Lord Peston: Before the noble Earl, Lord Home, says what he is going to do, may I follow on from what the noble Lord, Lord Taverne, said? It was in my notes to raise a similar point and I am glad that he has raised it instead.
Anything like this clause disappears when we go into European monetary union. Again, as somebody who favours that move, my concern is that the Maastricht Treaty contains nothing corresponding to such a clause. However, if economic policy is to evolve in Europe after Maastricht and we are to be part of that—and I put that conditionally despite my own views on what we ought to do—someone, somewhere, will have to have the equivalent of that clause because we cannot believe that Europe will never be hit by an economic and/or financial crisis that would not require an ability to intervene beyond what a central bank might be willing to do.
I want to thank the noble Lord for reminding us that it has to go. I also want to add the point, with which I hope he will agree, that in due course we have to evolve something of that kind in Europe.
The Earl of Home: I think I shall have to look through my old university notes, going back longer than I care to remember. I seem to remember being lectured by Sir Roy Harrod to the effect that the economy and finance were different. If I find that my notes were accurate we can return to the matter on Report.

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I accept that this is a temporary clause and that it is hoped that the economy will not be influenced by some dire disasters from over the water. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 41 not moved.]
The Earl of Home The Earl of Home moved Amendment No. 42:
Page 9, line 17, leave out ("28") and insert ("14").
The noble Earl said: We have talked about "extreme economic circumstances", though I am not quite sure what they are. In moving Amendment No. 42, I shall speak also to Amendments Nos. 43 and 44, which cover the eventuality of a crisis blowing up when Parliament is in recess. As drafted, the government of the day could perfectly properly act rapidly by issuing an order under Clause 19(1). It is anticipated that that order would lapse after 28 days unless Parliament is recalled and approves the order.
We have been told that the circumstances would have to be extreme and the country potentially in dire economic straits. I know and accept that it is difficult to recall Parliament in a great hurry, but as we are here talking about a major emergency and given the gravity of the situation, it must be right that, as soon as it is physically possible to recall Parliament, the Government should explain the reasons for overriding the Monetary Policy Committee's decisions.
As drafted, there is nothing to stop a government issuing a further order followed by yet further orders until such time as Parliament might resume naturally anyway. As drafted, we could have three months' worth of continuing orders between the end of July and the beginning of November. While the amendments do not necessarily stop the issuance of further orders, albeit on a fortnightly basis, they do at least indicate to any government that Parliament really should be recalled if a crisis turns out to be ongoing. It must be right therefore that Parliament should have a chance to debate and consider an order and to make a positive approval of it at the earliest possible opportunity. I beg to move.
Lord McIntosh of Haringey: The first point I should like to make may appear semantic. The Select Committee on Delegated Powers and Deregulation noted that the procedure contained in the Bill was the common emergency procedure, which seems appropriate here. The period within which the order must be approved is also in line with Cabinet Office guidelines as set out in the statutory instrument practice. They say that the period within which such an order must be approved is usually 28 days, though sometimes it is a month or 40 days, and therefore allowing only 14 days is very unusual.
Clause 19(5)says:
"In reckoning the period of 28 days for the purposes of subsection (4), no account shall be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than 4 days".
So there need be no fear of anything being different when either House is not sitting.
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The fundamental point is that the order takes immediate effect. It has to be approved within a specific period, but there is no delay in it taking effect, otherwise we could not have such an order. We would have to say, "We are not going to have any extreme economic circumstances during August and September". Bearing in mind that the whole definition of "extreme economic circumstances" is that they are not predictable, that would be tempting fate. So the noble Earl's fears are really unjustified.
The Earl of Home: On the basis of those assurances I accept what the Minister has said: namely, that we shall be informed of these things very rapidly. On the question of period, it is no bad thing every now and then to question what seems to have been set in tablets of stone. I accept, nevertheless, that we have had assurances from the Minister that these points will be taken seriously, and he will no doubt want to bring them before Parliament. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 43 and 44 not moved.].
On Question, Whether Clause 19 shall stand part of the Bill?
Lord Taverne: I do not know whether this is an appropriate time to mention this, but one of my concerns about the Bill is that there is an important role which still has to be played by the Treasury in the control of inflation. One of the problems which faces the Monetary Policy Committee is that it does not have in any way within its brief—and it is quite understandable why not—any question related to the exchange rate. The problem of the exchange rate might conceivably be a cause of great embarrassment to our economic circumstances. For that reason, it is very important that the reserve powers should be maintained because they give the Treasury overriding powers in certain circumstances.
I agree with what the noble Lord, Lord Peston, said earlier. It is a worrying aspect that again there is no brief for the European Central Bank to have any regard to exchange rates in the future. There may have to be some similar plan, although I accept that exchange rates will be much less important to the European monetary union as a whole than it is to individual countries within the monetary union now.
I want to put down a marker here. It is a grave omission from the five economic tests that the Chancellor laid down when he considered the future of economic decisions on whether or not we should join EMU, that he made no reference to the exchange rate. It is the most difficult of all the problems we face because he may well find that we have a high exchange rate at the time when we enter the two-year period of stability relating to the euro if we want to join EMU. Exchange rate policy will be a very important part indeed of the overall management of the economy over the next few years, something to which very little public attention has been paid.
Lord McIntosh of Haringey: I should love to debate these matters with the noble Lord, Lord Taverne.

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Perhaps we can do so when amendments are tabled to the European Communities (Amendment) Bill, the Amsterdam Bill, which starts its Committee stage next week. However, I am restricted from doing that in consideration of this Bill. All I can do is to refer the noble Lord to the debate that we had yesterday about the possibility of adding stable exchange rates to the objectives to the Bank of England in its monetary policy.
Clause 19 agreed to.
Clause 20 agreed to.
Clause 21 [Transfer]:
6.15 p.m.
The Earl of Home The Earl of Home moved Amendment No. 45:
Page 9, line 35, leave out from beginning to ("transferred") and insert ("As soon as the condition mentioned in subsection (2) below is satisfied, the following functions of the Bank shall be").
The noble Earl said: In speaking to Amendment No. 45, I shall speak also to Amendments Nos. 46, 47 and 48.
These amendments are unashamedly probing. In this and future clauses we shall be discussing the Government's intentions as regards the transfer of banking supervision to the proposed Financial Services Authority and the assumption of some other responsibilities by the Bank. I say first that nothing I say in relation to this amendment or any future amendments hereafter should in any way be construed as criticism of the existing management or staff, either of the Bank or the new authority. We are now looking to the future.
The first amendment is designed to ask the Government to define more clearly what happens in the event of the failure of a major British financial institution. My noble friend Lord Stewartby and I raised this point on Second Reading but have not yet received an answer on this point.
The Economic Secretary said in Committee in another place that,
"it is for the Bank to take the lead with respect to developments in its field of responsibility, which includes not just the stability of the monetary system but payment systems and the financial infrastructure".
Please note the words "the financial infrastructure". The collapse of a major British bank would undoubtedly affect the financial infrastructure, and from what she has said, one can only assume that in that circumstance, the Bank would lead any rescue or lifeboat operation.
Further, Mrs. Liddell went on to say:
"That means that the other role for the Financial Services Authority is to take the lead where problems in an institution may pose a wider threat".
These two statements seem to be contradictory, and frankly I do not see that at the moment we know who does what in such a crisis.
These amendments also contain something of an exhortation, for in this Bill we are considering only the transfer of one of the nine disciplines for which the authority will be responsible in due course. I am not so concerned that there will not be a carefully prepared critical path analysis of the steps that have to be taken to
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transfer the Bank's supervisory powers to the authority, although obviously to get that right is vital. However, noble Lords will remember the case in the United States when the transfer of the Thrift Institutions Advisory Council from Arkansas to Dallas led to serious problems and confusion. That problem was probably intensified by geography, as a lot of new staff had to be trained from scratch, which one hopes would not happen in this case. However, I am concerned that this transfer must be seen to be done 110 per cent. correctly, otherwise the unscrupulous may well believe that they can take advantage of any slipshod transfers of other regulatory bodies in future.
I am here obviously talking about the increased potential for fraud. Sadly, deliberate attempts to buck the system, however good one might hope that system might be, sometimes succeed. I do not see any particular point here in debating the rights and wrongs of any incident which has happened in the past. But incidents such as the Barings case do flag up the point that even when a system is working, there are ways and means of bucking it. How much more opportunity will there be if the transfer of the supervisory functions of all the regulatory bodies is not done with the minimum disruption.
There is one further point which concerns me about the transfer. One of the great attractions of the City of London—and as a Scot I must mention Edinburgh as well as there seem to be a lot of Scottish Members on this side of the Committee today—is that the Bank has in the past supervised institutions with a much lighter touch than the authorities in other major European cities which would like to compete with us for financial predominance. The UK has several advantages: geography, language and costs to name but three. However, the way that the Bank has regulated institutions in an almost paternal way has been a great advantage.
Traditionally institutions have come very rapidly to heel following a nod and a wink from the Bank, an action which is sometimes referred to as "the Governor's eyebrows". Such action does immediately stop a bank in its tracks, and potential problems have been nipped in the bud. I am not quite sure from the way this is set out, or indeed from the Memorandum of Understanding, who will be responsible for this type of action. Will the authority be the new institution which gives advance warning, in which case it must grow some eyebrows rather rapidly? The danger is that the authority will act more like auditors, with its powers set in tablets of stone, and some of the attractiveness of the UK will be lost.
In the past the UK has benefited from over-stringent regulation elsewhere, and it is vital to achieve a balance between tight supervision to protect the depositor and no supervision such as we see in tax havens. Assurances from the Minister on these topics would be most welcome, and I beg to move.
Lord McIntosh of Haringey: The noble Earl made an interesting speech about a whole range of issues concerning transfer. He has hardly spoken at all about the amendments and I am somewhat at a loss to know

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how to respond. I shall start by saying something about the transfer of supervisory functions, why we think it is necessary and what stage we reach with this Bill.
We believe that there is a general need to modernise the regulatory structure for financial services. Since the Financial Services Act 1986 was passed, huge changes have taken place. Some of those were anticipated and provided for by the 1986 Act and some occurred since then and led, among other things, to a considerable increase in complexity of the boundaries between different financial institutions. We need, therefore, to bring regulation of banking securities and insurance under one roof in order to secure more effective and efficient regulation.
What we are proposing reflects the way the sector itself is developing, with the traditional boundaries becoming increasingly blurred. The existing system is too complex and too fragmented. There is too much scope for gaps and costly duplication. We are, therefore, proposing reforms aimed at bolstering public and international confidence in the British regulatory system and hence the British financial sector.
I acknowledge that this Bill is only the first legislative step. We are taking the opportunity of this Bill to transfer banking supervision to a new single regulator—the Financial Services Authority. It makes sense to transfer banking supervision as other changes are taking place within the Bank. It will allow the Bank to concentrate on its new range of functions. At the same time, we recognise that this is only the first step in the process. There will be wider regulatory reform to follow in the second Bill, which is now being prepared and which will be published in draft before it is included in any Queen's Speech. The extra time we have in preparing that second Bill gives us more opportunity to consult and to achieve lasting reform. We will be consulting on a draft of this Bill in the course of this summer.
I cannot go any further in responding to the more general points made by the noble Earl. I do, however, have to respond to his amendments, because Amendments Nos. 45 and 48 in particular call for an estimate of the cost to businesses of complying with the regulatory requirements of the authority transferred under this section. We have made such an estimate and have included it in the Financial Memorandum, which is found with the Explanatory and Financial Memorandum of the Bill, and I read that in full:
"The Government's expectation is that the overall cost to business under the new arrangements in respect of the transferred functions and cash ratio deposits will be no greater than under the current arrangements".
I hope, therefore, that I can persuade the noble Lord that Amendments Nos. 45 and 48 are unnecessary.
Amendments Nos. 46 and 47 are also unnecessary. in that it is perfectly obvious, from everything that has gone before in this discussion of the Bill and indeed from its drafting, that the Bank will retain its responsibilities under Parts I and II. All references to transfer in Part III are to that part alone. It is also
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obvious that the authority will assume those powers immediately on transfer. There can be no other interpretation of the Bill as drafted.
Amendment No. 49 asks for no change of substance to the memorandum of understanding unless notice of such change has been given to both Houses of Parliament.
The Earl of Home: I have not yet moved Amendment No. 49.
Lord McIntosh of Haringey: I beg the noble Earl's pardon. I hope I have reassured the noble Earl that his Amendments Nos. 45 to 48 are unnecessary.
Lord Stewartby: There is one point that I wish to raise with the noble Lord for clarification. Although I take comfort from the penultimate paragraph of the Explanatory and Financial Memorandum to which he has referred, that appears to me to refer to the direct costs to business of the expense charged by the authority and the implications of cash ratio deposits.
As I understand Amendment No. 48, my noble friend is talking about the costs of complying with the regulatory requirements, which are generally regarded as being a substantially higher figure. It would be nice to have a reassurance that the pattern of supervision is not to be altered in such a way as to impose even greater costs of compliance on the institutions concerned. For example, Section 39 reports under the existing Banking Act involve an enormous amount of work by the institutions concerned. They have to pay auditors to produce them. I should like an assurance, if the noble Lord can give it to me, that the sentence in this memorandum covers, so far as a reasonable assessment can be made, the actual costs which the institutions themselves incur in complying with their responsibilities.
Lord McIntosh of Haringey: The Financial Memorandum means what it states:
"The Government's expectation is that the overall cost to business under the new arrangements in respect of the transferred functions and cash ratio deposits will he no greater than under the current arrangements".
I can give the assurance that the noble Lord seeks in the sense that the Bank does not create any new regulatory requirements. It merely transfers the existing supervisory function to the Financial Services Authority. Of course we cannot anticipate how efficient and cost-effective individual institutions are in the way in which they comply with regulations. What they need is the assurance I have just given that there are no regulatory requirements.
I can also give the noble Lord the assurance that the Bill places on the FSA a legal requirement to consult on its fees, as on any other rules that it makes for the financial services industry, on the basis of an analysis of costs and benefits.
The Earl of Home: I thank the noble Lord for kindly saying that I made an interesting speech which had nothing to do with the regulations. I was advised that that was the best way of bringing the points I was

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making into the debate, although I repeat what I said at the beginning that it was an unashamedly probing set of amendments.
I accept what the Minister has said about the costs being referred to in the Financial Memorandum. We are getting very close to the time when, in terms of pounds and pence, we ought to have some idea of what the costs at least of this transfer should be. However, for the time being we will leave it at that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 46 to 48 not moved.]
The Earl of Home The Earl of Home moved Amendment No. 49:
Page 10, line 7, at end insert—
("() The Treasury shall ensure that no change of substance is made to the Memorandum of Understanding of June 1997 between the Treasury, the Bank and the Authority, unless notice of such change has been laid before both Houses of Parliament.").
The noble Earl said: The Bill sets out the objectives of the authority in broad outline, and the memorandum of understanding between the Treasury and the Bank and the authority puts flesh on to that skeleton. There are parts of the MOU that I should very much like to see incorporated on the face of the Bill. Viewed in isolation, the Bill certainly does not meet the Government's own objectives, one of which is transparency. That word occurs, quite rightly, very early on in the MOU.
The MOU is a very well thought out document and I congratulate those involved in its drafting. It sets out in detail more of the objectives behind the Government's thinking, which is also welcome. A great deal of what we have been talking about and shall be discussing is in the MOU, not on the face of the Bill, and it seems desirable that there should be some mechanism whereby the MOU should be tied into the Bill in one form or another.
Any government can change direction quite radically in their thinking and the application of their stance towards financial institutions. They can do so simply by instructing the three signatories to re-write the MOU. It has, after all, total control over all these three bodies. Surely it is right that Parliament should be made aware of any significant changes anticipated to the MOU. By including the words "of substance" in my amendment, I acknowledge that from time to time it may be desirable to make some changes to it. I am even giving the Government the right to decide what is, or is not, of substance. The MOU is, however, such a fundamental part of this Bill that the formal link between the two should be worked out in one form or another. I am not sure that my wording is necessarily the most appropriate way of doing this, but I am concerned more with the principle. I beg to move.
6.30 p.m.
Lord McIntosh of Haringey: We do not need to be too concerned with the detailed wording. The noble Earl has made a very helpful speech and he is quite right to say that the memorandum of understanding is important to the understanding of this part of the Bill. In his
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position, in Opposition, I would have done very much the same. I used to do much worse things—I would have included it as a schedule on the face of the Bill and then amended it in order to have it discussed. The noble Earl is more gentlemanly than I was.
The memorandum of understanding is a flexible working document rather than a legal instrument. Although we do not envisage changing it, if it were necessary to change it, and the Treasury, the Bank of England and the FSA needed to change the way in which they work, it is important that they should be able to agree to do so and to put the new arrangements into immediate effect.
The noble Earl has recognised that point by including the phrase "of substance" in his amendment. Certainly, if the arrangements have to change, and in particular, if substantial changes have to be made, the Government would publish the revised memorandum of understanding. I am quite sure that the Opposition would seek an opportunity to have the matter debated in Parliament if it were of sufficient importance. Of course, I cannot promise that because it would be a matter for the usual channels, but it would seem an entirely proper request.
The Earl of Home: The noble Lord says that if there were any changes the amended document would be published. That goes a long way to meeting my point. I am grateful to him for that assurance and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 agreed to.
Clause 22 agreed to.
Lord Eatwell Lord Eatwell moved Amendment No. 50:
After Clause 22, insert the following new clause—
LISTED MONEY MARKET INSTITUTIONS: INCLUSION ON THE LIST
(" . In section 43 of the Financial Services Act 1986, after subsection (1 there is inserted—
"(1) The Authority shall have rules and practices to secure that person included on the list referred to in this section is fit and proper to be included on that list.".").
The noble Lord said: Before moving this amendment, and also speaking to Amendment No. 52 which is closely associated with it and Amendment No. 51, I would like to apologise for not having had the opportunity to attend the Second Reading of the Bill due to teaching obligations in Cambridge on that day, and also for not having been able to attend yesterday's proceedings for the same reason. I have, however, studied noble Lords' speeches in Hansard and will refer to them in my remarks.
Let me say at the outset that I totally support the Government's objectives of placing more financial regulation, including the regulation of institutions previously supervised by the Bank of England, under the control of the new Financial Services Authority. This is the right policy and it is not before time.
The amendments I have proposed to the Bill before us will assist the Government in ensuring that this policy is not just a success in the end but that it is a success in the difficult transition period to which the noble Lord, Lord McIntosh, referred a few moments ago.
As the Committee may be aware, I am an independent member of the board of the Securities and Futures Authority and, while much of what I have to say this afternoon is motivated by my experiences in that position, my remarks are made and my amendments put down in a purely personal capacity.
Before outlining the argument for these particular amendments, I wish to comment on the underlying rationale for moving both Amendments Nos. 50 and 52, and Amendment No. 51, with which I will deal afterwards. All three amendments refer to Section 43 of the Financial Services Act. It is that section of the Act which resulted in the listing of firms which, being so listed, have up to now been regulated by the Bank of England. Listed firms have been regulated by the Bank both as regards their banking business and, in almost all cases, as regards their investment business as well.
As the Committee will be further aware, the Bill in Clause 21 transfers all supervisory activities, including the listing of firms, from the Bank of England to the Financial Services Authority.
My amendments are an attempt to enhance regulatory coherence among listed and unlisted firms with respect to all investment business (I am not concerned with banking business at all) during the period commonly known as N1 to N2; that is, from the enactment of this Bill in early summer of this year to the enactment of the more general financial services reform Bill, to which my noble friend referred, in about two years' time.
These amendments will ensure that the listing of all institutions under Section 43 follows criteria which are more nearly in line with the registration procedures used to regulate firms conducting identical investment business which are currently regulated by the SFA. Accordingly, the investment business conducted by listed firms will be regulated in a manner more nearly akin to the manner of regulation of investment business by unlisted firms.
The criteria I propose will replace the essentially informal procedures used up to now by the Bank of England in listing, and which are indeed preserved, regrettably, in the Bill. Those informal procedures may have been appropriate for a regulatory authority which is also responsible for the conduct of monetary policy and the maintenance of liquidity; they are totally inappropriate to the new FSA.
It might be suggested that all this is unnecessary. After all, in a few months' time a new Bill to reform the regulation of the financial services industry will be introduced, and when that Bill becomes law, the whole process of listing firms under Section 43 will disappear and be replaced by new listing criteria which are the same for all investment business. That is, of course, quite true.
However, Part III of the Bill already provides for important interim measures to cover the period between 'the transfer of the Bank of England's regulatory powers to the FSA and the transfer of the powers of the other SROs, including the SFA, to the FSA—I am sorry about the alphabet soup which I am afraid bedevils discussion of these financial regulations.
Everyone acknowledges that this interim period is a dangerous period, and that it is vital that during it the regulatory structure should be as competent, as thorough and as coherent as it is possible to make it. My amendments, deriving as they do from my experience on the board of a financial services regulator, are designed to achieve those goals of competence, thorough regulation and coherence.
I should be grateful if the Committee would consider the impact of three facts: first, the transfer of the responsibility for Bank of England regulated institutions to the FSA will mean that the investment business of the Section 43 listed firms will be the responsibility of the FSA. By the Bill, FSA staff will regulate listed firms according to Bank of England rules and procedures.
Secondly, according to the working agreement between the Securities and Futures Authority and the FSA, virtually all the staff of the SFA will be transferred to the FSA in June at the same time as Bank of England staff are transferred. Their services will then be contracted back to the SFA in order for it to maintain its statutory duties under the Financial Services Act—up to such time as the new financial services reform Bill is enacted and becomes operative in a couple of years time. By this Bill, FSA staff will regulate SFA firms according to SFA rules and procedures.
Thirdly, the FSA is organised along functional lines—supervision, enforcement, authorisation and so on—and not along old type of business lines. It is after all the recognition of Her Majesty's Government that the boundaries between types of financial business are becoming blurred to the point of irrelevance that is the rationale of the creation of the FSA in the first place.
Let us take those three facts together: first, under this Bill SFA staff will regulate listed firms according to Bank of England rules; secondly, FSA staff will regulate SFA firms according to SFA rules and procedures; and the third point concerns the functional organisation of the FSA. What do these three things amount to? They mean that the same staff will be responsible for the authorisation, enforcement and supervision of the same sort of investment activities by listed firms and by non-listed firms. And yet the listing criteria, and hence the regulatory procedures, currently employed by the Bank of England are quite different from those applied by the SFA—but not always.
In the interim period, the same people will be regulating the same sort of business but in quite different ways. The difference is due entirely to the accident of history as to whether firms were regulated by the Bank of England or were regulated by the Securities and Futures Authority.
This is, I believe, not only incoherent but confusing and even dangerous. It is exactly the sort of regulatory incoherence which can be exploited by wrong-doers. It is exactly the sort of regulatory incoherence that is the great danger facing the UK system of financial supervision in the interim between N1 and N2.
Of course, there is no way in which the three amendments can result in a complete harmonisation of regulatory rules and procedures for all investment

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businesses. There is no way we can achieve total coherence. That will require the next highly complex Bill, the draft of which we will see this summer.
But the two areas I shall be covering this evening, the criteria by which firms and individuals are deemed fit and proper to conduct investment business and the enforcement of conduct of business rules, go to the heart of the matter. Incorporating these amendments will remove a large proportion of the ambiguity and incoherence which. I am afraid, is the inevitable product of the gap between N1 and N2 if these amendments are not accepted by the Government.
I make one final point before I proceed. My amendments embody some of the practical rules which have been developed since 1986 as an expression of the so-called SIB principles. I have presumed—and I should be grateful if the noble Lord, Lord McIntosh of Haringey, would confirm that this is the case—that since the FSA is just the SIB in modern guise, the SIB principles still hold and will apply to institutions previously regulated by the Bank of England once this Bill is enacted.
I now turn to the specific character of the amendments. First, Amendments Nos. 50 and 52 deal with the definition of firms and individuals who will be fit and proper. These amendments are offered in support of my noble friend Lord McIntosh, who on Second Reading said:
"The key to the SFA's regulatory role will be the authorisation of those carrying on business in the relevant areas. It is consistent with having a single regulator that there should be a single authorisation requirement and a single process for considering applications".—[Official Report, 13/2/98: col. 1387.]
The Bill before us does not achieve my noble friend's objectives; my amendments do.
These amendments require that clear rules be formulated for establishing that institutions and the individuals comprising those institutions should be fit and proper to conduct investment business. They achieve coherence in the characterisation of what is fit and proper by requiring that rules which stem from the SIB principles should be applied to all investment businesses regulated by the FSA employees between N1 and N2. It is interesting that under Section 43 of the Financial Services Act there are at present no specific criteria for how firms are listed; that is, there are no specific criteria as to how the Bank of England should allow firms to join the list of firms which it supervises. It is essentially an informal procedure.
Amendment No. 50 replaces that informality by requiring that all institutions conducting investment business should, to be listed, be deemed fit and proper to conduct an investment business, according to the rules and practices of the Financial Services Authority; that is, according to the specific criteria which would and should be expected of a modern regulator. The listing procedure will no longer be informal. Amendment No. 50 will require that the procedure is clearly specified in rules and practices and is common for all institutions conducting investment business.
Amendment No. 52 requires that in order to be included on the list each institution must satisfy itself that its employees are fit and proper persons to carry out
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their designated functions, and that, for such positions as the authority designates, persons appointed must be approved by the authority. Once again the procedures in place in the Bank of England are essentially informal. The Bank certainly requires that all senior management of listed firms should be fit and proper, but exactly how fitness and propriety are defined is not embodied in any set of formal rules. Amendment No. 52 ensures that the same rules will apply to all investment business.
I should make clear to the committee that Amendment No. 52 amounts to requiring the registration of individuals as fit and proper, something which the Bank of England has consistently opposed.
It does not, however, amount to "kite-marking" of individuals. Section 43(2C)(a) of the Financial Services Act makes it clear that it is the responsibility of firms to satisfy themselves that individuals are fit and proper, and Section 43(2C)(b) makes it clear that an individual's registration is related to his or her post within a specific institution. In other words, the registration cannot be transferred from one firm to another; it is not a registration of an individual but registration of an individual within a specific post.
I should also make clear that by these amendments the burden of proof will be on the individual and on the firm which employs that individual. That is the case for investment businesses which are presently regulated by the SFA, and I believe that is entirely appropriate.
Amendments Nos. 50 and 52 replace the informality of Bank of England procedures with the more formal rules required of a modern regulator. They will ensure that coherent rules and practices will define which firms and which individuals are fit and proper for all investment business, not just some investment business. If these amendments are accepted, the same FSA staff will be regulating the same sort of business in the same way.
I turn now to Amendment No. 51, which applies to another dimension of the SIB principles, as developed in SFA rules, extending that to all investment business including that of firms listed under Section 43. In this case what is required is that the authority should ensure that listed firms obey conduct of business rules appropriate to the kind of investor it is dealing with and appropriate to the costs involved.
Once again I believe it is vital, especially in the period between N1 and N2, that Bank of England informality be replaced with modern rules. As regards the conduct of business, the Bank of England seeks to regulate conduct of business by means of its code of conduct set out in the so-called grey book; but the terms of the code are not rules. The code defines best practice, whereas rules demand a minimum satisfactory performance. Breaking a code does not automatically trigger disciplinary procedures. Breaking a rule does automatically trigger disciplinary procedures.
Conduct of business regulation is the fundamental protection which the supervisory system offers to individuals. It ensures that in what may be very complex areas, firms have the responsibility to provide

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appropriate information to ensure best execution and in all ways to deal with investment business in an appropriate manner.
In a modern regulatory system, it is surely imperative that what is appropriate should be embodied in clear rules, and of course that those rules are attuned to the characteristics of the counterparty, as set out in my amendment.
It would surely be a nonsense if investment business conducted by listed firms—that is, those previously supervised by the Bank of England—was subject only to a best practice code, while identical investment business conducted by unlisted firms was subject to clearly defined conduct of business rules. Amendment No. 51 ensures that conduct of business regulation will be formal, clear and coherent rather than informal, unclear and incoherent.
These three amendments provide a framework of coherence between N1 and N2 which will ensure that the dangers, of which I spoke earlier and to which the Minister referred in introducing this section of the Bill, will be at least mitigated and substantially diminished. I beg to move.
Lord McIntosh of Haringey: My noble friend raised very serious matters and he raised them as appropriate in a serious way which reflects his expertise in the field and his wish to enhance the regulatory system. I am grateful to him for all of that. I thought at one stage that I would simply be able to answer by saying that he is trying to hurry us on and to implement more of the second Bill in the Bill than we had intended. Having listened intently to what he said, however, I rather think he is going further than that and is saying that there are new contradictions which will be introduced by the transfer which is proposed at this time. I shall, therefore, have to reflect that in my response.
Let me make it clear, first, that his amendments, which are in Section 43 of the 1986 Act, refer to wholesale money market institutions. He is quite right in saying that it has been the principle on which that Act operated that there should be a somewhat looser system when we are dealing with wholesale money market institutions whose clients are themselves in the financial services industry rather than members of the general public. He reflected that on a number of occasions in what he said. He is quite right in saying that the Bill simply transfers the existing regime—that is the somewhat looser regime for supervising money market institutions—from the Bank to the financial services industry, and that more general reform of the regulatory system will follow in the second Bill.
Let me deal with the content of his amendments and then think aloud about how we are going to tackle the more complex points which he made in his speech. First, in relation to Amendment No. 50, under the general reform that will be the subject of our second Bill, money market institutions will be subject to a general fit and proper requirement as will all other authorised persons. It will he an explicit authorisation criterion applicable
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to money market institutions as well as to retail banks, securities houses, insurance companies and investment advisers.
In the meantime, the money market institutions must meet certain conditions for admission to the list under Section 43. Those conditions are: that its financial position is sound; that its controllers, directors, managers and, where relevant. its partners are suitable and do not prejudice the sound management of the institution; that its ownership structure does not give rise to unacceptable conflicts or is otherwise a source of potential weakness; and that its systems, controls and record-keeping are adequate.
Those conditions are clearly central to the general fit and proper concept as applied elsewhere in the financial services sector. The listed institutions are required to abide by the standards and principles set out in the London Code of Conduct. The conditions are set by the Bank and will in future be set by the FSA and approved by the Treasury. If there were any deficiencies in them—and my noble friend clearly indicated that he believes there are—they could be rectified without the need. for any amendment to the Bill. If my noble friend has any concerns about the listing criteria and he has raised those concerns in his speech, I shall be happy to discuss them with him before Report.
I should note that most of the Section 43 firms are banks or members of the Financial Services Authority in respect of other business they carry on and so will be subject to the fit and proper test as applied by the FSA or the SFA.
I will take the amendments in the order in which my noble friend dealt with them. Turning to Amendment No. 52, in keeping with our broad objective of ensuring that the FSA has the powers it needs, we are considering what powers are needed to ensure that individuals employed in the financial services industry meet high standards of competence and integrity.
Until we have resolved the general approach, though—this is why I know that my noble friend is trying to hurry us up—we are reluctant to go down the route in the Bill for wholesale market institutions such as those listed under Section 43. These are firms which are granted the privilege of a lighter touch regime on the basis that they are dealing only with other expert players in the wholesale markets, not with retail customers. It would be odd to have a statutory power in that area alone.
The approach that we adopt will need to take into account the full range of authorised persons for which the FSA will be responsible. It may be that some statutory power along the lines suggested by my noble friend is the right approach, but that needs to be considered as part of the wider system.
I turn to Amendment No. 51. Again, we are entirely in sympathy with my noble friend's intention. The FSA will have rule-making powers. In exercising those powers the FSA will in all cases be informed by its overall statutory objectives, including the protection of consumers and the duty to ensure the costs imposed by regulation are proportionate to its benefits. However, both the listing conditions and the London code of

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conduct under which these money market institutions are required to operate have been drawn up with professionalism and integrity at their heart. The aim is to ensure that wholesale markets deliver the confidence that is needed for the benefit of investors and consumers more widely.
I am conscious that I have not answered the point that my noble friend made, which was to some extent central to his argument that the very fact of transfer brings the possibility of conflict and the possibility of the same people operating under different rules or under the same rules for different people. Rather than attempt to answer off the cuff two points which were not self-evident in the way the amendments were drafted, although they are clear in the way that he has spoken to them, much the best thing is for me to seek an opportunity to talk to him in detail before the next stage of the Bill and to undertake to take very seriously the matters that he has raised.
I do not think it would be possible for me to have anticipated the full rigour of the arguments that my noble friend has made. I apologise to him for that. However, I assure him that we shall seek every opportunity to ensure that the issues that he has raised are addressed.
Lord Eatwell: I am enormously grateful to my noble friend for his reply. I apologise if I placed him in a difficult position by the form of arguments that I put forward. I believe that we are facing a very serious problem of regulatory incoherence when we have the same sort of business being regulated by the same people but according to different rules.
I would say, however, that much of his answer hung on the argument that what we were dealing with was purely wholesale money market institutions. He may at this point have been misadvised or be labouring under a misconception. Under Part II of Schedule 5 to the Financial Services Act, it is clear that where the monetary limits on transactions are defined, which come under the terms of actions by investment business by listed firms, those monetary limits can be as low as £100,000 and are typically £500,000. Given the forms of gearing typically associated with transactions in money markets these days, those could easily be transactions made by individuals. There is no reason to suppose that they are just transactions made by large financial institutions. They could be individuals acting as a one-person firm. These are therefore not surely wholesale business transactions defined with respect to large banks or institutions dealing with each other but transactions which could involve individuals.
I hope I made the argument clear with respect to the definition of fit and proper. It is very important that, in particular, the notion of the registration of individuals as fit and proper should be introduced as soon as possible and should not wait until N2. It is an absolutely vital component of the supervisory apparatus in modern financial services and we need it as soon as possible to be applied throughout investment business in the British financial services sector.
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However, I take into account the very kind offers which my noble friend has made to discuss these propositions and I very much look forward to discussing them with him. On that basis, I give notice that I am likely to return to these issues at Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 51 and 52 not moved.]
Schedule 4 agreed to.
Clause 23 agreed to.
Schedule 5 [Transfer of functions: consequential amendments]:
7 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 53 to 56:
Page 29, line 22, leave out ("paragraphs 31 and") and insert ("paragraph".).
Page 30, line 9, leave out ("48(4)(a) and 52(6) (in both places)") and insert ("and 48(4)(a)").
Page 30, line 10, at end insert—
("(2A) In section 52(6)—

(a) in paragraph (a), the words "by the Bank of England" are omitted, and

(b) for "with the Bank of England" there is substituted "with the Financial Services Authority".").

Page 30, line 15, at end insert—
("Building Societies Act 1997 (c. 32)
.—(1) Section 32 of the Building Societies Act 1997 is amended as follows.
(2) In subsection (1), for "Bank" there is substituted "Authority".
(3) In subsection (3)(a), for "Governor of the Bank" there is substituted "Chairman of the Authority".
(4) In subsection (7), for the definition of "the Bank" there is substituted—
""the Authority" means the Financial Services Authority."").
The noble Lord said: In moving Amendment No. 53 I would like to move also Amendments Nos. 54, 55, 56 and speak to Amendment No. 73, although not necessarily in that order.
Amendment No. 53 is a technical amendment to tidy up some of the consequential amendments and repeals contained in Schedules 5 and 9 to the Bill. As currently drafted, the Bill both substitutes a reference to the Bank and revokes that reference. This is clearly inconsistent, and the amendment I have tabled removes this inconsistency.
Amendments Nos. 54, 55 and 73 are technical amendments. Paragraph 41 of Schedule 5 makes consequential amendments to the Court and Legal Services Act 1990. Subparagraph (2) deletes the reference to the Bank of England in various sections of that Act and in Section 52(6) of the 1990 Act two references to the Bank of England are deleted. These three amendments ensure that the consequential changes to the Courts and Legal Services Act are accurate.
Finally, Amendment No. 56 is a technical amendment required to make a consequential amendment to the Building Societies Act 1997. It arises because of the transfer of banking supervision to the FSA. The Building Societies Act in Section 32 makes provision

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for a future amalgamation of the Building Societies Investor Protection Board with the Deposit Protection Board. Provision is made for consulting the Building Societies Commission and the Bank before making any order affecting this amalgamation and for the Governor of the Bank to appoint ordinary members of the new board. Following the transfer of supervision, the comparable supervisory body for banks will be the FSA, so it will no longer be appropriate for the Bank to be consulted.
The amendments make the necessary change to allow the authority to be consulted for the Bank, rather than the Bank, and for the chairman of the FSA to appoint ordinary members of the new board. I beg to move.
On Question, amendments agreed to.
Schedule 5, as amended, agreed to.
Clause 24 agreed to.
Clause 25 [Liability]:
The Earl of Home The Earl of Home moved Amendment No. 57:
Page 10, line 37, at end insert ("or negligent"").
The noble Earl said: Clause 25 refers to the immunities to be enjoyed by the authority. Those previously working on supervision within the Bank enjoyed Crown status, which was understandable particularly at the more senior levels in the Bank. Some people were above the Chinese wall, in that they were involved not just in supervision but also, in those days, in advice on monetary policy. That status will, as I understand it, be removed for those being transferred and indeed for new recruits to the authority. Those types of people will now have their immunities enshrined in statute. By and large, in the interests of transparency, I support this change.
The members of the authority are now a combination of policemen, auditors and agony aunts. As far as I know, those three categories of professionals are not immune from action for negligence. The Government have repeatedly stressed that they are looking for maximum co-operation in all parties affected by this legislation. Institutions and individuals would be more willing to volunteer information if they knew that there was some redress if information leaked because a member of the authority negligently left a document in a train or other public place. Other aspects of disclosure of information will be discussed later. I am talking here about negligent disclosure of information. There is no reason why members of the authority should not be subject to the same disciplines as the rest of us in this instance. I beg to move.
Lord McIntosh of Haringey: I am glad to hear that the noble Earl supports the change in general. It is a helpful context in which to consider this amendment. We take the view that it is essential, if the regulator is to be able to operate effectively, that he is not constantly constrained by the fear of speculative or constructive litigation. It is right for people to be able to seek damages if it can be shown that the regulator acted in good faith. But we want a regulator who is free to act as necessary. It is important that the FSA is not too timorous to be effective. Narrowing immunity, which
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would be the effect of the amendment, would result in the FSA being unduly constrained by the fear of speculative or obstructive litigation.
Alternatively, the FSA might be encouraged to collect more information than it would otherwise need, or to set tougher minimum standards, or to take longer over decisions than otherwise. That would drive up the costs for the businesses being regulated. The existing regulation provides immunities for the FSA and the Bank so long as they act in good faith.
The clause simply extends the same immunity to the FSA's new functions in relation to money market institutions. The wording follows exactly that of Section 1(4) of the Banking Act, which will apply to the Financial Services Authority.
There is no change imposed here. The noble Earl is in fact proposing more intrusive regulation for wholesale market institutions, which have hitherto benefited from a separate, lighter touch regime. With due respect to my noble friend Lord Eatwell, who is clearly concerned about this lighter touch regime, it is out of character for the Opposition to be seeking to make the regime more intrusive than proposed here. On that basis, I hope that the noble Earl will withdraw his amendment.
The Earl of Home: I am not trying to restrict any information; I am trying to stop negligence and encourage what is called in the City, a "clean desk" policy, which means that they are negligent in letting bits of paper fly around the place and ought to be accountable for gross acts of negligence such as leaving a bit of paper on a train. Not being a lawyer. I may have come up with the wrong wording to achieve the objective which I required. It was not my intention to put the fear of God into the regulators in thinking that they would sued. The objective was to stop ordinary negligence. We had better return to this on Report when I have taken more legal advice.
Lord McIntosh of Haringey: Before the noble Earl withdraws the amendment, I should like to say that, in the light of the debate we have had on my noble friend's amendment, I would like to reflect on his amendment as well.
The Earl of Home: I am most grateful to the Minister for saying that he will reflect on it. If he can let me know before Report stage it may save a lot of time if we can solve this problem along the lines on which I would like it to be solved. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clause 26 [Power to charge fees]:
The Earl of Home The Earl of Home moved Amendment No. 58:
Page 11, line 16, leave out ("an") and insert ("a proportionate").
The noble Earl said: In speaking to this amendment I shall also speak to Amendments No. 59 to 62. The FSA consultative document, to which I have referred many times, states,
"the charge should be proportionate to some measure of the size of the hank and the nature and extent of its business".

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I do not dissent from that. It is helpful in that it recognises the principles. The Economic Secretary said,
"The FSA will have a statutory duty … to be efficient and economic to ensure that costs … and restrictions on firms are proportional to the benefits of supervision".
The first four amendments simply ask the Government to confirm the principle of proportionality on the face of the Bill. They have been consistent in saying that they want this anyway, and so I hope it should not create any particular problem.
Amendment No. 62 simply asks the Government to confirm their intentions following on from the consultation paper. Given that these proposals are of an interim nature and will last only a couple of years, I believe that the financial sector will go along with them, whilst no doubt making strong representations on the future structure during the consultation process on Stage 2.
I would here beg the Minister to ensure that this consultation process is done thoroughly but also speedily. We know that at any one time there are probably dozens of foreign banks and institutions wondering whether to locate here or whether to go elsewhere. Overhead costs are a vital element in deciding where to locate, and the supervisory costs within those overheads, being a significant proportion, could influence their thinking.
Also, several institutions are currently regulated by more than one body. As far as possible, institutions need to know the totality of costs, and particularly those considering coming here rather than those already here would be more than interested to know the Government's thinking on this. Again, to the degree that they can let us know what those costs would be, institutions would be grateful.
I make no apology for saying yet again that we are under the threat of competition from Frankfurt, Paris and other European centres, and in particular institutions which would now only be regulated by one or two bodies are concerned that the infrastructural costs of the authority might place undue strain on them.
Finally, I should be grateful if the noble Lord could also enlighten me on one further point. The consultation paper says the transition costs will be recovered over "a few years related to the annual fee". We all know that it is expensive to set up a new big group and the FSA will need departments such as human resources and internal audit, which individual groups to date have not needed. Can the Government yet tell us over what period the start-up and transition costs will be recovered? I beg to move.
7.15 p.m.
Lord McIntosh of Haringey: These amendments cover ground that was available for discussion when we were considering Clause 21. Because I was being economical in my speeches, I possibly did not make some of the points that I could have made then. I want to reassure the noble Earl by saying, first of all, that the FSA is currently consulting on banking supervision fees for next year. I take his point that the consultation should be as quick as possible in order to reassure banks
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and, particularly foreign banks. Also, the FSA has published a plan and a budget for 1998–99 which shows a reduction in budgeted costs for banking supervision of £6 million, from £73 million to £67 million. That will influence the charges that are made by the FSA to the banks being supervised.
Strictly speaking, the amendments are not entirely clear. The noble Earl says that he wants the proportionality to be the size of the institutions. There are various ways of measuring the size of institutions. One could also argue that proportionality should be to the benefit of regulation. The FSA is clear about the need to ensure that the costs that it imposes, through its rules as well as directly through its fees, are proportionate to the benefits of regulations. Proportionality of the regulatory burden is the principle which underlies the wholesale market regimes to which Clause 26 refers.
The FSA will be subject to statutory objectives, including one to be efficient and economic, and to impose only those costs on the industry as are proportionate to the benefits of regulation.
The second Bill, a draft of which will be published this summer, will provide that when the FSA consult on fees, it will have to publish details of its proposed budget as part of the same exercise. This will give the industry a much better opportunity to participate in the setting of the FSA's priorities.
I well appreciate the concerns which underlie the noble Earl's amendment. I hope that what I have said to him about what will happen next year and what is proposed for the second Bill will alleviate at least some of his concerns.
The Earl of Home: I thank the Minister for that and I am grateful to him for confirming that the consultation process will be as speedy as it reasonably can be. Again, we are talking about an interim phase. The noble Lord has confirmed that the Government are promoting the concept of proportionality. Obviously, one can make proportionality subject to a great many things, I accept that. We have to be very careful that a smaller institution, which might be regulated by only one or two people, does not carry the same burden as the enormous institution. We shall be watching how those costs turn out over the period between now and the next Bill.
I thank the noble Lord for his assurances and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 59 to 61 not moved.]
Clause 26 agreed to.
Schedule 6 [Banking supervision fees]:
[Amendment No. 62 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 63:
Page 40, leave out lines 2 to 4.
The noble Lord said: Schedule 6 (Banking supervision fees) defines "overseas institution" and "representative office". However, these terms have no

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operative effect and consequently there is no need to define them. The amendment removes their definitions from the Bill. I beg to move.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 27 agreed to.
Clause 28 [Board of Banking Supervision]:
Lord Eatwell Lord Eatwell moved Amendment No. 64:
Page 12, line 9, leave out (", who shall chair the Board.").
The noble Lord said: I beg to move Amendment No. 64, and I will speak to Amendment No. 65.
The amendments ensure that one of the bitter lessons learned during the Barings affair is not forgotten: namely, that supervisory authorities should themselves be subject to assessment and examination by an authority which is not only independent but is seen to be independent.
Noble Lords will remember that the investigation into the conduct of the supervisory authorities at the Bank of England with respect to the Barings affair was conducted by the Board of Banking Supervision (the board referred to in Clause 28). They will remember also that the Board of Banking Supervision has the statutory duty under the Banking Act 1987 to advise the Governor of the Bank on the exercise of his supervisory functions.
Under the Banking Act, the board consists of three ex officio members, the Governor, the deputy governor and the executive director responsible for regulation, plus six independent members appointed jointly by the Governor of the Bank and the Chancellor of the Exchequer. Crucially, the board is chaired by the Governor.
Noble Lords will recognise that essentially the same structure is contained in Clause 28, including the provision that the executive head of the institution responsible for supervision should chair the committee responsible for investigating whether that supervision is conducted in a satisfactory manner. It is this provision for chairing the board that amendments seek to change.
Noble Lords will certainly remember that at the time of the public of the report of the Board of Banking Supervision into the Barings affair the value of that report was called into question both in your Lordships' House and in another place and in the financial press, when it was revealed that the conclusions had been drafted at meetings of the board chaired by the Governor and Mr. Quinn, who was at the time the executive director responsible for supervision.
The noble Lord, Lord Ezra, noted on 18th July 1995 that the conclusions of the report did not seem to follow from the analysis which had been prepared by the independent members alone. He wondered whether the difference was attributable to the person who chaired the meetings at which the conclusions were drafted. My noble friends Lord Hollick and Lord Desai, speaking on 21st July 1995, when we managed to keep the noble Lord, Lord Mackay, from his holiday for some hours, both argued that it was unfortunate that the Governor
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should be the chairman of the committee examining activities for which he was himself responsible. They called for a new independent inquiry. For the sake of completeness, I should point out that the principal Treasury spokesman for the Opposition also expressed these fears, although perhaps that citation is somewhat diminished by the fact that that person was myself.
Similarly at the proceedings of the Treasury and Civil Service Committee of another place, held on Wednesday 19th July 1995, members of the committee expressed disquiet over the Governor's role as chairman of the Board of Banking Supervision, and suggested that it was hardly surprising that the Bank had accepted with alacrity the conclusions in the drafting of the final version of which the Governor and Mr. Quinn had themselves participated.
Let me be absolutely clear. No one has suggested—and I am certainly not suggesting—any impropriety in the operation of the Board of Banking Supervision or on the part of the Governor and Mr. Quinn. What was suggested, and I believe was correctly suggested at the time, was that the report should not only be independent, but it should be seen to be independent by virtue of having an independent chairman to prepare it.
I am sure that the Government are totally in agreement with this sentiment. Indeed, my noble friend speaking on Second Reading of this Bill argued that,
"The objective of the reform is again to enhance transparency and improve accountability".—[Official Report, 13/2/98: co1.1385.]
My amendments seek to achieve this with respect to the Board of Banking Supervision. In the new era of regulatory openness and institutional transparency, it is totally unacceptable for an individual with the authority of a chief executive to chair the body designed to monitor the institution for which he is responsible. Amendment No. 64 removes that embarrassment.
Amendment No. 65 requires that the chairman of the Board of Banking Supervision be elected from among independent members of the board, so that the chairman would be an independent member and not the chief executive of the FSA—or, as in the past, the chief executive of the Bank of England.
I am quite sure that the drafting of Clause 28 was a slip on the Government's part. These simple amendments prevent the new FSA inheriting unfortunate and embarrassing practices from the Bank of England. They seek to ensure that just and effective monitoring of some of the supervisory activities of the FSA will not just be done effectively, but will be seen to be done effectively. I beg to move.
Lord McIntosh of Haringey: I am grateful to my noble friend for the way in which he has introduced these two amendments. I appreciate that they are intended to further reinforce the independence of the Board of Banking Supervision by appointing as a chair one of the non-executive members.
In general it has not been our aim in this Bill to change the banking supervision regime in the course of transferring it to the FSA. This, again, is a matter which we will have to discuss with my noble friend between now and Report. However, in transferring the Board of

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Banking Supervision across to the FSA, we have already sought to increase its independence by reducing the number of executive members from three to two. I should point out that the Board of Banking Supervision is primarily an advisory body for the FSA and not an investigative body. When it investigated the Bank's performance, the investigative members—including the chairman—withdrew.
In the longer term we do not propose to retain the board in its current form. This would not be in keeping with the wider regulatory responsibilities of the FSA. The current provisions are only temporary until the second Bill can introduce a thorough-going reform of the system. The FSA has been consulting on the form of practitioner input for the longer term.
So we are not opposed to the spirit of these amendments, which would appoint a non-executive chair until a longer-term solution is legislated for. However, we need to consider the issue further in the context of the longer-term plans for practitioner input and to take account of the views of the Board of Banking Supervision members. On that basis, I hope my noble friend will see fit to withdraw his amendments.
Lord Eatwell: I must say that I find that reply rather disappointing. First, the Minister referred to the reduction in the number of executive members from three to two. He may have noticed that, in the investigation of the Barings affair, there were only two executive members involved because Mr. Rupert Pennant-Rea, who was deputy governor, resigned prior to the beginning of the inquiry and no new member was appointed. So the numbers of executive members in the Barings investigation, and those contained in the Bill before us, are exactly the same.
My noble friend also seems to have overlooked the point I made about the drawing up of the conclusions of the Board of Banking Supervision in the Barings investigation. He is quite right that the investigation was conducted by the non-executive members, but the peculiarity, as was pointed out by the noble Lord, Lord Ezra, at the time, was that the conclusions were drawn up at a committee chaired either by the Governor or by Mr. Quinn: that is, the executive members were actually involved in drawing up the conclusions.
As the noble Lord was speaking, I also found myself worrying about the insistence that these procedures were purely temporary. This brings to mind the number of temporary portacabins outside schools which are still there 20 years after they were erected, or indeed some of the prefabricated housing erected at the end of the Second World War, which I happened to pass in Swindon when I was there the other day. I find this word "temporary" very disturbing.
In light of what my noble friend said, I hope he will look very seriously at what is a very simple change which would significantly enhance the reputation of the Board of Banking Supervision, albeit in the period between N1 and N2. Moreover, it would be a powerful signal of the commitment of the Government to a new regulatory era of openness and transparency.
Lord McIntosh of Haringey: Before my noble friend concludes, this is a relatively simple issue, as he
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says. Let us discuss it at the same time as we have the more wide-ranging discussion on his earlier amendments before Report stage.
Lord Eatwell: I am looking forward to these extended discussions with my noble friend. I thank him for his comments and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 65 not moved.]
Clause 28 agreed to.
Clauses 29 to 32 agreed to.
Clause 33 [Closure of National Savings Stock Register to gilts]:
7.30 p.m.
The Earl of Home The Earl of Home moved Amendment No. 66:
Page 13, line 35, at end insert—
("() In making an order under subsection (1)(b) above, the Treasury shall ensure that no extra costs arising from such transfer shall be imposed on existing holders of stock on the National Savings Stock Register and that the overall level of charges is subject to controls similar to those in other parts of this Act.").
The noble Earl said: In moving Amendment No. 66, I shall also speak to Amendment No. 67. These are two very quick points but important ones for the small investor. They refer to the transfer to the Bank of the gilt business of the National Savings Stock Register and the future provision of brokerage services in connection with gilt registration.
The purpose of these amendments is to ensure that no extra financial strain is placed on the small investors. Institutions or high-net worth individuals have a whole range of stockbrokers and financial advisers to help them negotiate commissions, but the small man with a little spare cash to invest does not have that type of protection. Yet he is the sort of person whom we want to encourage to invest.
As far as that type of person is concerned. I do not believe that he ought to stand the cost of these transfers through increased charges. I may have missed it, but I do not believe we have yet been told what the cost of this transfer is, and I would ask the Minister to let us know if he has a figure at this stage. However, on the assumption that it does not run into many millions, I would hope that the Government would agree that the transfer could be sourced either out of the Bank's profits or at least from a source that did not impact on the small investor.
Amendment No. 67 simply recognises the fact that the Bank is in a near monopolistic position in this instance and, again, the small investor should be protected. I am not asking that this service should be offered at a loss but rather charged out at a rate which is consistent with market practice elsewhere for a similar service. I beg to move.
Lord McIntosh of Haringey: I am slightly puzzled by this proposal. The FSA is already, or will be, subject to the restrictions under Part V of the Banking Act in relation to all of the confidential information which it obtains in the discharge of its functions. So imposing

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these requirements, which are only drawn up in relation to the information needed for compiling monetary statistics and assessing liability for CRDs—I beg your Lordships' pardon, I have renumbered my amendments and I went on to the wrong one. This is the amendment on the National Savings Stock Register.
The main purpose of this measure is to reduce costs by merging the two similar services, although, in response to the request of the noble Earl, it is not possible yet to put a precise figure on the costs of the transfer. However, it is not appropriate to specify in legislation that the charge for providing a service cannot be increased since future increases in running costs may require an increase in charges to avoid making losses. However, we do expect existing holders of stock on the NSSR to benefit from the transfer. National Savings has been running the NSSR at a loss because the commission charged on the service does not cover the costs. Without a merger, there would have been pressure on National Savings to raise charges. However, once the transfer has been implemented, the economies of scale that the Bank can bring to bear mean that charges to customers using the official brokerage service can be contained.
The Earl of Home: I thank the noble Lord for that answer. When we have the precise figure, we may wish to readdress this question. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33 agreed to.
Clause 34 [Provision of brokerage service in connection with gilt registration]:
[Amendment No. 67 not moved.]
Clause 34 agreed to.
Clauses 35 to 37 agreed to.
Schedule 7 [Restriction on disclosure of information]:
The Earl of Home The Earl of Home moved Amendment No. 68:
Page 41, line 2, at end insert—
("General
. In this Schedule, "the Bank" includes the Financial Services Authority, where that Authority is exercising functions transferred to it under section 21 or Schedule 4.").
The noble Earl said: We have already discussed the removal of Crown status from members of the authority and the effect of that change. This amendment picks up the important point of disclosure of information by members of the authority. It is a point which my noble friend Lord Boardman and I raised during Second Reading and the Minister was kind enough to acknowledge it at that stage and said he would be addressing it.
As I have said before, it is important that the authority and the institutions develop the same mutual trust which currently exists between the Bank and the financial practitioners. Banks want to be open with the authority, but they will not be open unless they feel there are adequate safeguards protecting them from action by third parties because they have been required to disclose
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privileged information. At least under this amendment they would have the same redress against the authority as they would have against the Bank.
The MOU, to which we have referred in the past, in paragraphs 5 and 6 specifically addresses the collection of information point. Paragraph 6 says:
"Where both need access to the same information, they will reach agreement as to who should collect it and how it should be transmitted to the other".
If either the Bank or the authority can collect the information and then use it, it seems strange that the Bank is subject to restriction on disclosure but the authority is not. Surely both institutions should be subject to the same discipline. I beg to move.
Lord McIntosh of Haringey: With renewed apology, I will now respond to the amendment which is before us. The FSA is subject to the restrictions under Part V of the Banking Act in relation to all the confidential information it obtains in discharge of its functions. This amendment refers only to the information needed for compiling monetary statistics and assessing liability for cash ratio deposits. What would happen is that we would have a second regulatory regime for those statistics. We would have regulatory information subject to two different sets of confidentiality requirements.
The question is, what does the FSA do when the requirements differ? What if information could be disclosed to another regulatory body or a public authority under Part V of the Banking Act but could not be disclosed under Schedule 7? Presumably the FSA would not be able to make a disclosure that Parliament and indeed the noble Earl thought was necessary for the purposes of sound regulation when the Banking Act was passed. The confusion is relatively simple and I hope that the noble Earl will feel able to withdraw the amendment.
The Earl of Home: I thank the noble Lord for that reply. I do not in fact have Part V of the Banking Act in front of me, but I shall study his comments in Hansard in great depth and we may have to return to this topic at Report stage. Meantime, I beg leave to withdraw.
Amendment, by leave, withdrawn.
Schedule 7 agreed to
Clauses 38 and 39 agreed to.
Clause 40 [Orders]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 69:
Page 16, line 12, at end insert ("or
paragraph 3(2) of Schedule 7,").
The noble Lord said: In moving Amendment No. 69 I would like to speak also to my Amendment No. 72 and to Amendments Nos. 70 and 71 in the name of the noble Lord, Lord Mackay of Ardbrecknish. My amendments give direct effect to the opinions of the Delegated Powers and Deregulation Committee. Paragraph 3(2) of Schedule 7 empowers the Treasury to amend the table specifying authorities to whom the board may disclose information obtained under

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Clause 17(1) on monetary policy. The Delegated Powers and Deregulation Committee in its report of 4th February recommended that the parliamentary procedures to implement the power under paragraph 3(2) should be the affirmative procedure rather than the negative. The Government accept the committee's recommendations, and my amendments give effect to that.
The amendments of the noble Lord, Lord Mackay, would extend the affirmative procedure to paragraph 3(3), which empowers the Treasury to impose restrictions on conditions on such disclosures. Although I am perfectly happy to talk to him about it, I do not see why he has brought them forward when the Delegated Powers and Deregulation Committee did not seem to think that they were necessary.
Lord Mackay of Ardbrecknish: I am deeply grateful to the noble Lord, Lord McIntosh. He rightly pointed out that I became a little more enthusiastic in my amendment than was properly justified by the Delegated Powers and Deregulation Committee. I am not in the least surprised that he brought forward this amendment. I would have been deeply disappointed if he had not, but knowing his track record on these matters he did not let me down. I just hope that his good example is followed by the rest of the Government.
On Question, amendment agreed to.
[Amendments Nos. 70 and 71 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 72:
Page 16, line 19, leave out ("3(2) or (3)") and insert ("3(3)").
The noble Lord said: I beg to move.
On Question, amendment agreed to.
Clause 40, as amended, agreed to.
Clauses 41 and 42 agreed to.
Schedule 8 agreed to.
Clause 43 agreed to.
Schedule 9 [Repeals and revocations]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 73:
Page 44, line 35, column 3, leave out ("(in both places)").
The noble Lord said: I spoke to this amendment with Amendment No. 53. I beg to move.
On Question, amendment agreed to.
Schedule 9, as amended, agreed to.
Clauses 44 and 45 agreed to.
Clause 46 [Short title]:
[Amendment No. 74 not moved.]
Clause 46 agreed to.
In the Title:
[Amendment No. 75 not moved.]
Title agreed to.
Bill reported with amendments.
The Deputy Chairman of Committees (Lord Strabolgi): That concludes the Committee's proceedings on the Bill.
The Committee adjourned at sixteen minutes before eight o'clock.

  Cookham Wood: Young Offender Educational Programme
  Lord Acton
  asked Her Majesty's Government:

  Further to the Written Answer by Lord Williams of Mostyn on 24 November 1997 (WA 104), which referred to the secure training centre at Cookham Wood being available for use in April, what educational programme they plan for offenders aged 12 to 14 years sent there. [HL795]

  The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn)
  The centre will provide a positive regime offering high standards of education and training according to the individual needs of a trainee, with a view to maximising his/her potential. The programme will include 25 hours every week of conventional education appropriate to a trainee's academic level and based on the National Curriculum. It will also include tackling offending behaviour and crime avoidance and practical tuition in social skills and domestic training. Full details of the programme are contained in Section D of the Operational Specification in the contract, a copy of which has already been placed in the Library.

  Phyllis Bowman v. The United Kingdom
  Lord Braine of Wheatley
  asked Her Majesty's Government:

  Whether they will inform Parliament of the result of Phyllis Bowman v. The United Kingdom and the rights of citizens to publish and inform about the voting record or voting intentions of Parliamentary candidates on any given issue. [HL770]

  Lord Williams of Mostyn
  The Government are currently studying the decision and have no plans to make any announcement at present.

  Lord Braine of Wheatley
  asked Her Majesty's Government:

  Whether they have any plans to amend the Representation of the People Act 1983 to comply with the judgment of the European Court of Human Rights
  in Phyllis Bowman v. The United Kingdom. [HL767]

  Lord Williams of Mostyn
  The Government are studying this decision carefully. Before taking action we will wish to consider the recommendations of the Neill Committee on Standards in Public Life when it completes its review of political party funding and candidates' expenditure.
  WA 162
  Lord Braine of Wheatley
  asked Her Majesty's Government:

  Whether they will pay compensation to Mrs. Phyllis Bowman for any psychological damage caused by having a criminal record and having been found guilty of "corrupt practice" and fined on two previous occasions under the Representation of People Act 1983. [HL769]

  Lord Williams of Mostyn
  The Government have no plans to do so. The European Court of Human Rights, in reaching its decision, dismissed Mrs. Bowman's claim for damages.

  Bahrain Citizens: Asylum Applications
  Lord Avebury
  asked Her Majesty's Government:

  Further to the Written Answer by the Lord Williams of Mostyn on 26 November 1997 (WA 121), whether they can now give a date by which they will consider the asylum applications of Sayed Haider H. A. Hasan, Hamza A. J. Kadem and Sheikh Ali S. A. Salman, citizens of Bahrain, who applied for asylum on their arrival in the United Kingdom on 17 January 1995, after being imprisoned without charge or trial since early December 1994, and then expelled from their country by the authorities: and why these cases have so far taken more than three times the average time to resolve. [HL755]

  Lord Williams of Mostyn
  It is not possible to give such a date. However we do expect to be in a position to resolve these applications by the summer. Current delays in dealing with applications are the result of the large backlog of cases in the Asylum Directorate and it is inevitable that some cases will take significantly longer than the average.

  Bills for Consideration in Grand Committee
  The Earl of Northesk
  asked Her Majesty's Government:

  What criteria are applied in determining whether a Bill is suitable for consideration in Grand Committee. [HL701]

  The Lord Privy Seal (Lord Richard)
  The question whether a particular Bill is suitable for consideration in Grand Committee is one for agreement through the usual channels. The use of the procedure has been endorsed by the Procedure Committee on several occasions, most recently in its First Report, Session 1996–97 (H.L. Paper 20), which was approved by the House on 21 January 1997. On that occasion, the Chairman of Committees said that "the prime purpose of the Procedure Committee in suggesting these reforms…was to save time in the Chamber. That remains the basic aim." (H.L. Deb., Col. 558).

  Vacant Dwellings
  Lord Acton
  asked Her Majesty's Government:

  What are the latest figures for vacant dwellings in England. [HL920]

  The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)
  The total number of vacant dwellings in England is down by 23,000 on the April 1996 figure. This fall is encouraging.

  At 1 April 1997, a total of 81,200 council homes in England were empty, 2.4 per cent. of local authorities' stock. The 1996 figure was 79,600 (2.3 per cent). All of the increase was in "management vacants" (dwellings available for letting immediately or after minor repairs), which account for 61 per cent. of all vacant local authority homes.

  We are disappointed to see that the total number of local authority vacants has risen for the third year running, after falling in successive years between 1990 and 1994. It is clearly part of good housing management practice for local authorities to keep their empty dwellings to a minimum. The Department of the Environment, Transport and the Regions Working Group on Best Value in Housing will be looking at performance indicators, and will consider whether it would be appropriate for local authorities to establish local targets for reducing the proportion of their housing stock which is out of effective use.

  We are making nearly £800 million available to local authorities in 1997–98 and 1998–99 through the Capital Receipts Initiative, and we hope that local authorities will make the very best use of this additional spending power to improve and renovate their existing stock and make it more attractive to prospective tenants.

  It is also disappointing to note that vacancy rates in the Registered Social Landlord (RSL) sector have risen from 23,600 (2.5 per cent.) at April 1, 1996 to 26,800 (2.7 per cent.) at April 1, 1997. The Housing Corporation has published research and held seminars to inform and encourage RSLs to take action to reduce void levels. RSLs should also benefit from the development of Best Value in Housing.

  Many local authorities and RSLs already have good empty property strategies for which they can take credit. But there is still much to be done, and the Government will continue to encourage social housing providers to develop and implement effective empty property strategies to make the best use of existing housing stock.

  The number of vacancies in the private sector fell from 667,000 in 1996 to 640,000 in 1997. This is the fourth successive year that the numbers have fallen. About 45 per cent. of private sector empty homes are "transactional" vacancies, which are properties lying vacant for a short period as part of the normal buying and selling process. Some 225,000 are problematic vacants which may require action to bring them back into use.

  In the government sector, the number of empty homes held by the Department of the Environment, Transport and the Regions, the Ministry of Defence and the Home
  WA 164
  Office fell by 754 between 1 April 1996 and 1 April 1997. The number of government empty homes is still too high, and this Government are determined to improve on these figures in the future.

  We have placed in the Library of the House a list of local authorities in England ranked on the basis of their management vacants at 1 April 1997.

  Aquatic Environment: Dangerous Substances
  Lord Ponsonby of Shulbrede
  asked Her Majesty's Government:

  What steps they have taken to enhance protection of the aquatic environment against pollution by dangerous substances. [HL921]

  Baroness Hayman
  New regulations have today been laid in the House setting environmental quality standards (EQSs) for 20 List II substances under the Dangerous Substances Directive. The substances are:

  4-chloro-3-methyl-phenol

  2-chlorophenol

  2,4-dichlorophenol

  2,4 D (ester and non ester)

  1,1,1-trichloroethane

  1,1,2-trichloroethane

  bentazone

  benzene

  biphenyl

  chloronitrotoluenes

  demeton

  dimethoate

  linuron

  mecoprop

  mevinphos

  naphthalene

  omethoate

  toluene

  triazaphos

  and xylene

  These substances are in addition to the EQSs for 13 substances in regulations made in November last year.

  Pyrethroid Sheep Dips
  Lord Onslow of Woking
  asked Her Majesty's Government:

  What representations have been received from national or European organisations concerning the damage caused by pyrethroid sheep dips. [HL799]

  Baroness Hayman
  The Department of the Environment, Transport and the Regions has received correspondence from members of the Salmon and Trout
  WA 165
  Association expressing concern about the effect on aquatic life of pollution incidents involving synthetic pyrethroid sheep dips.

  Last month, the Government published draft regulations relating to England, Wales and Scotland which propose additional protection for groundwater from a number of substances, including synthetic pyrethroids. During the consultation period, which ends on 14 April, we expect to receive further comments on the impacts of synthetic pyrethroids on the aquatic environment.

  Company Law: Reform
  Baroness Pitkeathley
  asked Her Majesty's Government:

  What plans they have for the reform of company law. [HL900]

  The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)
  My right honourable friend the President of the Board of Trade is today publishing a consultation paper,Modern Company Law for a Competitive Economy. The paper sets out her plans for a major review of company law and its relationship with corporate governance codes. The review will focus on the Companies Act 1985. Insolvency and Financial Services legislation will not in general fall within its scope.

  The review is an important part of the Government's strategy to modernise the nation. While much of the relevant statute has stood the test of time, the review will ensure that company law statute can continue to underpin the growth, competitiveness and accountability of British companies into the 21st Century. It will, for example, consider whether, taking account of partnership law and the proposed Limited Liability Partnership, business has the right choice of legislative vehicles for growth. It will address the complexity of the current legislation, and ensure a structure that is clear to users; and it will seek a flexible framework of regulation which is cost effective for companies, and fair to all interests.

  The review will be a considered, consultative and long-term process. A Steering Group, chaired by the Department of Trade and Industry, will manage the review process; and there will be a widely-based consultative committee to ensure active representation of all wider interests. Full public consultation will continue at the end of this year with the first report of a first expert working group, and will continue throughout the process.

  The review will culminate in the publication of a White Paper on proposed company law reforms, towards the end of this Parliament.

  Scottish Civil Service Jobs: Dispersed Locations
  Lord Hogg of Cumbernauld
  asked Her Majesty's Government:

  What is the policy of the Scottish Office on the dispersal of civil service jobs from Edinburgh to other Scottish locations. [HL759]

  The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel)
  Scottish Office staff already work from a number of locations around Scotland. Staffing dispositions are kept under review to ensure continued efficiency and value for money. There are no present plans to make significant changes to existing staff dispositions. Future arrangements would be a matter for the Scottish Executive and the Scottish Parliament.

  "Learning Age" Policy Documents: Press Launch Costs
  Baroness Blatch
  asked Her Majesty's Government:

  Whether they will give details of costings of the press launch of the "Learning Age" policy documents:

  (a) A Renaissance for a New Britain;

  (b) Higher Education for the 21st Century; and

  (c) Further Education for the New Millennium, including the cost of press information packs.[HL819]

  The Minister of State, Department for Education and Employment (Baroness Blackstone)
  The cost of the press launch of the "Learning Age" policy documents was £66,991. This included the cost of press information packs as well as all the display and exhibition material, which will be reused at 13 regional consultation conferences.

  Action for Governors' Information and Training (AGIT)
  Baroness Blatch
  asked Her Majesty's Government:

  Whether Action For Governors' Information and Training (AGIT) has received in error a grant of £34,000 twice from the Department for Education and Employment; and if so, whether AGIT should be told to return the taxpayers' money it has been overpaid. [HL821]

  Baroness Blackstone
  I can confirm that that is the case. I can also assure the noble Baroness that steps have already been taken to safeguard taxpayers' money. Following the decision reached by AGIT's management committee to wind up the organisation as it is no longer financially viable, it has been agreed that any cash balance in the final accounts should be paid to the department against the outstanding debt and that the
  WA 167
  department will have the right to agree to the assignment of any remaining assets.

  We have been concerned to ensure that AGIT should be wound up in a way which would best reinforce governor training while also protecting public investment and ensuring financial probity. We consider that best value for money will be achieved by ensuring that the substantial body of intellectual assets created by AGIT in the form of publications and training materials can remain available for school governors. Discussions as to how this can best be achieved are currently taking place.

  Government Department Public Presentations
  Baroness Blatch
  asked Her Majesty's Government:

  Whether they will give the number of public presentations by all government departments since 1 May 1997 and their costings. [HL820]

  Lord McIntosh of Haringey
  The answer can only be provided at disproportionate cost.

  Grace and Favour Residences
  Lord Dormand of Easington
  asked Her Majesty's Government:

  How many grace and favour homes there are. [HL462]

  Lord McIntosh of Haringey
  There are currently nine Royal Grace and Favour residences in the Royal Palaces, and 12 official residences occupied by Ministers on a similar rent-free basis.

  Government Art Collection: Public Access
  Lord Freyberg
  asked Her Majesty's Government:

  What public access arrangements have been made to view paintings and works of art on loan from national collections to government departments, including Nos. 10 and 11 Downing Street and the Lord Chancellor's Residence. [HL699]

  Lord McIntosh of Haringey
  The works of art on loan from national collections to government departments are viewed by the wide variety of visitors to these buildings. Members of the public who have a particular need (for example relating to research or family connections) to see a particular work on loan can do so by writing to the Government Art Collection, which administers loans to government departments, including Nos. 10 and 11 Downing Street. The request is then forwarded to the appropriate department, with whom the final decision on granting access rests.

  The Government Art Collection does not administer loans of paintings from national collections to the Lord Chancellor's Residence. Discussions are currently under
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  way regarding public access once the refurbishment of the Residence is complete.

  Decommissioned Nuclear Submarines: Storage
  Lord Acton
  asked Her Majesty's Government:

  What is the impact of the delay to the Deep Waste Repository on the afloat storage of decommissioned nuclear submarines. [HL919]

  The Minister of State, Ministry of Defence (Lord Gilbert)
  Afloat storage is not time limited and is safe. However, space at Devonport Naval Base and at Rosyth Royal Dockyard is finite and is expected to reach its capacity some years before any Deep Waste Repository may become available. As a result, the MoD is now investigating other options, including interim land storage and other sites for storage afloat. Safety to the public and to the environment will be of paramount importance when considering the way forward.

  GP Partnerships: Deprivation Payment Statistics
  Lord Rea
  asked Her Majesty's Government:

  In respect of fund holding and non-fundholding general practice partnerships:

  (a) what is the mean level and range of deprivation of the practice populations of the two groups (using Under-Privileged Area (Jarman) (scores);

  (b) what is the distribution of inner city, urban, semi-rural and rural locations in the two groups;

  (c) whether there is any difference in the geographical (regional) distribution of the two groups; and

  (d) whether successive waves of general practice fund holding have had any impact on the above distributions. [HL657]

  The Minister of State, Department of Health (Baroness Jay of Paddington)
  The information requested is not available centrally in the form requested, but the following tables give some indication of the pattern of fundholding and non-fundholding practices in the United Kingdom for the categories requested.

  Table 1 shows how many fundholding and non-fundholding practices received deprivation payments in each of the last four years, indicating how the profile has changed over time. General medical services (GMS) deprivation payments are made to general practitioners for each patient on their list classified as living in underprivileged areas (UPA). Arrangements for assessing entitlement to these payments are based on the Jarman score for UPA as the measure of deprivation. This index is constructed from census variables weighted according to GP's perceptions of their influence on GMS workload. The

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  detailed arrangements vary from country to country. Payments are currently made on the basis of 1991 census data.

  Table 2 shows the percentage of the registered population covered by GP fundholders (GPFH) in each English health region and in Scotland, Wales and Northern Ireland in each of the last four years.

  Table 1a: Number of practices receiving deprivation payments: England, Scotland and Northern Ireland 1993 to 1996

  Number of practices in receipt of deprivation payments

  Number of practices not in receipt of deprivation payments

  Total

  1993

  GPFH

  707

  647

  1,354

  non-GPFH

  6,007

  3,181

  9,188

  Total

  6,714

  3,828

  10,542

  1994

  GPFH

  1,220

  1,043

  2,263

  non-GPFH

  5,472

  2,799

  8,271

  Total

  6,692

  3,842

  10,534

  1995

  GPFH

  1,542

  1,297

  2,839

  non-GPFH

  5,065

  2,587

  7,652

  Total

  6,607

  3,884

  10,491

  1996

  GPFH

  2,586

  1,568

  4,154

  non-GPFH

  4,405

  1,892

  6,297

  Total

  6,991

  3,460

  10,451

  Source:

  Enhanced GP census 1 April. Scottish Health Service and Department of Health and Social Services in Northern Ireland.
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  Table 1b: Number of practices receiving deprivation payments: Wales 1993 to 1996

  Number of practices in receipt of deprivation payments

  Number of practices not in receipt of deprivation payments

  Total

  1993

  292

  251

  543

  1994

  305

  240

  545

  1995

  306

  232

  538

  1996

  337

  195

  532

  Source:

  Enhanced GP census 1 April.

  Note:

  Data on deprivation payments to practices in Wales do not distinguish between fundholders and non-fundholders.

  Table 2: Percentage of the registered population covered by GP fundholders 1994–95 to 1997–98.

  Percentage of registered population covered by GP fundholders

  1994–95

  1995–96

  1996–97

  1997–98

  Region

  Northern & Yorks.

  34

  37

  52

  59

  Trent

  43

  47

  55

  59

  Anglia & Oxford

  39

  41

  51

  56

  North Thames

  27

  36

  49

  54

  South Thames

  38

  41

  49

  55

  South & West

  30

  31

  45

  56

  West Midlands

  41

  50

  60

  62

  North West

  34

  37

  53

  57

  England total

  35

  39

  51

  57

  Scotland

  22

  37

  46

  —

  Wales

  33

  39

  49

  56

  Northern Ireland

  25

  30

  45

  54

  Source:

  Returns from Regional Offices and Scottish Health Service, Welsh Office and Department of Health and Social Services in Northern Ireland.