Sitting of 28 June 1999

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

    Small Theatres
    Mrs. Jacqui Lait: If he will make a statement on the future of funding for smaller theatres. [87197]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): It is for the Arts Council and regional arts boards to take decisions on funding for individual organisations, and to formulate policy for individual art forms, including those relating to smaller theatres. I have made it clear to the Arts Council that there is considerable concern about the condition of regional theatre across the country, which needs to be recognised and addressed.
    Mrs. Lait: Will the right hon. Gentleman make the same clear to local authorities that contribute to funding small theatres such as the Studio in Beckenham, which is supported by the people who live in deprived wards in my constituency, and which is threatened by the Lib-Lab
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    pact that runs Bromley? Does he agree that in addition to regional theatres, smaller theatres need community support if they are to continue to exist. Is he concerned that cuts in capital funding will threaten the existence of those theatres?
    Mr. Smith: The hon. Lady is right to point to the support that local authorities give to small theatres. Indeed, 14 per cent. of all funding for theatres comes from local government. As regards the Studio, the co-leader of Bromley council, Councillor Chris Maines—a Liberal Democrat, I believe—has said:
    "The Studio is too small to be viable and not a lot of people get to see what is put on there…We cannot justify the subsidy Studio gets from the Council."
    The hon. Lady ought perhaps to address her remarks to Liberal Democrat Members.
    Dr. Brian Iddon: I thank the Secretary of State for his statement on the future of regional theatre. Will he congratulate the Octagon theatre, Bolton, and, in particular, SCOT—the campaign to support the theatre—which hopes to guarantee continued production from October by raising a large sum of money? Will he agree to the request contained in a petition from the Friends of the Octagon, requesting him to meet representatives of the theatre to discuss their concerns?
    Mr. Smith: I recall discussing the Octagon theatre with my hon. Friend and others, and I warmly congratulate those who have raised substantial funds for the theatre. I would be happy to meet representatives of the Octagon and of other theatres in the north-west of England. I have asked the Arts Council, as part of the funding agreement for the coming year, to review the subsidised provision of producing theatre and the associated infrastructure in the regions of England. I want the Arts Council to pay real attention to those issues.
    Mr. Peter Ainsworth: May I return the right hon. Gentleman to the question from my hon. Friend the Member for Beckenham (Mrs. Lait), which he

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    effectively dodged with a sensible sideswipe at the Liberal Democrats? On capital funding, is he aware of growing concern that, following the 30 per cent. cut in the Arts Council lottery fund and the overall cut in spending on the arts, less money will be available for capital projects in theatres, many of which urgently need refurbishment and restoration if they are to stay open at all? What can he do to dispel the impression that neither he nor the Arts Council care much about smaller regional theatres?
    Mr. Smith: I fear that the hon. Gentleman is getting capital and revenue mixed up. The Studio in Beckenham is a capital lottery-funded project, and lottery funds have been made available. Our Government changed the lottery, by means of the National Lottery Act 1998, to ensure that lottery funds can be used to support people and activities, not just bricks and mortar. By doing so, we did something that the hon. Gentleman's Government never did.

    Competitive Sport
    Mr. Paul Goggins: What steps he is taking to encourage schools to play competitive sporting fixtures against other local schools. [87198]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): It is important that we give young people the opportunity to take part in competitive team games, not only within their own schools but against other schools as well. Intra-school and inter-school competitive activities are already included as one of the criteria schools have to meet to be awarded a sports mark. However, competitive games need to be given an even higher profile, and we have asked Sport England to ensure that arranging inter-school competitive fixtures is a key part of the job description of the new active schools co-ordinators.
    Mr. Goggins: I thank my right hon. Friend for his answer. The initiative is welcome, particularly as competitive sport in schools declined by about 70 per cent. during the previous Government's period in office. May I draw my right hon. Friend's attention to cricket, a game meant to be one of our major national sports, but which is hardly played in state schools? There are many reasons for that: teacher time, the state of pitches, poor coaching and the fact that schools close for about a third of the cricket season. Will the Secretary of State ensure that competitive cricket in schools is an essential feature of his initiative?
    Mr. Smith: I can indeed give my hon. Friend that assurance. Cricket, along with football, rugby of both codes, athletics, swimming and tennis will be part of that initiative for the active schools co-ordinators to promote inter-school competition.
    Mr. Richard Spring: Does the right hon. Gentleman not understand that giving 14 to 16-year-olds an opt-out from competitive team sport often simply means that in practice they will not do any sport or physical education? Has he heard Denise Lewis's comment:
    "To take the competitive element out of sport seems ludicrous"?
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    Does the right hon. Gentleman not understand why that policy has provoked a storm of protest among concerned British sportsmen and sportswomen?
    Mr. Smith: I suspect that what protests there have been have resulted from direct and deliberate misrepresentation by Conservative Members. I refer the hon. Gentleman to the comments of David Moorcroft, the chief executive of UK Athletics, who said:
    "Setting a new target of two hours of PE in school per week for every child is a real breakthrough. It is right that young people who prefer activities like athletics should be free to spend more time on them as they get older. The result will be children doing more sport and PE in schools".
    That is the aim and that is what we will achieve.

    Cricket Grounds
    Maria Eagle: What steps his Department is taking to improve safety and spectator comfort at cricket grounds. [87199]
    The Minister for Sport (Mr. Tony Banks): The Government are determined that spectators of all sports should be able to enjoy the action in safety and comfort. In April, I announced new roles for both Sport England and the Football Licensing Authority in our drive to modernise sports grounds throughout the country. Sport England is to fund a £10 million improvement scheme in the next four years to help top rugby league and rugby union teams and the major cricket counties to improve safety at their grounds. In addition, the Football Licensing Authority will be reconstituted as the sports grounds safety authority and will have an advisory role on safety issues associated with all sports that use outdoor sports stadiums, including cricket. I am sure that my hon Friend will agree that these are welcome developments.
    Maria Eagle: I thank my hon. Friend for that reply. Does he agree that the best way to improve spectator comfort at cricket grounds would be to improve the England cricket team, since there is little more depressing than having to watch a succession of England batsmen returning to the pavilion, whether one is watching in safety and comfort or not?
    Mr. Banks: Mental comfort might indeed be improved by greater success, but our lads tried their best—it is just that on that occasion their best was not good enough. I hope that the recent changes that have been announced, in particular Nasser Hussain's captaincy, will help to restore the fortunes of English cricket, which is dear to the hearts of all of us in this House.

    Racism in Sport
    Mr. Jeff Ennis: What steps his Department is taking to tackle racism in sport. [87200]
    The Minister for Sport (Mr. Tony Banks): Racism is a blight that impacts on all sports. Last year the football task force published its report "Eliminating Racism from Football". I subsequently asked the football authorities to consider how they could implement the recommendations. This has been a good start, but we must ensure that the

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    problem is tackled by all sports. To that end I have written to the governing bodies of cricket, tennis, athletics, rugby union and rugby league to ask them how the problems can be addressed within their sports. Once I have all their proposals, I intend to call a meeting with those governing bodies, the Commission for Racial Equality and the Local Government Association to discuss new initiatives to combat the evil of racism in sport.
    Mr. Ennis: I thank my hon. Friend for his reply and congratulate the Government on their swift action to try to stamp out the insidious practice of racist chanting, particularly at football matches. Does my hon. Friend agree that in future he needs to inform football clubs before the start of the new football season—and the stewards employed by those clubs—of the changes that will come into practice in the near future?
    Mr. Banks: Yes, I do indeed agree. The relevant legislation is before the other place, which demonstrates how swift we were to act on the recommendations of the football task force that racist chants by an individual should become an offence, as is the case with collective chanting. All the football clubs have made good progress in dealing with racism and hooliganism inside their grounds, but this campaign must be continuous. Slogans placed in programmes and around the perimeters of grounds about keeping racism out are not of themselves sufficient. The campaigns must be proactive. The House can be assured that the Government will continue to have discussions with and use our influence to put pressure on the governing bodies. They take the issue seriously, but we want to help them to drive out the cancer of racism from sport.
    Mr. John Bercow: Does the Minister share the view that the England cricket selectors are themselves failing adequately to recognise the talents of non-white players? If he does, with what speed does he expect progress to be made in that matter?
    Mr. Banks: The hon. Gentleman raises a most interesting point. One of the lessons that we must learn from the world cup is the enormous fervour and enthusiasm for cricket among our Asian communities. As I have said before, English cricket will be transformed, as English football was transformed, the more that the ethnic minorities in our country become involved in those sports. For example, the appointment of Nasser Hussain is a good step forward. The cricket authority—the England and Wales Cricket Board—is aware of the need to do far more in the Asian communities to scout for talent, to nurture that talent and to get it through the county structures and into the English team. I know that I can always count on the support of the hon. Gentleman in campaigns of that sort.

    World Cup Bid
    Mr. Michael J. Foster: What assessment he has made of the prospects for England's bid to host the 2006 world cup; and if he will make a statement. [87201]
    The Minister for Sport (Mr. Tony Banks): I am firmly optimistic about our chances of success. England's bid has always been strong but, in the light of recent events, it is gathering even more momentum and strength; for example, through the highly successful visit to England last month of representatives of world football, who were received by His Royal Highness Prince Charles at Highgrove and by my right hon. Friend the Prime Minister in Downing street. The representatives also enjoyed the fantastic spectacle of the Wembley cup final.
    Manchester United's triumph in the European cup was a great advertisement for English club football and for English fans. The decision by UEFA-the European governing body-to remove the expectation that European delegates on the FIFA executive were to support Germany has further boosted our chances. The Football Association's 2006 bid is a national campaign actively supported by the Government and by Opposition parties. I am grateful to Members on both sides of the House who are working with me to ensure England's success.
    Mr. Foster: As my hon. Friend knows, the Football Association announced today that Manchester United football club does not have to take part in next season's FA cup. As a lifelong supporter of Birmingham City, and a fan of Worcester City, I am not used to supporting such a successful team. Can my hon. Friend enlighten the House as to the justification for that decision by the FA?
    Mr. Banks: Manchester United's exemption from next season's FA cup is a one-off exceptional proposal, in exceptional circumstances. There are two reasons for that. The first is that England has an unenviable reputation for looking down on new, major tournaments. We refused to enter the world cup when it was first organised, and we refused to enter the European cup when it began-my own club, Chelsea, which won the championship in 1954–55, was refused the privilege of being the first club to go into Europe. No one can say that those decisions were right; they were wrong and we cannot make the same mistake again. We cannot afford to be wrong about a new world club championship in the year 2000.
    Secondly, if Manchester United does not compete, Bayern Munich will replace it as Europe's champion representatives in Brazil. It is my considered opinion that, in such an event, significant damage would be inflicted on England's chances of hosting the world cup in 2006. The FA and indeed the Government are asking Manchester United and all fans to do their best to enhance England's reputation and standing throughout the football world.
    Mr. Peter Ainsworth: The whole House will know that the Minister brings his personal energy to the world cup bid with all the animation of Roland Rat, but what is he doing about—[Interruption.] I hope that the Minister is more successful in sport, and that he takes a leaf out of Roland Rat's book because Roland Rat was rather successful at TV-am.
    What is the Minister doing about the situation at Wembley? He will be aware that, in football circles, there is growing concern about the lack of progress towards the all-important redevelopment that is needed if we are to have a world-class stadium in time not only for the world

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    cup bid, but for the athletics championships. What is he doing to bring Brent council to the table in order to achieve progress on that important development?
    Mr. Banks: One thing I can tell the hon. Gentleman is that I will not rat on England's chances of securing the world cup in 2006, and I hope that he will not either, because I have been obliged to him and his hon. Friend the Member for West Suffolk (Mr. Spring) for their support for that campaign.
    The development of the new national stadium at Wembley is proceeding, and we shall unveil the proposals for that stadium toward the end of next month. I think that the hon. Gentleman will be satisfied because, together with his hon. Friend, he will be invited to the presentation and they will be able to see exactly what is proposed. We are confident that the new stadium will be available and open by early 2003 at the latest. That will give us the opportunity to use it for the 2005 world athletics championship.
    The new stadium remains the centrepiece of England's 2006 bid. I assure the hon. Gentleman that I have held discussions with my Labour colleagues on Brent council and we are keeping them posted because we do not want a public inquiry at the end of all this. Stage by stage, they have been involved in the negotiations. Although those negotiations are not being carried out directly by me, my right hon. Friend the Secretary of State and I are taking a close interest in the development of the new national stadium at Wembley. I know that it will be the envy of the world when it opens in 2003.
    Mr. Peter L. Pike: May I assure my hon. Friend that all those who are interested in football in this country are fully behind him? We congratulate him and the team who are fighting for the 2006 games and welcome his comments about the stadium. However, the issue is not merely the new stadium at Wembley, but the transport infrastructure. Can he assure us that that infrastructure will be able to meet demand far better than the current, quite appalling, system?
    Mr. Banks: I am grateful for my hon. Friend's comments about the 2006 campaign. We are asking all football supporters-not only Manchester United supporters, but all those who might like to have played Manchester United in the early rounds of the FA cup-to accept that Manchester United's exclusion from next year's FA cup, if it decides to accept the offer presented by the FA, is a one-off that is being done in the wider interests of English football. Football fans are just as capable of recognising national effort and national interest as anyone else in this country, and I know that they will do so.
    My hon. Friend is absolutely right about Wembley: it would be pointless to have a brand-new stadium in the mess that is that part of the lovely borough of Brent. We are taking such matters into consideration because the whole proposal for the national stadium must be consistent with improvements to transport infrastructure.

    Film Industry
    Miss Anne McIntosh: If he will make a statement on the financing of the British film industry. [87202]
    The Minister for Tourism, Film and Broadcasting (Janet Anderson): The Government's objective is to create the conditions for the growth of a self-sustaining, commercial film industry through the tax incentives introduced in 1997, through collaboration with the industry on the film policy review and the film finance forum, and through targeted support for the development and production of British films. We are also establishing a new body—the Film Council—which will have the specific task of helping the industry to develop sustainable financial structures.
    Miss McIntosh: The much trumpeted tax breaks to which the Minister refers have not benefited one film that has been made in this country. Does she agree that the remarks made to The Independent in March by the Secretary of State are quite silly? He described the tax breaks as
    "a really significant step in getting more British films made, and attracting more overseas film-makers here to use our facilities and our craftsmen and actors".
    Not one film has benefited, and I understand that the tax breaks are threatened by European Union harmonisation proposals. What support can the film industry in this country expect from the Government?
    Janet Anderson: I can only say that that is not what the well respected company Ernst and Young has to say. It has said that, because of the tax incentive it has been able to move into film financing, with an initial £30 million slate of British movies. Tax deals on completed films are providing new money for producers to put into their next film. That is a direct result of the action taken by my right hon. Friend the Chancellor of the Exchequer in his first Budget.
    Mr. Tom Clarke: Is my hon. Friend the Minister aware of the huge success of "Notting Hill" in the United States? Does she share with British movie makers their great pleasure at the fact that, in contrast to a survey a couple of years ago, a survey following that film shows an increase in appreciation of and demand for British films in the United States? Given the presence of our Los Angeles film office, does not my hon. Friend believe—in contrast to the doom and gloom that we have just heard—that investors have every reason to feel encouraged about supporting British films, both across the Atlantic and at home?
    Janet Anderson: I thank my right hon. Friend for that well-timed question and take this opportunity to pay tribute to him, as many of our achievements are the result of the excellent work that he did as Minister for Film and Tourism. A great deal has been achieved for British films with Government support over the past two years. We intend to build on that progress, and the definition of what constitutes a British film will be amended next month so that more films made in this country can qualify for tax breaks. The Government want to ensure that we give tax breaks only to those films that are really British. There is obviously support for British films around the world.
    Mr. Peter Brooke: Given the relative size of the British film industry, the disproportionate number of Oscars that British films and actors win and the fact that the City of

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    London is the world's leading financial centre, what prevents us from marrying together those national talents and assets?
    Janet Anderson: The right hon. Gentleman may not be aware that the Government have established the film finance forum—an independent think tank that is working to provide guidance and to encourage and assist with the industry's structural development in order to create the types of commercial undertakings in which the City will feel able to invest. In short, the forum is a bridge between the film industry and the main investment sectors. As a result of its activities, Ernst and Young began to get interested in funding British movies and, as I said earlier, has produced a £30 million slate for them. That is a great tribute to what the Government have done for British films.

    Broadcasting Reception (Wales)
    Mr. Gareth Thomas: What steps he plans to take to ensure that broadcasters improve reception of television and radio in Wales. [87203]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): The BBC and the broadcasting regulators are responsible for the transmission of television and radio services. The topography of Wales has long presented problems to broadcasters. With the aid of an extensive network of local relay stations, analogue television and radio broadcasters have now achieved near universal coverage in Wales. Digital broadcasters face similar problems in providing television and radio services to Welsh viewers. The BBC, the Independent Television Commission and the Radio Authority are now working with my Department to improve digital television and radio coverage.
    Mr. Thomas: I am grateful to my right hon. Friend for that reply. He is correct to say that the Welsh topography presents broadcasters with particular difficulties. What assurances can he give in that regard? Although digital television might provide an answer, current coverage remains patchy. Is it not essential to ensure that broadcasters improve coverage, which currently reaches no more than 70 per cent. of the Welsh population?
    Mr. Smith: We are considering that issue seriously with the broadcasters and the broadcast regulators. There are 230 local relay stations in Wales, and some 98.3 per cent. of Welsh people can receive analogue television transmissions. However, the situation could still be improved and we are looking at all the possibilities in that area.
    Mr. Dafydd Wigley: Does the Secretary of State not accept that, although the people to whom he referred may receive a television picture, the quality of the signal may be infinitely inferior to those emanating from other stations, mainly situated in England? Given that everyone living in Wales will be affected by decisions taken by the National Assembly on education, health and housing, do they not have a right to top-quality television and radio reception for news items about those subjects?
    Mr. Smith: It is indeed our wish that as many people as possible, both in Wales and elsewhere in the United
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    Kingdom, get the best possible quality picture and coverage. The quality and the provenance of the programmes that people can see really matters to them. We are considering that issue and we will consult closely with our colleagues in the new Welsh Assembly about any matters concerning Wales.
    Mr. Michael Fabricant: The Secretary of State is correct to say that the topography of Wales affects broadcasting signals, as it does in Scotland and in other parts of the United Kingdom. Does he accept that universal coverage will cost a huge amount of money—a sum that is disproportionate to the numbers of people who deserve to see those programmes? When will the Government get off the fence and accept that there is no middle way regarding the funding of the BBC? When the current licence period ends, will the Government not have to consider in advance allowing advertising, sponsorship or both on some or all BBC channels in order to assist with the expansion of British broadcasting?
    Mr. Smith: I have to say to the hon. Gentleman that the first part of his question is right. A difficult balance must be struck between cost and quality of picture, and we are working on that. However, I cannot agree with the latter part of his question. As he knows, we have asked Gavyn Davies and the panel that we appointed to report on the immediate future funding of the BBC. I suspect that I will take more cognisance of what Mr. Davies has to say than I will of the hon. Gentleman.

    Tobacco Advertising Ban
    Mr. Desmond Swayne: What recent representations he has received from sporting bodies which will be affected by the proposed ban on tobacco advertising. [87205]
    The Minister for Sport: The full task force has met three times and since January, I and the other members of the task force have had 10 meetings with representatives from the sports that are seeking our help. That close contact has identified the significant problems facing the sports in replacing tobacco money. They are all vying for sponsorship money in a crowded marketplace. We shall assist them in repositioning themselves in the marketplace and support them in building new commercial relationships that can be sustained.
    I have also recently had a very positive meeting with Richard Branson about help that he may be able to offer sports. My officials are now following up that meeting.
    Mr. Swayne: But what estimate have the Government made of the impact on the nation's health of the policy of providing a dispensation to snooker and formula one? If they estimate that the damage will not be very great, and certainly insufficient to question the very policy of providing that dispensation in the first place, why cannot the dispensation simply be extended to the 65 sports that are now facing financial difficulty and, in some cases, oblivion?
    Mr. Banks: It is a bit rich for a member of the Opposition to start talking about the damage caused to sports or to people's health by the use of tobacco. The

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    previous Government never did anything about that issue. The right hon. Member for South-West Surrey (Mrs. Bottomley) refused to ban tobacco advertising or sponsorship. We have done so, and we shall be commended for that. The hon. Gentleman knows that all sports will be required to end tobacco sponsorship by 2003. The only exemption will be for those sports that compete in three countries on two continents and have a substantial proportion of sponsorship—over £2.5 million—from tobacco.
    Mr. Patrick McLoughlin: A million from Bernie.
    Mr. Banks: That will, undoubtedly, apply to formula one and, perhaps, to snooker, if it can prove—
    Mr. McLoughlin: A million from Bernie.
    Madam Speaker: Order. There is a parrot in here.
    Mr. Banks: I had a parrot—an African parrot called Chunky. He was considerably more articulate and beautiful than the hon. Gentleman. An apology to parrots is probably in order.
    I say to the hon. Member for New Forest, West (Mr. Swayne) that snooker will have to prove its case if it is to be exempted until 2006. If he is worried about the impact of tobacco use on the nation's health, why on earth did he accept hospitality at Henley from the Imperial Tobacco Group? Clearly, he was not worried about his health.

    Out-of-school Activities
    Mr. Andy King: How many schools he estimates will benefit in the first year of the national lottery-funded out-of-school hours activities. [87207]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): The programme, for which the new opportunities fund has allocated £205 million, opened for applications at the end of March, and the first grants under the programme will be announced in the autumn. It is therefore too early to say how many schools will benefit this year. However, we expect that by 2001 the new opportunities fund will have funded regular out-of-school-hours activities in at least half of all secondary schools, a quarter of all primary schools and half of all special schools. That breaks down as approximately 10,000 schools in the UK. In addition, by 2002, the fund will have committed funds to summer school projects which will provide summer school places for an extra 250,000 pupils.
    Mr. King: I thank my right hon. Friend for that welcome announcement. I have visited such clubs, as I am sure have all hon. Members. I recently visited Bridges in Brownsover in my constituency, which is a first class club, where all the children are benefiting significantly from the opportunity to socialise and learn with other children, and their parents have the security of knowing that their children are safe and in a proper environment both before and after school. Will my right hon. Friend
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    ensure that such opportunities will be made available across the country, and that the new opportunities fund will be asked to provide good quality information to all education authorities on how to access that fund?
    Mr. Smith: Yes; I can give my hon. Friend that assurance. Indeed, such information has already been sent to all parts of the United Kingdom. Under the directions that we have established for the new opportunities fund, we have insisted that it ensures a fair geographical spread of the moneys that it makes available.

  MILLENNIUM EXPERIENCE
  The Secretary of State was asked—
  MILLENNIUM EXPERIENCE

    Dome
    Mr. Tony McNulty: If a revised sponsorship target for the millennium dome has been set following the achievement of the original target. [87227]
    The Minister for Tourism, Film and Broadcasting (Janet Anderson): Some £160 million of sponsorship has been committed to the millennium experience. That is more sponsorship than has ever been raised for any single event in the United Kingdom.
    Mr. McNulty: I thank my hon. Friend for that answer. Will she join me in congratulating the New Millennium Experience Company on meeting its target, but assure me that she will keep up the pressure so that it maximises its sponsorship potential? Will she publish in the House of Commons Library a list of every moaning minnie on the Opposition Benches who carped and whinged his or her way through last year, saying that the millennium experience company would not reach its target, but who now have had the grace to apologise and congratulate the company? I suspect that it will be rather a short list.
    Janet Anderson: I thank my hon. Friend for that observation. He is of course right that the faint hearts on the Opposition Benches said that the company would never reach the sponsorship level that we had set. We do not intend to issue a revised sponsorship target, although we are finding that more and more people want to contribute to what will be the most spectacular event in the world marking the millennium.
    Mrs. Virginia Bottomley: In her list of moaning minnies, will the hon. Lady please put at the top the right hon. Members for Hartlepool (Mr. Mandelson) and for Sedgefield (Mr. Blair) and her other colleagues who for nine months, particularly in opposition, thoroughly and professionally rubbished the millennium company and all its work, so greatly damaging sponsorship? I am delighted that on this, as on many things, they changed their tune on 1 May 1997. They should not try to rewrite history as well.
    Janet Anderson: The right hon. Lady should not subject us to such nonsense. As she knows only too well, this Government decided to take the project forward. Indeed, I take this opportunity to remind the House that

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    if the Conservative party had had its way, the dome would have been pulled down at the end of the millennium year. We intend that the dome is put to good use afterwards.
    Mr. Robert Maclennan: Has that sponsorship diminished the amount of money going to other artistic projects?
    Janet Anderson: I assure the right hon. Gentleman that there is no evidence of that; increasingly we are finding that people want to be associated with the project. Sponsors who have so far supported the project include BT, Manpower, Tesco, BSkyB, Marks and Spencer, Boots the Chemists, McDonald's, Ford, the Corporation of London and BA—the list goes on and on. I assure the right hon. Gentleman that there is no evidence that that sponsorship has reduced support for other projects.
    Ms Rosie Winterton: How many temporary and permanent jobs he estimates will be created through the millennium dome. [87228]
    The Minister for Tourism, Film and Broadcasting (Janet Anderson): During the dome's year of operation 5,000 full-time jobs will be created. Of those, 2,000 will be employed directly by the New Millennium Experience Company and 3,000 will be employed by service providers, such as caterers and security services. NMEC's recruitment drive was announced on 10 June.
    Ms Winterton: Is my hon. Friend aware that Ridings International in my constituency secured 14 jobs by winning a £2 million contract to provide 50 miles of steel cable, which holds up the dome? I think that it is safe to say that without Doncaster, the dome would droop. In view of that invaluable contribution, will she ensure that companies which help to erect the dome are included in the opening celebrations?
    Janet Anderson: I thank Ridings International for its very significant contribution. My hon. Friend is quite right—without it, goodness knows what would happen to the dome, because that company's steel cables are holding it up. We are anxious that as many people as possible who have participated in this project should be included in the opening celebrations. We are carefully considering who we can include, and we shall take very careful note of my hon. Friend's suggestion.
    Sir Sydney Chapman: I am sure that the Minister would agree that central to the success of the millennium dome and the millennium experience must be a London Underground connection to it. As she believes in joined-up government, will she tell the House when the whole length of the Jubilee line extension will be open?
    Janet Anderson: I cannot give the hon. Gentleman an exact date, but I can assure him that it is a subject of much discussion between my Department and the other Departments involved. I assure him that the Jubilee line extension will be finished on time.
    Mr. Peter Ainsworth: May I ask the Minister to withdraw her remarks about Conservative Members' attitude to the dome? She knows perfectly well
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    that we have continued to support the project. It is not our fault that 90 per cent. of the population believe that it is a waste of money. Whose fault is that?
    While on the subject of long-term jobs, will the Minister update the House about the after-use of the site? Given the long lead time for such a major investment project, should not we now be moving towards a final stage and selecting what will happen on that site, and who will run it, after the exhibition closes? Or will there be an embarrassing and costly delay between the closure of the exhibition and whatever comes after it?
    Janet Anderson: The hon. Gentleman's ability to score own goals gets better and better. I remind him that, under the previous Government, in which he served, there would have been no after-use of the site; they planned to pull the dome down. The hon. Gentleman knows only too well that the Deputy Prime Minister has received several bids for ideas to use the dome in a way that will serve the national interest after the millennium year. We intend that to happen, which contrasts starkly with the Conservative party's woeful attitude.
    Joan Ruddock: What assessment he has made of the extra visitors and spending in (a) London and (b) the United Kingdom next year as a result of the millennium dome. [87229]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): The British Tourist Authority has estimated the number of overseas visitors to the UK in 2000 as 27.5 million. Of those, the New Millennium Experience Company foresees that 2.5 million will visit the dome. The BTA has also suggested that as a direct result of the millennium experience, an additional £300 million to £500 million of overseas tourist revenue will be brought into the UK economy. The "halo" effect could double that figure. The BTA has further estimated that 10,000 to 15,000 new tourist-related jobs will be created. That is excellent news for the whole of the UK.
    Joan Ruddock: I congratulate my right hon. Friend on that and I share his enthusiasm for what will happen at the dome and all that will follow from that. However, is he aware that in constituencies such as mine—neighbouring Lewisham—some concerns exist arising from those wonderful forecasts? Will he undertake to look at the plans for a passenger transport interchange at Lewisham, which will enable much speedier transfers between the docklands light railway, train services and buses between Lewisham and the dome? That proposal would, I suggest, bring a lasting benefit to local people, help all the visitors and help to ensure that Lewisham does not become a giant dome car park.
    Mr. Smith: Of course I understand my hon. Friend's concerns about what might happen if proper provision is not made. It is absolutely essential to ensure that good quality, reliable public transport services are available to everyone who wishes to travel to the dome. I will bring the specific points that my hon. Friend raises to the attention of my right hon. Friend the Deputy Prime Minister.
    Miss Anne McIntosh: It is all very well overseas visitors coming and using an interchange at Lewisham, but how are my constituents from the Vale of

    15
    York meant to visit the dome? What special arrangements and special fares will be made available for those travelling from the north of England?
    Mr. Smith: The hon. Lady will be aware of the National Express package, which has already been announced. It will offer transport from anywhere in the United Kingdom to the dome, including entrance to it, for £29 per person. She will be aware also of the special rates for family groups of up to five people, which have already been announced. The hon. Lady may be aware of the discussions that are under way with other transport operators to ensure that other means of getting to the dome from all parts of the United Kingdom are available at affordable rates.

  HOUSE OF COMMONS
  The President of the Council was asked—
  HOUSE OF COMMONS

    House Procedures (Reform)
    Siobhain McDonagh: What progress has been made in reforming the procedures of the House since May 1997. [87237]
    The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The procedure for the scrutiny of European Union legislation has been overhauled. New mechanisms for pre-legislative scrutiny are in operation. That is probably the most significant reform that we have introduced. Certain old-fashioned aspects of conduct in the Chamber have been updated. We are experimenting with sitting hours, and I look forward to the autumn when we begin to experiment with sittings in Westminster Hall.
    Siobhain McDonagh: I thank my right hon. Friend for that answer. Does she agree with me that while many of the changes, particularly those relating to behaviour in the Chamber, are important, pre-legislative scrutiny will lead to better legislation on behalf of our constituents? As a result, we shall be able truly to consider proposals in a more balanced light and, if necessary, bring about changes.
    Mrs. Beckett: Yes, I agree entirely with my hon. Friend. I believe that that process will be conducive to fundamental changes leading to more efficient and orderly management of the House, as well as substantial improvement to what is in many ways our prime purpose in being here. The Committees have worked on four draft Bills so far and a joint Committee has been established on the draft local government organisation and standards Bill. The draft freedom of information Bill is before the Public Administration Committee and another Select Committee in the Lords. I entirely share my hon. Friend's view that all these measures will lead to an improvement in the quality of legislation.
    Sir George Young: Was not one reform where the Government hoped to make progress that of injecting greater certainty into the parliamentary calendar? As the date of the summer recess is still shrouded in uncertainty, does the right hon. Lady propose to give further attention to that matter?
    Mrs. Beckett: As I have just said, making the parliamentary calendar more predictable was certainly one
    16
    of the aims, but that is only a knock-on and beneficial consequence of our fundamental aim, which is to have good scrutiny of legislation. Although we have made progress on pre-legislative scrutiny in Committee, there are other aspects of management of the House's affairs where perhaps we have not yet made quite so much progress. The right hon. Gentleman will recognise that with both Kosovo and Northern Ireland, this has been an exceptional year.
    Mrs. Gwyneth Dunwoody: Will my right hon. Friend look seriously at the way in which the American legislature deals with giving individual members independent and accurate advice on legislation? If we were to have the equivalent of the general accounting office available to the House, Members would be able to assess the accuracy of the information that they were being given by Government Departments and by Her Majesty's loyal Opposition, and do something about it. That might be a distinct improvement.
    Mrs. Beckett: My hon. Friend makes an extremely important, serious and interesting point. What she says is to some degree the direction in which the House has been going, with the increase in numbers of staff who are available to hon. Members, with the precise purpose of ensuring that those Members carry out their role more effectively. My hon. Friend's underlying point about a fresh facility for the House is one not merely for me but one that may come under discussion in the years ahead in the House of Commons Commission and other such bodies.
    Mr. Paul Tyler: Following the right hon. Lady's previous answers, does she agree that one of the most important recommendations from the Modernisation Committee, which she chairs, relates to the management of business in the House? I understand that 14 Bills have been the subject of agreed programme motions. Unfortunately, we have still had a number of guillotine motions. Does the right hon. Lady agree that the former are preferable to the latter? What efforts will she make to try to ensure that measures are implemented in the next few months to make certain that we have more agreed programme motions?
    At various stages 14 Bills have been the subject of agreed programme motions—we have been able to debate them in time and we have had opportunities to take decisions at the right moment—but will the right hon. Lady note that only one Bill has been the subject of a programme motion in Standing Committee? Is she disappointed by that, and what steps can be taken to improve upon that?
    Mr. Andrew Mackinlay: Discuss.
    Mrs. Beckett: An essay, I think.
    I entirely share the hon. Gentleman's view that it is infinitely preferable to have agreed programme motions than for the Government to introduce guillotines, which under this Government have always followed on what we have seen—although no doubt this would be contested—as exploitation of time, rather than use of time properly to scrutinise legislation. In a sense, the imposition of a guillotine suggests the failure of the notion that underlies a programme motion—that all Bills should be properly scrutinised in all their aspects.

    17
    The further use of programme motions would require agreement and good will in all parts of the House. It has been evident of late that the view expressed at the outset by the Leader of the Opposition that all Bills should have programme motions is not entirely shared by all on his Benches. However, we shall continue to try to build good will and sensible understanding to the benefit of the public whom we are here to serve.

  The President of the Council was asked—
  PRESIDENT OF THE COUNCIL

    House of Lords Reform
    Mr. John Healey: What representations she has received on the White Paper on the reform of the House of Lords. [87238]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): The Government have received a range of representations on their plans to reform the House of Lords. There have also been debates on the White Paper in the House and the other place. Proposals on the second stage of reform are currently the responsibility of the royal commission chaired by Lord Wakeham.
    Mr. Healey: I thank my hon. Friend for that answer. In the representations that he has received, what degree of recognition has there been that a reformed House of Lords will be a more independent House of Lords? Can he confirm that one of the main aims for the second Chamber is to achieve a more even political balance, including a strong representation from regions of the United Kingdom, rather than the massive majority control to which the Conservatives have clung for centuries?
    Mr. Tipping: My hon. Friend will know, first, that it is the view of colleagues that no party should have an absolute majority in the reformed upper House, and secondly, that the Prime Minister is the first Prime Minister to give up powers by ensuring that an independent appointments system is in place for the new year's honours 2000, to provide a better political balance.
    Dr. Julian Lewis: I note what the hon. Gentleman says, but can he give the House a guarantee that when the Government's reforms of the House of Lords are complete, it will not simply become a fallback repository to reward Tony's donors, now that the position of Director-General of the BBC is no longer available for that purpose?
    Mr. Tipping: The hon. Gentleman should remember the history of various Prime Ministers and their appointments. He would do well to scrutinise the record of his own colleagues. As I said, my right hon. Friend the Prime Minister is the first Prime Minister to reduce his powers in that regard.

    Millennium Compliance
    Angela Smith: If she will make a statement on the preparedness of the key sectors of the UK public infrastructure for the millennium bug. [87239]
    Mr. Ben Chapman: What progress is being made on the state of readiness of the national infrastructure in preparation for the millennium date change. [87240]
    The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): All key sectors of the infrastructure have independent assessment programmes in place, ensuring that the UK should have one of the most objective and comprehensive pictures of readiness in the world. The outcomes of the latest assessments will be made public at the next meeting of the national infrastructure forum on Tuesday 13 July.
    Angela Smith: I thank my right hon. Friend for her answer, but may I press her further with regard to the water services? Many constituents have expressed to me their concern that after the millennium partying, the continuation of services should be assured so that they can flush their loo and have a cup of tea. Can my right hon. Friend tell the House what arrangements she has put in place to ensure that there is a continuation of services and to reassure my constituents, many of whom do not have enough knowledge about the millennium bug and are understandably worried?
    Mrs. Beckett: I am grateful to my hon. Friend for raising the matter. People should know how well their electricity and water supplier is doing as we get nearer to the millennium. We expect further reporting on 13 July and more detail about the huge amount of work that has been undertaken. I am glad to be able to tell my hon. Friend that as recently as 10 June, Ofwat, which is the responsible body for the water industry, reported that it had been assessed as 100 per cent. blue—in other words, its preparations have been completed, so people should be able to flush the toilet or have a cup of tea, as they wish.
    Mr. Ben Chapman: Although the independent assessment of the preparedness of key sectors of the national infrastructure is welcome and provides possibly the most comprehensive and objective review of readiness anywhere in the world, this is not a one-off event. Monitoring and preparation must take place right up to 31 December. What further steps does my right hon. Friend have in mind?
    Mrs. Beckett: My hon. Friend is entirely right to say that monitoring must take place right up to the millennium date change. We anticipate that further work will need to continue beyond that, because, as he may know, people in some sectors are concerned about the leap year date. We therefore expect and anticipate that people will go on working and developing their programmes and, in particular, that people will plan for continuity of service, should any unforeseen disruption occur.
    Mr. David Tredinnick: Can the right hon. Lady assure my Leicestershire constituents that the effort

    19
    to cope with the millennium bug has not been centred just on London and the south, and that real efforts have been made in the midlands?
    Mrs. Beckett: Yes, I can assure the hon. Gentleman that work has been going on throughout the country. If he contacts the Government office for the east midlands, his local authority and his local chamber of commerce, he will find that they will be able to give him some information about the work being undertaken. I believe that the Prime Minister's adviser on this matter is of the view that more work has been done on this project than on any single issue since the end of the second world war.
    Mr. Michael Fabricant: The right hon. Lady will be aware that the best test is to forward-wind computers to see what happens, in simulation, when the date changes. Does she know what percentage of firms has done that test?
    Mrs. Beckett: No, I cannot give the hon. Gentleman that detail. The whole purpose of the assessment and work that Action 2000 has done is to report on as many companies as possible in as much detail as possible, where testing has been carried out and independent assessments made, and publication of that work will continue. The hon. Gentleman will find much of that information readily available on web sites.

  HOUSE OF COMMONS
  The President of the Council was asked—
  HOUSE OF COMMONS

    Early-Day Motions
    Mr. David Heath: What assessment she has made of the effectiveness of the current procedures for early-day motions. 187241]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): As part of the preparation for the weekly business statement I, together with the President
    20
    of the Council, review recent early-day motions. I have not made a wider assessment of the effectiveness of that procedure.
    Mr. Heath: I am grateful for that answer. Although many of our constituents do not entirely understand the status of early-day motions as a form of licensed parliamentary graffiti, and setting aside those hon. Members who simply want to curry favour with their local football teams, is there not a case for early-day motions that attract substantial support from hon. Members having some mechanism by which they can be debated in the Chamber, because they clearly represent a body of Back-Bench concern?
    Mr. Tipping: I am not sure whether I entirely agree with that point, although I accept the need for more opportunities for Back-Bench debate. I look forward to the Westminster Hall Committee experiment in the autumn, when hon. Members will have the opportunity to press and raise local and regional issues.
    Mr. John Bercow: Although I share the view of the hon. Member for Somerton and Frome (Mr. Heath) that early-day motions are an important means by which to express opinion and concern about a range of issues, does the Minister agree that, at least in one area of public policy, they are used—and, I venture to suggest, have been for some years—simply because it is now 14 years and 100 days since the last Question Time was exclusively devoted to European Union matters? In view of the important fact that we have since had three EU treaties that impact on this country, will the Government seriously consider the reinstitution of that important means by which the legislature can hold the Executive to account?
    Mr. Tipping: Early-day motions can be an opportunity to raise European issues. The hon. Gentleman will know, if he checks the record, that in May the European Union and Europe were mentioned on 207 occasions in the Chamber. I know that he took a passing interest in that.

Wormwood Scrubs
3.30 pm
The Secretary of State for the Home Department (Mr. Jack Straw): With permission, Madam Speaker, I should like to make a statement on the report of an inspection of Her Majesty's Prison Wormwood Scrubs which the chief inspector of prisons, Sir David Ramsbotham, is publishing today. Copies have been made available in the Library and the Vote Office. Given its serious nature, I thought that I should report to the House the failings exposed by the report at the prison and the urgent remedial action that I expect to see taken.
Before coming to the report itself, let me first deal with the question of the prosecution of certain prison officers. On 15 June, after a detailed police investigation, the Crown Prosecution Service announced that 25 prison officers from Wormwood Scrubs were to be charged with offences of assault on prisoners. The House will understand that I am therefore unable to comment on those allegations today, but there can be no place in the Prison Service for any abuse of prisoners. That is a fundamental principle. The Government and the new Director General of the Prison Service, Martin Narey, will take whatever steps are required to maintain it.
Let me now come to the report itself. The chief inspector of prisons undertook an unannounced full inspection of Wormwood Scrubs from 8 to 12 March 1999. The report of his inspection, published today, makes deeply disturbing reading. In his preface, Sir David recalls that he had already been highly critical of what he had found when he last visited the prison in 1996. In that earlier report, he made a large number of recommendations and called for a determined Prison Service response to reform the prison. However, on his return in March, Sir David found that that reform had not occurred. While individual staff were carrying out excellent work, in what Sir David said were extremely difficult circumstances, he considered that overall the treatment of prisoners remained "profoundly unsatisfactory".
In his report, Sir David sets out a number of specific failings: the needs of prisoners appeared to be inadequately understood; there were examples of the statutory rights of prisoners being denied; induction procedures were poor; prisoners spent too long in their cells; regimes were inconsistent and impoverished; health care had been cut back; there were allegations of abuse, including racial abuse; and arrangements for the discharge of prisoners were not systematic.
Sir David found a destructive, unco-operative, and self-seeking attitude among a minority of staff which had been very difficult for managers to combat. Those are serious criticisms and Sir David makes a large number of recommendations for improvement. I have asked the new director general, Martin Narey, to put in place a robust action plan to respond to them. He is to report to me within 30 days. I expect the overwhelming majority of the recommendations to be accepted and implemented.
There is one significant exception—Sir David recommends that Wormwood Scrubs should be market tested. I am keeping that option open but there are new managers in place at every level of the Prison Service responsible for Wormwood Scrubs and in my view they should be allowed an opportunity to put the prison back
22
on an even keel. However, should rapid progress not be made in reforming Wormwood Scrubs, all options—including market testing or the closure of the prison—are open.
I shall now tell the House of the changes already under way. Those include a thorough overhaul of the procedures of the segregation unit; improved prisoner complaint procedures; more efficient deployment of staff; expansion of the regimes of the prison, including additional offending behaviour programmes, increased constructive activities and a new education contract; a restructuring of health care management; and finalising and implementing an effective drugs strategy.
The report points out that, at the time of the inspection, 46 per cent. of prisoners at Wormwood Scrubs came from the ethnic minorities, compared with 11 per cent. of staff. The chief inspector makes six recommendations relating to race relations, and I accept them all. In addition, as the House knows, the Government are setting the Prison Service overall challenging targets for the recruitment, retention and promotion of ethnic minority staff. That reflects our commitment to eradicating racial discrimination in the criminal justice system.
All those, however, remain small beginnings, and much is still at a planning stage. What I require is a radical overhaul of Wormwood Scrubs, its culture and its working practices. I firmly believe that the overwhelming majority of prison officers will welcome the improvements that the Prison Service needs to implement at the prison. I expect the Prison Officers Association, both nationally and locally, to work constructively with the service to secure reform.
The senior POA official who, a few days ago, publicly described prisoners at Wormwood Scrubs as
"the scum of the earth"
has now expressed bitter regret for his gratuitously offensive remarks. Last week, the national chairman of the POA gave the director general a categorical assurance that his members would work with the governor and senior Prison Service managers to transform Wormwood Scrubs. I welcome that assurance.
I have, however, made it absolutely clear to the director general that change must be delivered at Wormwood Scrubs. I very much hope that that will be done with the full support and co-operation of the staff at Wormwood Scrubs and of all Prison Service trade unions, including the POA—but there will be change, either with or without that co-operation. Wormwood Scrubs has the staff and the resources to meet the challenges laid down by the chief inspector. To ensure progress, I have asked Sir David and his team to conduct a further inspection of the prison in six months' time, the result of which will, of course, be reported to the House.
I am determined to ensure that we have a Prison Service that both protects the public and provides a secure and decent environment for staff and for prisoners.
Miss Ann Widdecombe: Again, I thank the Home Secretary for allowing me early sight of his statement and for the prompt delivery of the report. It makes a change from the standards to which I have been used over the past year.
The Opposition support the Home Secretary's decision not to close Wormwood Scrubs. Given the pressure on the London Prison Service, we believe that that would have

23
been long on drama and short on common sense. On the question of market testing, I accept that as it would involve decanting, and given the present numbers in prisons, it could be impractical. Nevertheless, given the chief inspector's recommendations in paragraphs 17 and 18, can the Home Secretary tell us about his overall plans for market testing?
In his report in 1997, the chief inspector detailed a large number of remedial measures that needed to be taken, and which he says in his current report have been virtually ignored. To whom does the Home Secretary attribute responsibility for the failure to take such action over the past two years? I am sure that he will accept that, while the House is grateful for his assurances about the future, it needs far more detail about what has been going on since the last report, and, in particular, what action has been taken by Ministers, by the then director general, by the area manager and by the governor to implement the recommendations.
Can the Home Secretary tell the House why the prison was left without a governor for six months? Can he also help us with a passage in paragraph 4 of the report? The chief inspector says that
"the prison was left for six months without a nominated successor, during which time the first specific allegations of brutality were handed to me by a solicitor, and by me to the Home Secretary."
What did the Home Secretary do when he received those allegations? Will he put on record the number of complaints of assault on prisoners by members of staff that have been made since the report of March 1997? How many of those complainants asked to see the governor? Is he satisfied that normal procedures were followed? What specific steps were taken to implement the Prison Service's anti-bullying strategy at Wormwood Scrubs?
How many inspections or visits have been carried out since May 1997—other than the one now under report—by the former director general, Ministers and the area manager? How many of those visits, if any, were unannounced? Has the Home Secretary visited Wormwood Scrubs since his appointment? Since the specific allegations of violence were made, has he asked for and received regular reports from the director general on the state of affairs at Wormwood Scrubs? In his regular meetings with the director general, has Wormwood Scrubs been specifically and regularly discussed?
In 1997, the chief inspector's report criticised, among myriad other things, the failure to introduce a personal officer scheme, the failure of the regime over and above the basics, and the absence of sentence planning, which he described as "non-existent". Particular criticism was levelled at the use of special cells and restraints. What remedial action was taken specifically on those points?
When the allegations of violence were first made, was the prison designated as in need of special managerial attention by the Prison Service, and if not, why not? If it was, how could so much have gone unattended to for so long?
What representations about resources and staffing levels has the Home Secretary received from the Prison Service in relation to Wormwood Scrubs? Is he satisfied that resources have been adequate? Will he place in the Library—I do not expect him to know it off the top of his head—a statement of Wormwood Scrubs's performance
24
against each target set for the Prison Service? What are the implications for other reports of the way in which the 1997 report on Wormwood Scrubs was ignored? Will the Home Secretary order a review of all the reports that he has received in his term of office and write to me about their implementation?
The current report points out the difference between the performance of the private sector as against the public sector. I accept that the Home Secretary has already reversed his pre-election pledges on privatisation, but, given what is said in the report, what plans does he have for introducing the standards of the private sector into the public sector, or, optionally, for expanding the private sector?
Mr. Straw: I thank the right hon. Lady for her opening remarks. I am always ready to accept a bouquet from her. I am grateful to her for what she said about the decision not to close the prison. Given the fact that prison numbers are rising—they may have been 800 fewer last Friday than this time last year, but the pressure on the Prison Service is still significant—it would have been impractical.
We do not regard market testing as impractical; it remains an option. If there is not the significant change that Sir David has set out in the report, which I have said we accept, and clear evidence of that change within six months, market testing is one option that we will certainly pursue.
The right hon. Lady asked a number of questions essentially about why the recommendations in the previous report were not followed through as swiftly as they should have been. To be truthful, I cannot give her a satisfactory answer—they should have been followed through much more swiftly. Had they been, I suspect that the report that we have received today would have been a good deal more satisfactory.
Too much time was taken to appoint a successor to the previous manager. The right hon. Lady may know the present manager, Mr. Moore. He comes with a very good track record as a governor, having successfully governed both Albany and Bedford prisons. He has been in post for about a year. Since that time—I am certainly able to give this information to the House; Sir David himself recognises it in the text of the report—some of the recommendations have been implemented, including important improvements in the operation of the segregation unit.
The right hon. Lady asked what I did when I received the allegations. As soon as I received them—they were indeed handed to me; and solicitors representing quite a number of the alleged victims had made separate direct contact with me—I caused them to be investigated. As she and the House will know, consequences have followed from those investigations, so the House will understand why I am not able to go into them in detail.
The right hon. Lady asked how many inspections had been made by the director general, the area manager, Ministers and me. I have not visited Wormwood Scrubs since I became Secretary of State. The previous prisons Minister, my right hon. Friend the Member for Gateshead, East and Washington, West (Ms Quin), paid a visit to the prison last year. I cannot tell the right hon. Lady—although I shall certainly write to her on it—whether that visit was announced or unannounced. Although I know that the director general and the area manager have been

25
there on a number of occasions, I do not have specific information with me now on the number of visits, but I shall provide it to her. She asked whether I had received regular reports on Wormwood Scrubs from the director general. Yes is the answer to that question—it is a very serious and unsatisfactory situation.
The right hon. Lady asked about levels of resources and staffing at the prison. In his report, Sir David sets out some of the prison's current funding levels. What may be obscured in his report is that two of the prison's wings have now been closed: one was closed towards the end of last year, and another was closed only last week. Consequently, the prison's roll has been reduced from 1,100 to 720. Some of the staff who consequently were not needed were fairly close to retirement, so the opportunity was taken to reduce their roles. However, other staff—particularly from the wing that was just closed—are being kept to compensate for staff who have been the subject of suspensions, and to ensure that the report can be properly implemented.
The prison's resources—I could provide information on them in detail—are adequate. I am quite clear about that, as I have gone in some detail into the issue of its resource levels. The right hon. Lady will know that between 1995–96 and 1996–97, resources overall for the Prison Service were reduced. The Government have ensured that in this financial year, and in subsequent financial years covered by the comprehensive spending review settlement, an additional £660 million will be made available above the levels set by the previous Administration. That money is to improve regimes and to implement many of the actions specified in the report.
The right hon. Lady asked why the previous report was ignored—it was not ignored—and for a review of all the reports. If I may chide her, I should point out that the chief inspector's new report was published within 12 weeks of its receipt. That is consistent with a protocol that I established very quickly after becoming Secretary of State to ensure that all inspector's reports were published very soon and without requiring an action plan to be attached to them.
When I came into office, I discovered that there were about a dozen unpublished Prison Service reports. Some of them had been waiting for publication for many months, and some had been waiting for over a year. Of course I do not blame the right hon. Lady for that—at the time, she was dealing with the forces of the night. Nevertheless, I cannot tell her why the inspection was made in September 1996, but the report not published until Friday 21 March 1997—which was the very last day on which the previous Parliament sat.
Mr. Chris Mullin: I welcome the Home Secretary's statement and the robust report from Sir David Ramsbotham. Should my right hon. Friend ultimately decide that the only way to deal with the problems at Wormwood Scrubs is a spot of market testing, he will not find any objections from me. To what extent are the problems that have arisen at Wormwood Scrubs due to overcrowding? As he knows, overcrowding is a problem not only at Wormwood Scrubs, but in other parts of the Prison Service, and it arises, to some extent, from the prison works philosophy pursued by a previous Home Secretary.
My right hon. Friend will have noted that Sir David Ramsbotham refers to the number of prisoners spending up to 23 hours a day in cells at Wormwood Scrubs and
26
will know that the practice is not confined to that prison. In a written question last week, I asked his Department how many prisoners were confined for 23 hours a day. The answer was that the information is not kept centrally. As overcrowding is obviously a serious factor in relation to some of the problems that the Prison Service faces in Wormwood Scrubs and elsewhere, may I suggest that he has a look at this matter?
Mr. Straw: I am grateful to my hon. Friend for what he said about market testing. The report of the Select Committee, of which he is a member—which was also published before the previous election, but slightly more timeously than on the last day of the previous Parliament—has informed our thinking on the use of the private sector.
I am sorry, but I should have answered the right hon. Member for Maidstone and The Weald (Miss Widdecombe) about the use of the private sector. I have already authorised the building of a number of prisons using private sector contracts and that remains the situation. Two prisons, in addition to Strangeways, are currently the subject of market testing—Buckley Hall and Doncaster.
My hon. Friend the Member for Sunderland, South (Mr. Mullin) asked about overcrowding. I can recall no evidence, from a detailed reading of the report, which suggests that overcrowding, in the classic sense of the word, has been a cause of the problems at Wormwood Scrubs. Plenty of other prisons around the country with a similar combination of prisoners, including remand, just-sentenced and long-term prisoners, have to cope with similar pressure from numbers. The staff of those prisons have dealt with their problems very much better—more sensitively, more humanely and more efficiently—than have some of the staff at Wormwood Scrubs. That is why what has happened there is wholly unacceptable.
It is unacceptable that many prisoners have been kept locked up for 23 hours a day. Indeed, there is alarming reading in parts of the report about how the staff had a cavalier attitude to unlocking prisoners. They also took over part of a wing to play cards rather than look after prisoners. I do not regard that as even remotely acceptable.
I will look into the point raised by my hon. Friend about data on time spent unlocked. It is certainly the case that there is a key performance indicator for the Prison Service as a whole on the amount of time which prisoners must be kept unlocked. That information is kept centrally—I assume that it is collected individually from prisons, so there must be some information—and I will follow up that point.
Mr. Richard Allan: What systems has the Home Secretary had in place to monitor the state of prisons such as Wormwood Scrubs during his two years in office, or has he been following the policy of his Conservative predecessor—asking no questions and taking no responsibility?
For what reasons does the Home Secretary believe the 143 recommendations of the chief inspector's 1996 report have not been implemented? I am disappointed that he has not visited the prison during the past two years. Does he have any idea why his prison visit programme does not take into account the priority that one would have expected to be afforded to a prison with such a report as the 1996 report hanging over it?

27
Specifically, was the Home Secretary made aware of the 40 per cent. cut in the health budget? The chief inspector says that the
"standard of care being provided for some mentally disordered patients is not only clinically but also morally unacceptable and unsafe."
Does the Home Secretary accept that the new report and the report on Feltham young offenders institution show serious failures in the senior management of the Prison Service, specifically over allocation of budgets? Can he tell us whose head will be on the block if we find ourselves back here in two years' time to deal with a similarly shameful and depressing report on Wormwood Scrubs?
Mr. Straw: I have been responsible for the Prison Service since May 1997. I was not responsible for what happened before then. The hon. Gentleman asked whether I have a policy of asking no questions. Of course I do not follow that policy.
Miss Widdecombe: What are you going to do?
Mr. Straw: If the right hon. Member for Maidstone and The Weald will kindly stop twittering, I shall tell her that our policy on the Prison Service was set out clearly in our manifesto. Ministers, including me, will take responsibility for the Prison Service. As Secretary of State, I am responsible, as has been made clear in changes to the framework document.
It was always absurd to try to distinguish between policy and operations as though policy were some abstraction. Policy can be tested only at the point at which it operates. There is an agency agreement with the Prison Service. There is a broad understanding that I do not undertake to lock up the cells and check the walls every evening, but I am responsible to the House for what happens in the Prison Service.
I visit as many prisons as I can, and prisons Ministers make many visits. Since my right hon. and learned Friend Lord Williams of Mostyn became prisons Minister, he has visited 46 of them. I thought about visiting Wormwood Scrubs, but it is impossible for me to make an unannounced visit to any prison. Under the circumstances, I am not sure that anything would have been achieved by my visiting the prison. The hon. Member for Sheffield Hallam (Mr. Allan) will appreciate that even if I ask to see the worst part of a prison, I cannot be sure to undergo a profound learning experience, because everyone is on his or her best behaviour.
The 40 per cent. cut in the health budget was unacceptable, and it should not have happened. The Prison Service has gone through a significant process of reform. The Woolf report introduced many changes for the better under the previous Government, and I pay tribute to the right hon. Member for Maidstone and The Weald. However, prisons are difficult to run. The cut should not have been made, and we are putting matters right. My right hon. Friend the Secretary of State for Social Security and I have published plans for complete reform of the prison health service to ensure that it works
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more collaboratively and, in some cases, under the leadership of the national health service, as should have happened many years ago.
The hon. Member for Hallam asked about the serious failures of senior management noted in the report. The senior management at the prison, and those responsible nationally, have since changed. In response to questions about what will happen if there is a further failure to implement the report, I can say only that I do not want to talk about failure. The report must be implemented in full.
Mr. David Winnick: The report highlights an appalling situation in one of our major prisons. On the point on which my right hon. Friend concluded, does he accept the danger that if changes for the better occur—we all hope that they will—there may be a slide back into the old ways after some time? It is alarming to think that the changes may not be permanent.
More generally—I do not refer specifically to the case of racial taunting and bullying by prison officers that the Home Secretary mentioned in his statement—should it not be clear to the minority of prison officers who persist in such behaviour, at Wormwood Scrubs or anywhere else, that it will lead to their dismissal?
Mr. Straw: My hon. Friend is right to say that it is always important in such circumstances to maintain the pressure for change. That is why, as well as asking the director general to report to me in 30 days, I have asked Sir David Ramsbotham to go back to the prison within six months to monitor progress. My hon. Friend is also right to say that the bullying and taunting of prisoners—racial taunting of prisoners of different racial and religious backgrounds and other taunting of prisoners of the same racial or religious group—is wholly unacceptable. Where it is proved, it will be followed in appropriate circumstances by prosecution by the Crown Prosecution Service and, where there is other evidence, by appropriate disciplinary action within the Prison Service.
Mr. Desmond Swayne: May I tell the Home Secretary that while I will read the report with interest, the description that he gave in his statement is not of a prison with which I am familiar, despite being a regular visitor to Wormwood Scrubs for a number of years? I even wonder whether I have been visiting a prison on a different planet. While the Minister will have my support for stamping out any abuse and wrongdoing, will he exercise a sense of proportion and take care to remember that a prison must remain an unpleasant place to provide an incentive for miscreants to stay out of it?
Mr. Straw: Only the hon. Gentleman can speak for the planet that he inhabits, although sometimes some of us doubt whether it is the same one as the rest of us. In my judgment this question comes back to that raised by the hon. Member for Hallam. It requires the sort of forensic, unannounced inspection by a full team of, I think, more than a dozen inspectors turning up suddenly to find out exactly what is going on in a prison; and observing that for a week. Prisons are, by definition, closed institutions. It is extraordinarily difficult for outside visitors to find out the truth of what is going on in prisons. Also, as the inspector points out—I refer to this in the report—a lot of good work is going on in Wormwood Scrubs in particular areas of the prison and by individual prison officers. That

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should be doubly applauded, given the difficult circumstances overall. However, it is not possible to read the report without coming to the conclusion that its recommendations are soundly based in fact.
Mr. Paul Flynn: Does my right hon. Friend agree that regimes of bullying and gangsterism are not confined to one prison? The endemic use of illegal drugs in prisons invites corruption, which is not confined to prisoners. Is my right hon. Friend not appalled that many people still go into prison as minor offenders and emerge as drug addicts? Will he take note of the fact that Sir David Ramsbotham said that 70 per cent. of women prisoners should not have been given a prison sentence? He has also drawn attention to the fact that many people who are being weaned off illegal, non-addictive drugs are put on highly damaging medicinal drugs, which may have resulted in two deaths. In one prison that practice resulted in a riot last August because almost the entire population was on sedation and it was a few hours late in arriving.
Our prison population will soon be one of the highest in Europe, and we have an atrocious record of diverting prisoners from future crime; so does my right hon. Friend really believe that prisons work?
Mr. Straw: Let me deal with my hon. Friend's last point first. Our prison population happens to be 122 per 100,000, which is at the higher end of the range of prisoner populations in European countries. One reason why we have that population is that we have a higher level of acquisitive crime than other European countries. If we want more criminals to be caught and punished—this is hardly a matter of party dispute—for as long as crime remains at its current level, the prison population is likely to go up, not down. For example, people who compare our prison population with that in the United States—that might have been implicit in my hon. Friend's comments—need to consider the facts. If our prison population, proportionate to our total population, equalled that of the United States, there would be not 65,000 but 320,000 people in prison.
In relation to my hon. Friend's point about women prisoners, apart from the relatively small minority of prisoners who are sentenced to custody for the first time because of the seriousness of the offence, the vast majority of prisoners enter prison, having had previous convictions, because the community punishments to which they were subject did not work to stop them reoffending. Prison numbers are partly a function of the relative failure of community sentences and of their enforcement.
Although I am pleased that the chief inspector has produced a very good report on Wormwood Scrubs, I do not agree that 70 per cent. of women prisoners should not have been sentenced to prison. As far as I am concerned, sentencing decisions are difficult; they are best left to independent sentencers—magistrates and judges.
The final point relates to drugs. Certainly, some bullying—though not all of it—is to do with drugs. My hon. Friend is wrong to say—the evidence is not there—that many minor offenders go into prison and emerge as drug addicts. A large proportion of offenders—especially for acquisitive crime—go into prison as drug addicts and are helped to come off their drug addiction.
As for the ingress of drugs to prisons, I hope that my hon. Friend applauds the fact that, in January, I announced a major tightening of the rules against the importation and
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smuggling of drugs into prisons, with a standard three-month ban on visitors who smuggled drugs and closed visits for those prisoners found to be in receipt of drugs—as well as other disciplinary action.
Mr. Douglas Hogg: Does the right hon. Gentleman agree that grave concerns must be expressed about this statement, and that, in essence, there are two such concerns? First, the recommendations made in March 1997 were virtually ignored. Does he accept that there is ministerial responsibility for that? There would have been an action plan. It was the business of his Department—Ministers and officials—to ensure that that plan was fulfilled. Why was it not fulfilled? Will he please write to me, setting out the original action plan and, in respect of each recommendation, will he set out the extent to which each was implemented and, where it was not, why it was not implemented? Will he please also put that information into the Library?
The second concern is different but it overlaps the first. The truth is that we have learned of the shortcomings in Wormwood Scrubs only because of an unannounced visit. Does that not show that the monitoring of what happens in prisons is inadequate? Inspectors conduct a full inspection only once every three years or so. What is being done to improve inspections? Why was the board of visitors report not fully read and implemented by Ministers?
Is the Secretary of State satisfied with what has happened? Those of us who have served with the Prison Service—as Home Office Ministers—regard this statement as quite lamentable.
Mr. Straw: I hope that what is regarded as lamentable is the fact that I have had to make the statement—not the statement itself. I have already tried to explain why there was inadequate implementation of the report that was published in March 1997. As I have already made clear, I take responsibility for what has happened in the Prison Service since May 1997—including that failure. Of course, I shall write to the right hon. and learned Gentleman, as he requests—
Mr. Hogg: Item by item.
Mr. Straw: Yes, of course, I shall write to the right hon. and learned Gentleman item by item, setting out what has happened. As I pointed out, one of the changes that we made was to ensure that Ministers are responsible for the Prison Service, and are not involved in the pantomime in which responsibility was formerly shuffled between the director general and Ministers.
The right hon. and learned Gentleman refers to the unannounced visit. One of the ways we find out what is going on in prisons, which are necessarily closed institutions, is by unannounced visits by Her Majesty's inspector and his team. He has demonstrated what a valuable function he performs; that is why a proper inspectorate was established.
As for the board of visitors, I shall write to the right hon. and learned Gentleman in greater detail, but my recollection is that the board's 1996 report did not sound many alarm bells. The 1997 report did, but by the time it was received it had already been recognised that there had

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to be a process of change. One of the changes that was made was the introduction of a new governor and a complete change of the senior management. One of the points made in the 1996 report was that there were no governor grade managers on any of the wings; that was palpably unsatisfactory and it has been changed.
Fiona Mactaggart: I congratulate the inspection team on the inspection, which has clarified a matter about which people were becoming concerned. I also congratulate the Home Secretary on proposing that an inspector should go back in six months to see what progress has been made.
Does not today's statement highlight the problems with the historic method of managing the inspection process, which are, perhaps, a hangover from the time when there was a division between policy and operation? When an inspection identifies matters of concern, as the 1996 inspection did, is it not necessary to have some closer form of management of the process of removing those concerns than has hitherto been the case? I do not think that the bang-by-bang approach of the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) is necessarily the right one; but do we not need some mechanism to ensure that, in future, when problems on the scale of those in Wormwood Scrubs are revealed, the process of managing the way out of them is closely supported, monitored and implemented?
Mr. Straw: I am grateful to my hon. Friend. The contents of the report highlight the importance of unannounced inspections. However good the day-to-day management arrangements that are put in place by the director general—and they are improving—there will always be a need for external inspection of prisons and for unannounced inspections as well as routine inspections.
It all comes back to the nature of the institutions: prisons are closed institutions. They deal with 65,000 of the most difficult people in this country, many of whom are, by definition, dishonest and deceitful and have lived chaotic lives. They are very ready to make any number of allegations against staff, a very large proportion of which are not provable or are wholly unfounded. What is needed are intelligent, experienced managers and good inspectors, such as we have, who can cut their way through those closed institutions and find the truth.
My hon. Friend is right to say that there need to be closer forms of management, and those have already been established. The deputy director of the Prison Service, Mr. Phil Wheatley, who works directly under the new director general, Mr. Martin Narey, whom I appointed, has full-time day-to-day responsibility for the operation of the Prison Service; and other changes have been introduced. I cannot promise that those changes will eliminate for ever the possibility of problems such as those found at Wormwood Scrubs recurring, but they should both greatly reduce that risk and ensure swifter follow-through when they do occur.
Mr. Humfrey Malins: The Home Secretary and I have visited a number of prisons over the years, and he knows that we can be proud of some of our best prisons. Equally, as a House of Commons, we should be ashamed of some of the worst prisons in this country, where conditions are extremely bad.
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I have never been prisons Minister and I doubt that I ever shall be, but if I were, one of my first tasks would be try to ensure that prisoners were not locked up for 23 hours out of 24, a practice which has been far too prevalent for many years. I would also try to insist that every prisoner received a full day of education, training, constructive work and sport. In that way, we could move towards—[Interruption]—yes, toughness, but also a more humane and a better prison system.
Mr. Straw: I cannot speak for the hon. Gentleman's prospects as a future prisons Minister, unless he wants to follow—
Mr. Kevin Hughes: If he comes over here, we will see what we can do.
Mr. Straw: The Whip on the Treasury Bench—who should remain silent—issues an invitation to the hon. Gentleman. However, as it comes from my hon. Friend, I am not sure that even I would accept it. Everyone knows what Whips are like, Madam Speaker.
The hon. Member for Woking (Mr. Malins) is correct to say that it is unsatisfactory to lock up prisoners for 23 hours a day. To pick up a sedentary comment made during his question, the punishment is being sent to prison. Of course prisons should not be comfortable, but they should be humane. Much effort should be expended trying to make bad people better—which is in the interests of society and of the individuals concerned. For that reason, we are investing £660 million extra—above the base line left by the previous Government—in constructive regimes for education and drug rehabilitation, for example. We believe that that is the only way to ensure that the majority of prisoners emerge as better people with less chance of re-offending.
Mr. John Bercow: Given the Home Secretary's acknowledgement of personal responsibility for the past two years and two months of the 1997 report, and in view of his earlier assurance to the shadow Home Secretary, my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe), that he had received regular reports, can the right hon. Gentleman explain why progress has been so tardy? Is it because the reports were insufficiently clear, or were the reports abundantly clear but the Department was woefully inadequate in heeding the lessons that they contained?
Mr. Straw: No—it is more the former than the latter. I acted as quickly as possible on all reports made to me, as any sensible Minister would—particularly in view of the allegations that were made. Until the appointment of the new governor, everyone down the track in the Prison Service—at an area level and within the prison—kept reassuring each other that things were okay and that action was in hand. As I have said—I will send the information to the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) and it will also be placed in the Library—
Mr. Hogg: Item by item.
Mr. Straw: The right hon. and learned Gentleman is getting a better service from me than he got from his right

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hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) when he was Home Secretary. I am glad to see that he acknowledges that fact.
Mr. Hogg: I am looking forward to receiving it.
Mr. Straw: Good.
Mr. Bercow: Do not leave me out.
Mr. Straw: I will not do that. People down the track were reassuring themselves that things were okay, partly because industrial relations in the prison were very difficult. The Prison Officers Association at Wormwood Scrubs got into a wholly unacceptable position of power, so the truth about what was happening did not emerge up the line. That is my reading of the situation. When there was better reporting of events, action was taken.
I have made it clear to the House that the change in the senior governor at the prison and the other changes that were introduced—not least following the appointment of Martin Narey as director general and Phil Wheatley as deputy director general—are designed to ensure that there is much greater accountability inside the Prison Service and better line management of institutions such as this one.

Financial Services and Markets Bill
[Relevant documents: The First and Second Reports from the Joint Committee on Financial Services and Markets, Session 1998-99, HLSO/HC328 and HL66/HC465 and the Government Response thereto, HM Treasury, June 1999, and the Third Report from the Treasury Committee, Financial Services Regulation, Session 1998-99, HC73, and the Government's Response thereto, Fourth Special Report, Session 1998–99, HC347.]
Order for Second Reading read.
4.19 pm
The Chief Secretary to the Treasury (Mr. Alan Milburn): I beg to move, That the Bill be now read a Second time.
The UK's financial services industry is one of our country's greatest success stories. It accounts for 7 per cent. of our national wealth and employs more than 1 million people. The City of London is one of the three leading global financial centres and it is rightly renowned around the world for its innovation and integrity. It is home to hundreds of foreign banks; it is a major insurance centre, and it is the global leader in foreign exchange dealing and eurobond issue and trading—a position that the Government will protect. The London stock exchange is the largest trade centre for foreign equities.
The City therefore contains some of the most formidable financial expertise in the world, but the UK financial services industry does not relate only to the City of London. Increasingly, financial services are a key component of local economies throughout the United Kingdom. Edinburgh is the UK's second financial centre, and Manchester and Leeds, among others, have thriving financial sectors. The health of the industry is a matter of concern to the whole country. It is vital to Britain's future as a modern, enterprising economy competing successfully in global markets.
The sector matters to every business seeking capital to expand and create jobs. Indeed, it is the availability and efficiency of an increasingly wide array of modern, competitive financial products and services, ranging from pensions and insurance to securities and derivatives, that allows UK industry to raise capital effectively and competitively and helps to make the UK an attractive place in which to do business.
The financial services industry does not only serve the needs of business. Millions of ordinary people also rely on its services. The sector matters to every household with an insurance policy and every person who is saving for retirement.
The proper regulation of the industry is a matter of national significance. In supporting enterprise and providing funds for investment, the financial markets use the savings that millions of people entrust to the industry. Investors will not be willing to buy products and entrust their money to the markets unless they have confidence in the stability of those markets and in the integrity of the providers of the products.
Individual investors themselves cannot of course monitor the minutiae of the markets, so confidence depends in practice on there being a system of regulation capable of safeguarding the public interest. We all—as investors, as consumers and as businesses—have a shared interest in a regulatory structure that is fair, clear and, above all, accountable. It is no exaggeration to say that

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getting the most efficient and effective means of regulating the industry is key to its future prospects for growth in a global marketplace that is becoming more sophisticated and competitive by the day.
The Bill provides a far-reaching and long-overdue overhaul of financial services regulation. It establishes the Financial Services Authority as a modern world-class regulator for a modern world-class industry. The authority will operate according to a philosophy based on light-touch regulation with protection where necessary and fairness throughout. The Bill will reduce regulation and increase accountability. In place of nine regulators, there will be one. In place of eight dispute procedures, there will be one ombudsman. In place of five compensation schemes, there will be one. One-stop regulation will be better for practitioners and fairer for consumers.
Mrs. Margaret Ewing: Is the Minister aware that the Law Society has expressed concern that the Bill may result in double regulation in Scotland because both the Law Society of Scotland and the FSA will be involved in such regulation? Will he tackle those issues, particularly as a commitment to do so was given in the Scottish Parliament by the Deputy Minister for Justice, who does not want double regulation?
Mr. Milburn: I understand those issues and the concerns that have been expressed by the Law Society of Scotland and others. However, I remind the hon. Lady that the Bill is designed to effect new forms of regulation across the United Kingdom as a whole. The Financial Services Authority's remit will extend not only to England and Wales, but to Scotland and elsewhere, because we want common standards applied across the whole of the United Kingdom. As the hon. Lady is aware, there is a technical issue about whether amendments will need to be made to the Solicitors (Scotland) Act 1988, and if so, what the relevant procedures should be. We are in discussion with the profession, not just in Scotland but in England and Wales. We want appropriate regulation; we certainly do not want unnecessary and over-regulated authorisation procedures. We have already consulted about that. The FSA is in discussion with the profession in Scotland and elsewhere. I hope that, before too long, we can make satisfactory progress. I hope that that allays the hon. Lady's concerns and, indeed, those that have been expressed elsewhere—not just in Scotland but in England.
Mr. Tim Loughton: Will the Minister admit that he is talking about an effective retrenchment of devolution? Scottish lawyers who offer financial services, who until now have been subject to the Law Society of Scotland, will, under the Bill, be subject to the FSA, which is based in London—very far south of the Scottish border.
Mr. Milburn: No, that is a misreading of the position concerning devolution. I know that the hon. Gentleman follows these issues very closely, so I am surprised that, on this occasion, he has got it wrong. He will be aware that issues to do with finance are reserved for this Parliament. Given his position and that of his party,
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I should have thought that he would support that. There is no retrenchment on this issue. As the hon. Gentleman is aware, however, appropriate regulation of solicitors, accountants and other bodies must be sorted out. That applies not just in Scotland but elsewhere. I assure him that there has been no U-turn on that issue.
The Bill fulfils the promise that the Labour party made before the election, in its manifesto for business promise—a promise set in train by the Chancellor in his statement in May 1997. My right hon. Friend announced, alongside operational independence for the Bank of England, that a new regulator would be created with responsibility for supervising all aspects of the financial services industry. The Bill gives the FSA the statutory basis and powers that it needs to be the world's leading regulator of financial services. In so doing, it establishes a modern regulatory framework that will stand the test of time and apply into the next century.
Change of the order that we are proposing has taken both time and effort. I make no apology for that; we need to get financial regulation right. That is why the Bill is the product of thorough and exhaustive consultation. I know that in some quarters, the word "consultation" invariably produces some sighs of cynicism, but in this case, such sighs would be misplaced.
We published the Bill in draft at the end of July last year. We have undertaken further consultation on key pieces of secondary legislation that are to be introduced under the Bill. In total, 222 organisations responded to consultation on the draft Bill. I take this opportunity to thank each of those organisations for their contributions, not least because there has been such a positive response to our proposals. It is worth reminding the House of the breadth of support that the Bill enjoys.
The Association of Unit Trusts and Investment Funds said, for example, that it welcomed the overall aim of the Bill to simplify the regulatory structure. The British Bankers Association said that the introduction of a single legislative framework for the financial services industry in the United Kingdom was welcome. The Futures and Options Association said that it supported the Government's policy of rationalising and simplifying the structure for regulating financial services. The Association of British Insurers said that it fully supported the objective of a single regulator. The Consumers Association said that it was enthusiastic about the Bill and saw a variety of advantages in a single regulator.
That consensus for change has also included the Select Committee on the Treasury, which held a brief inquiry into the Bill over the winter. I thank my right hon. Friend the Member for North Durham (Mr. Radice), who chairs that Committee so assiduously, for its work. The consensus also includes the Joint Committee on Financial Services and Markets, which was established in March under the chairmanship of Lord Burns. I pay tribute to the Committee for its excellent work, and particularly to the leadership shown by Lord Burns. As hon. Members are aware, the Bill is quite complex and technical, but the Committee managed to respond in remarkable detail, to a very tight timetable. The Committee has made a major contribution to a major piece of legislation, and the Bill is better for its efforts.

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The Government have responded positively to most of the Joint Committee's recommendations. We have made several key changes to the Bill, especially in relation to the accountability of the authority and the fairness and transparency of its enforcement procedures.
The establishment of the Joint Committee and the proposed carry-over of the Bill to the third parliamentary Session are historic developments for the House. They demonstrate our belief in the Bill's significance. Now, however, it is time to start making progress. That is what the City wants. It is what the industry wants. It is what consumer organisations want. The Government are determined to maintain the momentum so that, by spring 2000, subject to Parliament's approval, a full set of FSA powers will be on the statute book. We intend to make as much progress as possible on the Bill in this Session, with a view to carrying it over into the next. We hope that, by working co-operatively with other parties in the House, we can meet that timetable.
Of course, there will be differences of view about the changes that we are making to financial services regulation, but one thing should be clear from the outset—no change is not an option.
It has long been apparent that the overlapping and inconsistent regulatory structures under the Financial Services Act 1986, the Banking Act 1987, the Insurance Companies Act 1982 and all the other legislation in this area were not delivering the standard of supervision and investor protection that the industry and the public have a right to expect. For example, the old system under the Financial Services Act 1986 had two tiers, with regulatory responsibility split between the old Securities and Investments Board and self-regulating organisations. That split has caused confusion for consumers and regulatory overload for the industry.
In any case, the old regulatory framework has been overtaken by events. I say that for two principal reasons. First, in today's world of integrated global financial markets, the old distinctions between different types of financial institution are becoming increasingly blurred. Nowadays, banks, securities firms and insurance companies all play in the same pond. But while the traditional sectoral boundaries are disappearing, the old regulatory structures have failed to keep pace. The result is the worst of all worlds—heavy-handed and confused regulation, with more than one supervisor, all with different rules and procedures, seeking to regulate the self-same firm. That is not just a recipe for confusion; it is costly and inefficient and, ironically, it can dilute the impact of effective regulation. It works neither to enhance competitiveness nor to improve transparency.
Secondly, the system is complicated enough for experienced professionals. What chance, then, for the ordinary investor who is faced with a veritable alphabet soup of regulation—the PIA, IMRO, the BSC, the different ombudsmen, the different compensation schemes? The trust on which successful financial services must be based is undermined when there is so much overlapping and confusion.
Mr. Ian Taylor: Of course there is a great deal of merit in the simplification and codification of all these things, but the Minister talked about the global aspect and about individuals. Is he satisfied that the new framework can cope with the
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dramatic growth of electronic communications networks and, effectively, the ability to trade in any stock market in the world from the internet site on one's desk?
Mr. Milburn: Yes, I am. That is an important question. That is why the Bill seeks to introduce appropriate flexibility so that the Bill—once, with Parliament's approval, it is on the statute book—can stand the test of time. The hon. Gentleman might be aware that we have already consulted about certain exemptions from proposed legislation on financial promotions—legislation that is specifically designed to deal with the challenges that the internet and other forms of modern communication bring to the industry. I hope that appropriate flexibility is built into the heart of the Bill, in order to deal with modern challenges such as that. Those are challenges for the United Kingdom and for the industry worldwide. We can be proud our industry has adapted pretty well and that in some senses it is ahead of the game. However, it is important that we have a flexible structure that is not always tied down to specifics, so that legislation can anticipate precisely the future trends that the hon. Gentleman highlights.
Nor, as the personal pensions mis-selling scandal reveals all too clearly, has regulatory overlap prevented gaps from appearing in regulation. Clarity, accountability and transparency are the vital ingredients that are missing from the old regulatory framework. They are all the more necessary in the context of the pensions mis-selling scandal which so badly damaged the industry's reputation.
Of course the Government have taken action to find redress for those who suffered. To date, more than 401,000 people who were mis-sold a pension have been offered £2.7 billion of compensation by the industry. The FSA estimates that the final costs of redress could be £10 billion. However, the other impact, including the delay in offering people redress, has been on the confidence of ordinary investors in financial services products. Now more than ever they need to be confident that when they buy a financial product they will not face similar problems again. Investors also need to know that if they have a grievance, there will be simple, clear and effective ways of dealing with it. That is not the position under the law as it stands.
The old regulatory maze has not worked and is not sustainable. Both the industry and consumers deserve better. The Bill is designed to be fair to both. It will reduce and simplify regulation. There will be one regulator, one authorisation process, one compensation scheme and one independent tribunal. For the first time, too, there will be one set of objectives, functions and powers.
By simplifying and reducing regulation, the Bill will increase accountability. The creation of one powerful regulator must, of course, be balanced by the creation of new mechanisms to ensure that it uses its powers responsibly and accountably. The various consultations that the Government have undertaken have been particularly helpful. The changes that we made to the draft Bill strengthened the accountability framework under which the FSA will operate while allowing it to get on with the day-to-day job of effective regulation.
In the first place, the FSA will be accountable to Parliament and to Ministers. The Treasury will be able both to appoint and to remove its board. There are powers

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to commission statutory inquiries in the public interest. There will be an annual report from the FSA on how it has performed against its objectives and on other matters that the Government specify. Those reports will be laid before Parliament to aid scrutiny of the authority.
Secondly, the FSA will be answerable both to practitioners and to consumers. There will be an open annual meeting of the authority. There will be a majority of non-executives on its board. There will be a practitioner panel and a consumer panel, both of which will have to be consulted by the FSA and both of which will have a role in assessing the authority against its statutory objectives.
Those are not only necessary safeguards—they will help also to shape the nature of the regulatory regime for which the FSA will be responsible. There will be a light touch where possible and protection where necessary, with fairness throughout. The Bill avoids over-burdensome regulation that would serve only to stifle innovation and to increase consumer costs. Instead, it provides for regulation which is firm and fair: indeed, the FSA will be under a duty to demonstrate that the burdens that it seeks to impose are proportionate to the benefits that will result.
The Bill gives the authority effective powers to make rules and to enforce them, but at the same time it contains safeguards to protect individuals' rights and the principles of natural justice. A key part of our plans from the outset has been the new tribunal, set up by the Lord Chancellor's Department and run as part of the court service. It will be completely independent of the FSA, and the Bill provides a right to refer all the FSA's enforcement decisions to be considered afresh by it.
There is no question of the FSA acting, as some have alleged, as prosecutor, judge and jury. I should make it clear that the FSA cannot enter the premises of an authorised person without a warrant; nor will it benefit from the penalty income that it imposes; nor will it have powers to award itself costs. In other words, the Bill does not give the FSA the draconian powers that some commentators have rather mischievously suggested it does. Rather, the authority will have powers that are commensurate with the job that it needs to do. It will be accountable to Parliament and answerable to those whom it serves.
We are satisfied that the Bill is fully compatible with the European convention on human rights, and the Chancellor has signed a statement to that effect, as required under the Human Rights Act 1998. We have made changes to the draft Bill in light of concerns voiced by Lord Burns's Joint Committee, that the market abuse regime might be classed as criminal for convention purposes. We have listened to those concerns and have now included additional safeguards in the arrangements for imposing financial penalties when people abuse the financial markets. Today I can tell the House that we are publishing for consultation a draft order prescribing the markets to be covered by the new regime.
Clearly, there is a tricky balancing act to be achieved—between protecting the consumer and not hampering innovation and enterprise with excessive regulation. The consultation process has helped us get that balance right, not least by setting the FSA clear statutory objectives—
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market confidence, the reduction of financial crime, the protection of consumers and the raising of public awareness. That is a balanced portfolio that we will expect the FSA to reflect in all its work.
The objective relating to public awareness is a good example of the innovative way in which we envisage that the FSA will operate. Consumers enter into contracts for what may be complex financial products, often worth large sums of money, but about which they may understand precious little of the detail. However, not all users of financial products lack financial expertise—far from it. Many of them will be financial services practitioners themselves. In pursuing its objectives, therefore, the FSA must be proportionate. Clearly, those at the expert end of the consumer spectrum do not need protecting from their own kind, and to try to do so would be to over-regulate.
However, the vulnerability of some consumers in this sector is very real, as we all know from what happened with pensions mis-selling. Consumers need information so that they can make informed decisions to choose the most competitive products and the ones most suitable for their needs. That is why we have charged the FSA with the objective of raising consumer awareness, but that does not and should not remove responsibility from individual consumers for reaching decisions based on their own judgment.
Protecting consumers does not mean absolving people of responsibility for their investment decisions. It is of course the job of the regulatory system to ensure that customers have sufficient information to make an informed choice. Consumers have a right to that, but it is not the job of regulation to provide a guarantee that nothing can ever go wrong; sadly, it sometimes does. That is the balance that the Bill seeks to strike—a light touch where possible, and protection where necessary. The result will be a fair deal for the industry and for the consumer.
There is another balance to be struck. Modern light-touch regulation requires the industry and individual practitioners to look to themselves and to ensure that their own houses are in order. That is why, for example, the Bill takes a reserve power to regulate the sale of mortgages, but it will not be used without first carefully considering whether the industry's own voluntary code has been found wanting. We will regulate only if we are clear that that could make a difference to consumer welfare in a way that did not impose undue burdens on the mortgage industry.
I believe that that is the right approach. We look to the financial services industry as a whole to manage its affairs properly. Those firms that do will gain competitive advantage. Those that do not must know that they will face a regulator with real teeth. In particular, nobody should be in any doubt that we shall take a tough and resolute approach to City crime, malpractice and abuse. We have given the FSA proportionate powers to deal with those problems.
The Bill provides for modern, proportionate regulation, which will be firm but fair. In May 1997, when we first announced this approach, it was regarded by many as novel and by a few as unworkable. Two years later, it

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commands almost universal support as the right model for a dynamic, fluid and competitive international industry. Indeed—
Mr. Jim Cousins: I am extremely grateful to my right hon. Friend, and I am conscious that I am interrupting his flow. May I take him back to his reference to mortgages? He said that there will be a reserve power to regulate the provision of mortgages. He will be aware that many of his own hon. Friends would like that power to be used. So far, he has not referred to the provision of long-term care insurance, which is another important matter; nor has he referred to general insurance. It is not easy to separate the training, professional intermediaries and products that constitute long-term care insurance and general insurance on the one hand and those that will be regulated by the Bill on the other. Does he intend to clarify those matters?
Mr. Milburn: I am grateful to my hon. Friend for those questions. May I deal first with the point about mortgages? He will be aware that the Council of Mortgage Lenders has now produced its mortgage code. It has been pretty well adopted by the industry and we want to see whether it works in practice. We shall not just wait and see, but shall monitor the process. We shall take statistics and information not just from the CML, but from the ombudsman concerned. If my hon. Friend and others have concerns about the effective regulation of mortgages, the Government will be happy to hear them.
On long-term care insurance, my hon. Friend will be aware that both Lord Burns's Joint Committee and the royal commission recommended that we regulate for long-term care insurance. We are looking at those recommendations carefully, particularly in the context of the royal commission's report. In due course the Government will respond to the royal commission's report and it is important that what we say is in line with what we are doing in the Bill.
Finally, on general insurance, my hon. Friend will be aware that schedule 2 provides for the regulation of a number of areas that are currently unregulated, including general insurance. We want to see whether the industry's own efforts, through the new General Insurance Standards Council, can safeguard the public interest in the way that we want. We want to give that a fair wind and, again, we shall monitor how well the industry puts its own house in order.
In all those cases, we shall take action where necessary, but we want a regulatory system that is in line with the appropriate principles of light-touch regulation, which offers protection where necessary but does not impede effective regulation of the industry. I believe that that is the right approach. I also believe that the approach that we are taking in the Bill, through a one-stop arrangement, is one that others will seek to emulate. Indeed, others as far apart as Ireland and Japan are now following the lead that this Government established in May 1997 when we first announced our proposals for the Financial Services Authority. There is little doubt that the trend that we have started towards regulatory consolidation will intensify in the future to reflect the parallel changes that are taking place in the industry.
The UK is leading the way in defining a new form of regulation for financial services industries worldwide. This is a modernisation that is long overdue. It is part and
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parcel of the Government's modernisation programme for our country as we prepare to enter the next century. Our future prosperity as a nation depends on the good functioning of our financial services industries. They are growing, not diminishing, in importance. Their ability to compete successfully in tough and competitive world markets relies on modern, firm and fair regulation. The Bill will create a regulatory framework that will enhance the standing and the success of the UK's financial service industry. In the FSA, the UK will have a regulator that will command the confidence of industry, of practitioners and of consumers. The Bill will create a successful world-class regulator for a successful world-class industry. I commend it to the House.
4.50 pm
Mr. David Heathcoat-Amory: It might be thought that this Bill would appeal only to financial specialists, but it raises some important and broad issues of principle, including matters of human rights and the rule of law, the realities of international competition and the perils of over-regulation. It is therefore a substantial Bill that it is our duty to consider.
The Bill has had a somewhat delayed birth, despite its early conception in the weeks following the general election in 1997. I do not blame Ministers personally for that because several important changes have been made to the Bill and Ministers inherited a fluid situation. It now runs to 367 clauses, including 130 additional ones since it was first published. Bills have a tendency to expand the longer they are left, so on those grounds alone it is probably wise that we should legislate as soon as possible. Indeed, it is not the Opposition's intention to hinder unnecessarily the legislation in this House or in the other place.
The importance of the Bill is undoubted. As the Chief Secretary said, the financial sector is one of our biggest and most successful industries. It is a huge employer and generates colossal overseas earnings for this country. In many respects, the City is the largest international market in the world. When we talk about the City, we must be careful not to overlook the fact that financial services are transacted in every part of the United Kingdom, and the Bill will affect all those who buy and sell financial products. Also, Edinburgh is an important international centre in its own right.
The very success of the UK's financial services industry also makes it vulnerable. It is by definition operating in a very competitive global marketplace and the same forces that brought firms, banks and other institutions to this country could equally drive them away. They are highly sensitive to changes in taxation and regulation. We have been critical in the past about tax changes and we still want to know what the Government intend to do about the threat of the withholding tax to the City of London.
Regulation can be a deterrent, but when it is done well it can be an asset. We are anxious to ensure that the Bill sets in place a structure that provides a reason for people to come and transact business in the United Kingdom, not a reason for them to leave. Therefore, we believe that regulation should be minimal, but that is not an argument for no regulation or for weak regulation. Markets require rules. Some of the more brainless critics of the free market system allege that it is about the law of the jungle. That

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is the opposite of the case. There are no rules in the jungle, whereas the free enterprise system requires laws and rules. It requires defined property rights and it requires security of transaction.
We support the principle of a Bill that will provide for such a structure in this country. We support the aim of giving statutory cover to the Financial Services Authority. The authority badly needs that: it is operating with only partial secure legislative cover, which itself creates uncertainty in the marketplace.
Let me say in passing that we are not sure whether it is wise to transfer banking supervision to the FSA. However, as that has been done in the Bank of England Act 1998, and as we wish to move on, we shall not press the matter—although I hope that, if a systemic risk is posed to the banking system, the procedures for the FSA to co-operate with the Treasury and the Bank of England will prove adequate to the task. We certainly believe that the Bank had considerable expertise in this regard, and we are pleased that many of its staff have transferred to the FSA to do the same job.
With that proviso, we accept in principle the case, as advanced by the Chief Secretary, for consolidating a number of existing regulatory bodies. None the less, we have some major concerns. Overall, we want to ensure that the new regulatory system is an asset, and that it is effective in tracking down and dealing with dishonesty, while at the same time respecting the principles of British justice and providing fairness for the accused. In doing that, the FSA must be vigilant and not over-regulate. All public bodies have a tendency to expand their responsibilities, expand their powers and expand their expense. That is a natural dynamic in the public sector, but if it imposed extra costs on the marketplace and on savers, the consequences could be highly detrimental. The danger of what I call "regulatory creep" must be countered by the provision of safeguards in the legislation itself and the designing of countervailing pressures to stop that danger from becoming a reality.
How does the Bill shape up? The draft Bill published in 1998 was seriously flawed in a number of respects. In particular, it is now clear that that Bill could never have survived a challenge under the European convention on human rights—which, of course, is now to be incorporated into British law, giving members of the public a right to test its provisions directly in British courts without having to go to the European Court of Human Rights.
The earlier Bill was, however, a consultation draft, and it did provide the essential raw material for the Lords-Commons Joint Committee on Financial Services and Markets. The Committee was originally due to be set up in January and to report by Easter. In fact, it was finally formed in March. Despite the tight time scale on which it operated, and despite the delays, I think that it was an undoubted success. Much of the credit for that goes to its Chairman, Lord Burns, who conducted our proceedings so skilfully. I also thank the very able Clerks, who did a great job in creating and distilling the enormous amount of evidence, both written and oral, that the Committee received.
The Joint Committee had less than two months to complete its main report. That is why we concentrated on six areas, including the FSA's objectives, the scope of the
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legislation and the FSA's powers and procedures, as well as the knotty issue of market abuse and how that could be defined in legislation.
We were a little shocked—I think that I speak for a number of the members of the Joint Committee—when the Treasury suddenly landed on us another 100 clauses halfway through proceedings on the draft legislation. We were unable to examine them. To be fair to the Treasury, they were of secondary importance. Nevertheless, it is true that large chunks of the Bill remain completely unscrutinised, either by the Joint Committee or by any other Committee of the House. We will need to examine the Bill very carefully at every stage to ensure that the assurances that Ministers have given—in good faith, I am sure—are in fact reflected in the Bill.
I stress that the Joint Committee was a useful procedure. The House may like to do the same with other legislation. The subject lent itself particularly well to the procedure. It meant that, in a relatively unpartisan atmosphere, hon. Members could examine issues that did not fall naturally to one side or the other of a party political debate.
We noticed with regret that the Liberal Democrats hardly participated. I am glad to see the hon. Member for Twickenham (Dr. Cable) in his place now and look forward to listening to what he says, but it was somewhat surprising to us that the Liberal Democrats, who are usually so forward with their suggestions for innovative ways in which to scrutinise legislation, barely participated in the Joint Committee.
We had a stream of high-calibre witnesses, including trade associations, City practitioners, consumer groups, regulators, ombudsmen and lawyers. Indeed, we had two useful sittings with the Economic Secretary to the Treasury who gave the Government's view. Nevertheless, as I have mentioned, some matters still cause us considerable concern—I expect that I speak not just for Conservative Members but for Labour Members who participated, who may have their own points to put in due course. We will use the Standing Committee and Report stages to strengthen and amend the Bill in ways that we think are essential. I thank in particular my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton), the only other member of the Conservative party from the Commons on the Joint Committee, who brought particular City expertise to bear on the issues.
We were pleased when the Government announced that they accepted most of the Joint Committee's recommendations. As I mentioned, we will be vigilant in ensuring that they are actually carried through into the drafting, because there have been occasions when that was not the case. Solicitors, for example, noticed at an early stage that although they had received some assurances about the registration of their members in relation to their incidental financial advice, those assurances were not entirely carried through into the draft statutory instrument when it was published.
Our concerns about the Bill may be said to fall into two general areas. The first is the very wide power still vested in the FSA, and the danger that any concentrated executive power can lead to abuse. The second is the danger of over-regulation, with consequential damage to the United Kingdom's position.
On the first question—the FSA's power—a central part of the Joint Committee's second report considered whether the Bill was compatible with the European

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convention on human rights, or, indeed, with the basic principles of British law. It is very easy to appreciate people's concerns. The FSA is a private company. It enjoys substantial statutory immunity and has wide powers of investigation. It is also able to deprive people of their livelihood, to levy unlimited fines and to keep that fine income. Very few other bodies enjoy that amount of power and authority. It is therefore very important that those powers, which in many respects are necessary, should be circumscribed and closely defined by Parliament, and that the FSA should be accountable for the use of those powers.
The Economic Secretary to the Treasury (Ms Patricia Hewitt): The right hon. Gentleman mentioned the proposal that the FSA should be able to keep fine income. Does he accept that the Bill provides that the FSA is required to rebate gross to the regulated community any income from fines imposed on authorised persons?
Mr. Heathcoat-Amory: Yes; I gladly accept that clarification of the position, of which I was aware. Perhaps I put the case in a rather shorthand manner, but it is still the case that the money will remain with the FSA—although, as the hon. Lady said, that will offset the fees levied on the regulated community. Whether that will satisfy all lawyers and observers is another matter; but certainly the Government have moved on the issue, as they have on others. I mentioned the matter only because it was critically commented on by senior legal figures, including an appeal judge. Therefore, the use to which the money will be put is an important issue.
The FSA sometimes, in some evidence sessions, took refuge in assurances that it would always use its powers reasonably. I believed the FSA's chairman and senior executives when they gave those assurances—I have a very high regard for those executives whom I got to know during the proceedings—but that does not entirely satisfy participants in the market, who may be on the sharp end of the FSA's powers of investigation and prosecution. Many institutions and individuals will be dealing with comparatively junior FSA members, and they want to know that those good assurances will be fully reflected in the FSA's working practices at every level.
Another point is that people at the FSA could change and the regulatory environment could alter. Happily, we are in a situation in which, generally, those who have bought savings products have seen them do quite well. Generally, we are enjoying a bull market. However, those who legislate have to consider the possibility that the atmosphere could change completely. If the stock market or the property market went into a prolonged decline, the atmosphere would alter, and those who had bought savings products could feel resentment or feel that they had been mis-sold those products. They could look for people to blame, and the FSA could come under pressure to look differently at those who originally sold the products in good faith.
It is therefore important that we include those good intentions in legislation, and limit and define the powers that we expect the FSA to deploy.
Mr. John Greenway: My right hon. Friend is touching on one of the Bill's most important aspects—learning lessons from the past. Does he agree that those who give advice and conclude business have to know that,
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at the time they do so, that advice and business complied with the regulatory regime? Only in that way will there be no question of retrospective judgment on the quality of the advice given or the product purchased.
Mr. Heathcoat-Amory: Yes; my hon. Friend endorses my point. It is always tempting, with the benefit of hindsight, to revisit decisions taken and perhaps alter judgments made in good faith.
The Government accept many of these observations, and there is genuine intent to put the safeguards into law. That will certainly be our intention in Committee. The Government's first shot at the Bill was seriously at odds with the requirements of justice. I do not know whether that was due to mistaken legal advice or because they did not fully recognise or understand the implications of adopting the European convention on human rights, but they have moved on a number of those issues. For example, the financial services tribunal is to be given more status and independence, which I welcome, but several senior legal figures had grave misgivings.
It might help hon. Members if I draw attention to the evidence given by Lord Hobhouse, who is an appeal judge. He picked up the point, which was raised by one of my hon. Friends, about the international dimension and the possibility that savings products could be sold on the internet or electronically; indeed, people in other legal jurisdictions could somehow come under the Bill's provisions. He was also concerned that there was not sufficient clarity or certainty in the part of the Bill relating to market abuse. He summed that up in these words:
"All those things when one adds them together add up to a scheme for punishing people who may be abroad, who may not be taking any active part in any market in this country, who have not done anything illegal, whose conduct is innocent, who are under no duty to act where they are accused of failing to act and nevertheless punishing them for such conduct."
That was some of the most devastating legal evidence that I have ever heard being given to a Committee of the House and, because of it, the Joint Committee went on specifically to examine the compatibility of the draft Bill with the European convention. I happily acknowledge that the Government moved on that issue, and the market abuse provisions will now apply to a more narrowly drawn category of market participant. The Chief Secretary said that an announcement on that was due today.
The right to silence—or the fact that compelled evidence should not be used in subsequent proceedings—is to be clarified, and those accused of market abuse will be eligible for a form of legal aid. In other words, the safeguards of the criminal law will now apply to that part of the Bill—I welcome that—but my hon. Friends and I are still concerned that the offence of market abuse is still not clear. What is now clause 95 is still, in many respects, quite dangerously ambiguous.
The Government have responded by saying that they will not be relying entirely on a clause in the Bill to define market abuse but will be relying also on a subsequent code, which is still to be published. That is all very well, but a general problem is that too much of the Bill will

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depend on subsequent rules published by the FSA or subsequent regulations published by the Treasury as secondary legislation.
Mr. James Plaskitt: Does the right hon. Gentleman believe that, in a market as dynamic and global as that for financial services, it is possible to have a watertight definition of market abuse?
Mr. Heathcoat-Amory: I accept the part played by secondary legislation, and I certainly do not suggest that all the matters covered by the Bill should be dealt with in primary legislation. Legal witnesses have observed, however, that if someone is to be prosecuted, he must know where he stands and must be certain of what rules he may have broken. As the House must judge the effectiveness of the clause on market abuse, it would be highly desirable if we could see the codes of conduct and the secondary legislation—even in draft—before we proceed much further.
In too many respects the Bill is merely a framework. We must think about what may occur subsequently before we take an overall view. I hope that the Government will accelerate publication of draft legislation so that we may take a full view. The same applies to the FSA. More than 20 consultation papers have been published, though fewer than five have received responses. We remain in the dark about the totality of the powers and rules to be exercised by the FSA.
Should the Government get the Bill wrong on European convention on human rights matters, the consequences would be extremely serious. We can say little this afternoon about that hurdle—the Government erected it and they must jump it because they incorporated the convention into British law. Whether the Bill complies with the convention remains a matter of legal dispute. I hope that the Government are right, because a successful challenge to the Bill could torpedo almost the entire regulatory system.
We are concerned to ensure that the Bill's powers are balanced by fairness. Several past cases were brought to the Joint Committee in which regulators had used their powers in an overbearing or arbitrary way. We were not able—indeed, it was not our duty—to inquire into those cases, but we are concerned to ensure that there are safeguards in future. If something has gone wrong in the past, we must ensure that it does not happen again. Some of the cases were disturbing, and we should keep them in mind as we consider the Bill.
We wish to examine in particular the idea of statutory immunity, the granting of which by Parliament is a serious matter. The police do not have statutory immunity; nor do doctors, or the Serious Fraud Office. However, we are giving immunity to the FSA. There is a case for some statutory immunity, but I am less sure that the Bill is exactly right in providing the FSA with immunity from prosecution while it acts in good faith. That does not cover examples of negligence. The Bill does not give the complaints investigator—to some extent an alternative to prosecution of the FSA—powers to grant compensation. If, through negligence, the FSA causes financial loss to an institution, the complaints investigator should be empowered to grant monetary compensation.
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The Joint Committee believed that the FSA should not be accountable to Parliament only through a Minister. We need to find a way to make the FSA accountable in some respects to Parliament itself—perhaps to the Treasury Select Committee or to an ad hoc committee constituted for the purpose.
The Joint Committee also suggested splitting the role of the FSA's chairman and chief executive. That suggestion was not directed at the present incumbent, Mr. Howard Davies. It was suggested that after he relinquishes his office, future chairmen and chief executives should be two different people, which would act as a check on any unnecessary concentration of powers and would strengthen the position of the chief executives on the FSA board.
That suggestion met with opposition from existing members of the FSA, but I note that the Hampel committee on corporate governance, which is a successor to the Cadbury committee, recommends splitting those posts in corporations of any size. Perhaps it is at least arguable that what is desirable and urged on private industry by the Government should also apply in the public sector. Again, that is an issue to which we shall undoubtedly return.
I have already mentioned over-regulation and costs, but I want to stress that this is not merely a question of the competitive position of the United Kingdom; it is also about creating a genuine savings culture among the population at large. As for the City and the United Kingdom financial services industry in general, they require and deserve that the FSA should report regularly on compliance costs that it could be transferring to them through additional regulation. Those matters should not only be calculated but reported on at least annually in aggregate and also in comparison with jurisdictions in other countries. We also believe that competitiveness, or competition, should be elevated from a principle under which the FSA operates to one of its objectives. That would be one of those countervailing forces to the regulatory creep to which I referred.
The dangers of excessive costs do not apply only to the industry. If we are to create a real savings culture as an alternative to the welfare culture, it is important for people on all income levels to invest and buy savings products. If the result of over-regulation is to make doing so more expensive, it will have the opposite effect.
We have been critical of the Government on savings. We criticised the £5 billion a year raid on pension funds that was a feature of their first Budget in 1997; we criticised the abolition of tax-exempt special savings accounts and personal equity plans; and we criticised the fact that the 10 per cent. threshold for income tax would not apply to savings. If the Bill leads to any increase in costs for savers, it will certainly be a further blow to savings. If that happens, it will not only deter savers from saving but will put them off seeking good financial advice.
To some extent, the signs are already not entirely encouraging. The Law Society of Scotland pointed out that the FSA proposes that a sole Scottish solicitor practitioner should be charged a minimum £1,000 for authorisation with the FSA, compared with the existing charge of £135 levied by the society. That is a proposed increase of 640 per cent. If that is replicated in other parts of the savings and financial services industry, the results will be extremely serious.

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We have already heard an intervention from the now deserted Benches that are usually inhabited by the Scottish National party. I was interested, but not entirely reassured, by the Chief Secretary's answer. It has been pointed out—indeed, it was emphasised by my hon. Friend the Member for East Worthing and Shoreham—that, on the face of it, financial services regulation will undergo a form of reverse devolution. Matters that are currently handled by the Law Society of Scotland will now come south to London. I do not know whether that was the intention, but it has not been explained to those north of the border.
Indeed, further confusion was engendered by a debate in the Scottish Parliament last week. The Bill, which applies to the whole of the United Kingdom, will require amendment to the Solicitors (Scotland) Act 1980 and also to Scottish bankruptcy law. However, those are matters for the Scottish Parliament. In that short debate last week, the Deputy Minister for Justice in Scotland seemed to imply that those changes to Scottish legislation would be made not by the Scottish Parliament but by this Parliament. Will the Economic Secretary clarify that matter when she replies to the debate? We do not want the Bill to become a wrangle between the two Parliaments. We gave many warnings that, if two Parliaments were set up in a unitary state, such confusion and overlaps would be created with, at best, the possibility of ambiguity—at worst, there could be confrontation between two Parliaments, both of which felt that they had jurisdiction in the matter.
Mr. Loughton: Not only will great resentment be created if those Scottish legal and financial practices have to send large amounts of money south to London to pay their membership fees, but the fixed membership fees and charges that my right hon. Friend mentioned will hit smaller firms disproportionately. That can give only two results: either the costs will be passed on disproportionately to the consumer, or many of those businesses will withdraw from the market altogether and there will be less competition and less choice for the consumer.
Mr. Heathcoat-Amory: My hon. Friend is right. Just as all taxes are eventually paid by individuals, so too charges and fees are eventually borne by the saving public. An escalation in fees will deter the very savings habit that we all want to encourage.
I have said enough to show that we shall not oppose the Bill's Second Reading. We have several deep-rooted worries about it, and our suggestions for its improvement will be tabled as amendments. In respect of timing, we shall not unnecessarily delay the Bill, if it is true that the Government have accepted the recommendations of the Joint Committee and have implemented all of them in the Bill. If that has been done, as we have been assured, there is a good case for the Bill to go to Committee in short order and to be carried over into the next Session of Parliament without having to start the process all over again in November. The Bill has already been delayed enough, and there is considerable uncertainty in the marketplace. We certainly want to improve the Bill, but we shall not impede it.
In conclusion, it is in the interest of all hon. Members that there is a regulatory system that serves the market and all who buy and sell in it. Let the House, and the Government, reach out for a regulatory system that will
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be the asset to the United Kingdom that I have already urged. The system should be the scourge of wrongdoers, but, at the same time, a model of how to balance effectiveness with fairness. If that is the Government's aim, the Bill certainly has our support.
5.29 pm
Mr. Barry Sheerman: Since the general election, the Labour Government have introduced a large number of constitutional reforms. Some would say that, through the Select Committee on Modernisation of the House of Commons, one of the most revolutionary changes has been the innovation in which many of those present in the Chamber this afternoon have participated: the pre-legislative inquiry, especially one of both Houses of Parliament. I had the privilege to be the deputy Chairman of the inquiry into the Bill before us. A Member of Parliament is asked to do all sorts of things, some dull and boring, others exciting and challenging. Participation in the pre-legislative inquiry fell into the exciting and challenging category.
We should not underestimate the revolutionary nature of such an inquiry, for in many ways it upsets our traditional methods. Some of us are sick to death of the yah-boo element in the House of Commons—one builds up a certain distaste for it after a while, even while continuing to participate when necessary—but the inquiry offers a process whereby at least two cultures are blended. Working with Members of the upper House was an education, because their approach to Committee work differs from ours: they were surprised by our approach, and we learned a great deal from theirs.
The experience was a valuable one. If I want to stay on-message, I should not say this, but it should be acknowledged that some of the hereditary peers gave the Committee excellent quality advice that I would not have wanted to be without. I am sure that, in due course, we shall find new sources of high-quality information. However, for the sake of honesty about the quality of the debate, it has to be said that knowledge in the upper House of how this country's financial institutions work is of greater quality than that of the lower House. That is due to the breadth of experience available in the upper House, especially on the academic side, such as that of Lord Eatwell, Lord Poole and others.
We had an interesting time. The mix of the two cultures was productive and we gradually learned to work together in a positive manner—even more positive than I have experienced on Select Committees in the past. There was a task in hand that we had to achieve in a relatively short time: we were given two months, extended by an extra month to examine the Bill's compliance with the European convention on human rights. Politicians will go on as long as they are allowed to, so even if we had been given six months, we would have said that there was not enough time. However, the discipline of having two months plus one struck me as sufficient to enable the job to be done.
There is one caveat, which was strongly expressed by Lord Burns, whose chairmanship I greatly valued. I do not know whether he was gamekeeper turned poacher, or poacher turned gamekeeper, but it was interesting to see him struggle with the change between the two roles, which at times had to happen quite quickly. I am sure that some of the parliamentarians taught him a little in that

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respect, although he taught us a great deal in terms of technique and tactics. Our approach to the task was constructive: we had an end in view and a timetable to keep, and we got on with the task.
Those of us who had spent more time dealing with industrial concerns than with the City became far more aware of the importance of the Bill. Not one of us failed to learn something of great value about the contribution that the financial services sector makes to the life of this country. That sector contributes at least 6.4 per cent.—and probably more than 7 per cent.—to national income in terms of gross domestic product. It employs 1.17 million workers, although that is probably an understatement. If we compare that with the 21.5 per cent. of gross domestic product that flows from manufacturing industry—I must always make that point—which employs 5 million people, we can see how important the City and the financial institutions and services are to this country.
The challenge is to ensure that we introduce regulation that delivers the right environment that allows the industry to grow. It is a fascinating industry because it will grow only with good regulation. It will not grow without regulation because that is an essential quality of the United Kingdom, and of London in particular. One does not always win arguments about what language should be in a Bill, so one derives quiet satisfaction when an amendment that one really wants is accepted. I was most grateful when my fellow Committee members said that an environment of integrity is important to the workings of the City of London. That reputation for good regulation, honesty and integrity on the part of all who work in the City makes all the difference.
Things will go wrong in any complex area of our economy. Pensions mis-selling is one shadow of the past, and some of us remember well what the Maxwell experience did to the City. Morgan Grenfell was another unfortunate experience, as was the Bank of Credit and Commerce International. Any large sector must learn from five or six such episodes. In some ways, the regulatory system that we are introducing in this Second Reading has benefited from the failures of the past. The incoming Government knew—and the seeds were sown with the previous Administration—that there had to be a dramatic change in the quality of regulation. Achieving a market of integrity was a prime concern.
This is a particularly unique sector. An Opposition Member who knows a hell of a lot about information technology and electronic communications—and who is not in his place at present—pointed out that we are introducing a regulatory regime at a time when the industry has never moved so quickly. There is an accelerating pattern of change in all our lives—and it is particularly fast in the financial services area. It is a global market. Instant transactions can be made electronically, which means that London and Britain—this country benefits from our use of the English language and our financial expertise—has a wonderful opportunity. We must make every effort to ensure that this fine industry grows and expands.
At the same time, we must be aware that regulations that are set in concrete will not measure up. A financial services authority must have the flexibility to move quickly and to change in order to respond to enterprise. This is a very enterprising sector—but those who would
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make mischief are also enterprising. If a regulator cannot move quickly, the mischief makers will not be caught. We must strike that fine balance between the needs of an expanding industry and the need for flexible, quality regulation.
Before I refer to the nature of this Bill, I point out that we must get it right. I have been in the House long enough to have seen an awful lot of bad legislation passed. I acted as a shadow spokesman on home affairs in the proceedings on several large criminal justice Bills. They were awful, and the Administration had, with a red face, to abandon large sections of many of them. I do not want to mention particular instances—some were mentioned in the Special Standing Committee. On two or three occasions, I was the Opposition spokesman on prevention of terrorism Acts. That legislation was originally introduced in haste by a Labour Government, and experience demonstrates that much of it was wrong.
Much ordinary legislation is, despite every effort, poorly conceived, thought through and delivered. The process undergone by this Bill is a great contrast. The draft Bill was introduced in July 1998; the period of consultation on the Bill was extended and, as the Chief Secretary said, there were 240 responses. The Select Committee on the Treasury held a short inquiry, followed by a Government response to the consultation process and the establishment of the Joint Committee.
Hon. Members should not forget that the House of Lords Delegated Powers and Deregulation Committee had a valuable input into our report and expressed wise opinions. The Joint Committee report was published two months later and the Government then responded to it. They asked us to extend the Joint Committee's work to assess the Bill's implications for the European convention on human rights. The Government then responded to that assessment. All that happened before Second Reading.
This is complex legislation and we want to get it right, and I cannot think of anything more that could have been done to achieve that. The Bill has been through an excellent process, and I hope that the Government and all successive Governments will learn that it is a model for a better way to deal with complex legislation. This Second Reading is, therefore, a milestone, and I hope that it will be a beacon—if I may mention beacons—in legislative performance. I hope that many other Bills undergo such scrutiny to the same effect.
I do not want to go back over ground that was properly covered in the opening remarks of Members on both Front Benches. We all know that the Joint Committee decided to specialise—we considered particular accountability and statutory objectives and principles. We had amusing and interesting debates about what is an objective and what is a principle, which is more important and whether they should be listed in alphabetical order or prioritised. We think that we got it right in the end.
The Joint Committee also did a great deal of work on discipline, enforcement and the tribunal. We concentrated on six areas. I fear that the only people who will read our reports will be those writing PhD theses about 20 years from now, but they will find that we made a substantial difference.
Working parliamentarians understand the issues arising from legislation because they immerse themselves in them. I am concerned, however, because I read in the so-called serious press comments about our work which

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were totally inaccurate and often superficial. One newspaper attributed to the right hon. Member for Wells (Mr. Heathcoat-Amory), who opened the debate for the Opposition, remarks that he did not make in the Joint Committee. The Daily Telegraph inaccurately reported the remarks of the Chairman of the Joint Committee, which he then had to correct in a letter to that paper. The tone of commentary, particularly in The Daily Telegraph, was superficial. The City editor and his journalists could not have run their stories had they read the material and acted professionally. That is not a total condemnation of the media; one or two people read the stuff and wrote reports on the basis of what was said in Committee rather than what was suggested.
A report in The Times said that our Committee's two main recommendations—after all the time taken—were to split the job of chairman of the Financial Services Authority from that of chief executive and to bring mortgages into the proposals. The inference was that, since the Committee failed on those two matters, it had wasted its time. Nothing could be further from the truth. If one reads the recommendations, one finds that the Government have responded to the majority of them—the serious stuff—and changed the Bill in the right direction, which all members of the Committee appreciated.
I say in passing that, as I sat through discussions on the posts of chairman and chief executive, I did not regard the issue as a priority. It is an issue that perhaps would be nice to consider following the retirement or moving on of Howard Davies; it was not seen as one of the matters on which we would go to the wall.
The Government have responded very positively on mortgages by including in the Bill the possibility of addressing the issue later. We will not have to return to primary legislation. Given a fair view, the issue may be revisited if the structure and code do not work. So, let us sometimes say what really happened in a Committee and not what some journalists imagine happened.
A long time ago, I used to be a member of the Public Accounts Committee, before which civil servants were hauled and intensely questioned. Committee members would try to wrong-foot them and embarrass them. Another revolutionary aspect to this Committee's approach was that we did not play such games. We ran the Committee like a seminar. Given that, when I worked for a living, I was a university academic, people may say that that was a result of my malign influence, but that was not so. The Committee decided that proceedings would be run like a seminar and that six—or even eight—people would join us to give evidence and participate.
Without looking around the Chamber at places to which I should not even allude, rather unusually, six or eight senior people from the City, the regulatory world, the ombudsman's office and elsewhere contributed to a positive discussion, and intervened on each other. Indeed, even the person in charge of the Bill from the Treasury and those from the FSA intervened in the discussion. What a different, innovative way in which to approach the legislative process. It was excellent, and achieved results.
There was a quiet satisfaction when we saw that the Bill, especially as amended, met with increasingly wide acceptance. Of course there was some variance on some parts; everybody wants a little more than he is going to get. Indeed, I received a very nice letter from the Consumers Association only on Friday, suggesting other
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changes. It will of course have an opportunity to continue lobbying when the Bill is in Committee. It is amazing to think that we are only about to begin that process. Although there is still an opportunity for change, there is a fair degree of acceptance that this important Bill goes in more or less the right direction. We should be reasonably content with that.
Of all those who gave evidence, no one objected to or found a problem with the notion of a single regulator. No one wanted to defend the old method of self-regulation, because it was not really self-regulation but what was described as "a self-regulatory process". The broad view was that we wanted to move to a fully statutory system.
Very strong voices also argued that we should include practitioners and consumers, to give them a real hold on the Bill and the FSA. I believe that, as a result of all our recommendations and everything that happened during our investigations, the role of the consumer and the practitioner were enhanced. I believe that practitioners and consumers went away fairly content with the changes that they had managed to persuade us—and that we had managed to persuade the Government—were along the right lines.
To conclude, I admit that one journalist got it right on 30 April, after we had completed our investigation and publicly launched our report. The leader in The Independent that day said that we had improved an entirely practical and relatively enlightened piece of legislation and helped to turn it into a practical and workmanlike piece of legislation. I believe that we have helped the Bill to be the Bill that it should have been—the Bill that it wanted to be—although the legislative process was difficult. I do not believe that we have created a bureaucratic monster, but I take what the right hon. Member for Wells said about watching the FSA grow and seeing how things work.
The test of any regulatory body is how it carries out its task from day to day. In this instance we have had a great deal of experience, because the FSA, under Howard Davies, has been operated under the previous legislation, albeit in a rather contrived way. At least we have something on which to make a judgment. I believe that many of us feel reasonably content about those early months of practice.
I think back to the experience under the previous Administration of setting up the Environment Agency. I applaud many of the things that have happened in the overarching Environment Agency, but real problems with the agency have not yet been sorted. I am sure that we shall not have a similar experience with the FSA.
The Bill has the makings of good legislation. It is a vital piece of legislation, so I was delighted to hear the right hon. Member for Wells say that, provided certain standards and criteria were met, the Conservatives would accept its carry-over to the next Session. The new FSA must be in place if we are to face the next century with a regulatory system that will allow this important industry to grow.
The focus on one ombudsperson is also important. Many of our constituents are very confused about what happens when they want to complain about their pension or insurance policy—or perhaps, some day, their mortgage. We have all met people in our advice surgeries who have been the casualty of poor financial advice that they were given more than 30, or even 40 years ago.

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People visit me and say, "Mr. Sheerman, I worked for a certain well-known company in the town"—perhaps an engineering company—"and I thought that I was in a good pension scheme, but the only thing that that pension delivered was the difference between getting any state benefits and being in the poverty trap." Over the years, many people have not been given enough good-quality information on which to take the important life decisions that affect every aspect of life—on pensions, mortgages and long-term care. I believe that the regulatory system that the Bill will erect will be flexible enough to ensure that such good-quality information is provided.
I especially like that part of the Bill which ensures that the FSA gets out there and helps to educate the British people. I sometimes say, having something of an environmental interest, that we conduct lifecycle analysis for products, but it is time that we conducted lifecycle analysis for human beings, because the decisions that people take early in life can change—and sometimes warp—their opportunities for the rest of their life. Financial services are especially important in that regard. Anyone who makes the wrong choices early on, as a result of being given bad guidance and advice, gets a pretty rough deal later on, in terms of a happy retirement and much else. We did not spend a great deal of time on that part of the Bill which relates to the provision of financial information, but I feel passionately that it is very important.
5.56 pm
Dr. Vincent Cable: I want to express broad support for the Bill, whose philosophy and whose architecture of financial regulation reflect a broad consensus. I appreciate the extent to which there has been broad and extensive consultation with practitioners and with Parliament, and the fact that the Government have responded to very many of the anxieties that have been expressed.
My reservations—I shall raise them in Committee—relate primarily to the exclusion of mortgages. As the hon. Member for Huddersfield (Mr. Sheerman) has just explained, there are reserve powers in the Bill and that omission may well be rectified; but that omission sends wholly the wrong signal at this stage by defending the rather discredited principle of self-regulation in the one area that is almost certainly of most concern to most of our constituents.
There are broad areas of consensus. I do not believe that any hon. Member present would argue either of the two extreme philosophical positions on financial regulation. No one is arguing for an increasingly severe, more onerous and dirigiste system of regulation. Equally, no one is arguing for laissez-faire. Quite properly, the right hon. Member for Wells (Mr. Heathcoat-Amory) drew attention to the fact that the liberal market approach to financial services involves a rules-based system, not a free-for-all.
There are major market failures, which are broadly recognised. In what are loosely called the wholesale markets, the main aspect that requires regulation is systemic weakness. History is littered with examples of one unsound or corrupt institution dragging down many soundly managed and safe institutions. Regulation is
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necessary to prevent that from occurring. However, as I believe the Government now acknowledge, that should be done on a light-touch basis. In their response to the Joint Committee on Financial Services and Markets and others, they acknowledged the need to ensure that compliance costs are comparable to and competitive with those of other financial markets. I believe that that point is understood and non-controversial.
In many ways, the most important area covered by the Bill is consumer protection. I believe that we all share the view that the biggest abuses often occur in the consumer markets. They occur because of a vast disparity and asymmetry between the bargaining power of people selling complex financial products and that of consumers. Consumers are often ill informed—for a very good reason—about products that can be understood only with a great deal of specialist expertise. Much abuse takes place in those markets.
So strong regulation is needed—strong regulation which retains the principle that, ultimately, purchasers are responsible for their own actions, and which does not increase compliance costs to such an extent that poor consumers are forced out of the market by the additional costs of regulation. I believe that the balance in that area has been roughly struck.
I have not sensed a great deal of philosophical difference between Government and Opposition regarding the Bill.
On the architecture of regulation, I acknowledge the consensus that we do need a unitary regulator, and that it was wasteful and inefficient to have a substantial number of separate regulators and ombudsmen. That is a helpful advance. In the Select Committee, we tested in some detail the argument that the differing requirements of the wholesale and retail markets should be reflected in the structure of the regulator. Some of the academic witnesses argued in favour of having two separate systems of regulation that maintained that distinct philosophy. The issue was pursued to exhaustion and I think that at the end of the process we all accepted that it made much more sense to keep the regulatory structure intact under one roof.
The hon. Member for Huddersfield talked about the many stages of pre-legislative consultation in which the Government were involved. That consultation and involvement was commendable. It is part of a wider process of improving legislative scrutiny. I was severely over-extended as a result of simultaneously trying to participate in the pre-legislative scrutiny of this Bill and in parallel efforts to deal with the Immigration and Asylum Bill and other measures. In passing, I reassure the Conservative spokesman, the right hon. Member for Wells, that in the next Parliament, when Liberal Democrat numbers more accurately reflect our party's strength in the country, he is more likely to be outnumbered than he is to be pining for our company, as he was in this instance.
One of the key issues that emerged in our discussion related specifically to the legal issue in respect of human rights. It is essential that the Government correctly determine that issue. I have been slightly taken aback by some of the comments of those in the City, which in some instances have come near to implying that the London dungeon has been reopened for normal business and that people in the City will be racked for their financial activities. That is hardly what we are discussing.

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Those of us who are non-lawyers have always wondered whether the legal system is far too lenient towards those who perpetrate fraud. Many of us think that on a commonsense basis there is much to be said for testing whether prosecution should take place and thereafter considering whether harsh penalties should be imposed. The somewhat ambiguous wording at the end of the Joint Committee's report on human rights implies an understanding of that dilemma. However, we want fraudsters to be prosecuted and penalised severely. That may conflict with a demanding test of human rights legislation. We understand the dilemma with which Treasury solicitors are grappling.
I have referred to the areas where we enjoy broad common ground. I shall now say a few words about the area in which I think the Bill is deficient and where there lies an important issue of principle, which is mortgage regulation. The Government have been subjected to conflicting advice. The Council of Mortgage Lenders and the Financial Services Authority, for administrative reasons, have been anxious to keep mandatory regulation of mortgages out of the Bill. However, there has been—this should be recorded—substantial pressure in the other direction. The Consumers Association has argued strongly for mortgage inclusion from the outset, as have the Financial Advisers Association and some banks and building societies, which see no reason for being exempted at this stage. I shall set out some of the reasons why I think that the Government are making a mistake in this instance and why they should, perhaps, rethink their position.
First, the Government's position will undermine much of what the Bill is designed to achieve. Instead of unitary regulation, banks—at the early stages, at least—will be responding to two separate sets of regulation. There will be a self-regulatory system and another system for other aspects of their business, which will involve the FSA. The Government's position appears to contradict their confidence that a statutory system of regulation is appropriate.
There are many severe market abuses perpetrated by some of the largest players. I am sure that right hon. and hon. Members are familiar with these abuses, from their postbags. For example, the system of repayment penalties is extremely onerous in some instances. I have nothing against the National Westminster bank and I bank with it, but its system of compensation penalties involves about a third of the loan. Extremely large penalties are imposed on customers who for good reasons wish to pay mortgages early.
As for building insurance—new competitors in the market are pointing this out rather brutally—there is about £1 billion of over-charging as a result of linkage between mortgage lenders and building insurers. Many mortgage protection products offer very bad value. It is reported that on average a 40 per cent. commission is paid on mortgage protection products. There are excessive linkages in endowment policies. That is a longstanding problem with the mortgage industry. There are also arrangement fees.
At the bottom end of the market there is something akin to loan sharking for non-status borrowers that operates with little regulation. That system that should be brought within the regulatory framework as a matter of priority.
In practice, because self-regulation has been put in place, large lending institutions may be happy to see individual financial advisers put into the dock for serious
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mis-selling—for example, the excessive promotion of inappropriate endowment products. However, many of the problems relate to the big lenders. That is why they should be regulated rather than allowing them to regulate their own industry.
Many of the problems in the mortgage market relate specifically to the extent to which it has been demutualised. That is an issue that we shall be pursuing in the Treasury Select Committee over the next few weeks. New forms of banking competition have come into the housing market and as a result many of the players are trying to widen their margins. They have to pay dividends, whereas mutual lenders do not. This is giving rise to many practices that are disadvantageous to borrowers.
In some respects the code is probably not satisfactory. The Council of Mortgage Lenders has done its best to produce one. To take a simple example, there is no league table, as there is for pension funds, of performance. The results of such a simple test should be available to consumers. I hope that the Government will think again. Clearly we shall be examining these matters in Committee. The right signal will be sent—I do not think that there is an enormous gulf between us on this issue—if it is clear to the mortgage lending industry that it will be subject to the same degree of supervision as other players in the market.
Mr. Loughton: I am interested in what the hon. Gentleman has to say. In a way, it is a shame that he was not able to elaborate on his comments in the Joint Committee. During three months of intensive sittings he made two cameo appearances of half an hour each, I believe. As for the inclusion of mortgages, how does he think that the Financial Services Authority will be able to cope with 1.4 million mortgage transactions a year? An enormous number of staff would have to be taken on. How can the hon. Gentleman give an opinion at this early stage on the voluntary code set up for the Council for Mortgage Lenders, which has already brought about many successes, all of which he has conveniently forgotten to mention?
Dr. Cable: The hon. Gentleman has made several points. If he were a member of the Select Committee he would know that I dealt extensively with the mortgage regulation issue during the cross-questioning. The hon. Gentleman referred to 1.4 million mortgages. Regulation would operate through a series of test cases. It is ludicrous to imagine that every mortgage transaction would be subject to individual regulation. Of course that would not happen. There is already a bureaucracy within the mortgage lending industry. It is a voluntary one, but it exists. I think that it is implied in what the Government have been saying that the transfer will take place, be it in six months or 12 months. I am arguing for it largely because of the signals that we need to send to the industry that the transfer takes place now. I do not see the gulf that the hon. Gentleman is describing.
I have already had a fistful of critical comments from the various players in the City about the Bill. We shall come later to our proposed amendments to it. Like the Conservative Opposition, we shall approach the issues constructively. There is no reason to hold back the Bill. I hope that the Government will do what they have already done to a commendable degree: listen to the criticisms that emerge and seek to improve what is already a well above par piece of legislation.
6.9 pm
Liz Blackman: The importance of financial services to the United Kingdom's economy and the high standing of that sector in the global context have been well rehearsed in the Chamber this afternoon. It is essential that the sector should be seen to function efficiently and properly. In recent years there has been damage and some loss of confidence as a result of bad practice.
There is no better example than pensions mis-selling. Such scandals not only affect the standing of financial services but ruin the lives of people who, in the case of pensions mis-selling, saved and invested in good faith, determined not to rely on the state. The Government are to be congratulated on tackling that abuse, but some of the pensioners concerned have already died and some have not yet been compensated. For those people, the torment and worry have been incalculable. There has been widespread recognition that change was necessary, and the Bill and the setting up of the Financial Services Authority have been the response.
I remind the House of the case of the Child Support Agency. No one disagreed with the principle, but the legislation was deeply flawed, with the result that the lives of many women, children and men have been severely damaged. That will continue until new legislation comes on stream. The problems with the CSA in its current form are due to the lack of consultation and pre-legislative scrutiny.
The right hon. Member for Wells (Mr. Heathcoat-Amory), the shadow Chief Secretary to the Treasury, described the original draft Bill in July 1998 as deeply flawed, and did so again this afternoon. However, the draft Bill was clearly intended as the start of a process that would produce much more effective legislation. Indeed, the right hon. Gentleman acknowledged that the process has been useful.
I read in this month's edition of Securities and Investment Review that Howard Davies had described the progress of the draft Bill as taking the scenic route, which I think is a pretty good description, and it is right that that should be so.
My hon. Friend the Member for Huddersfield (Mr. Sheerman) described the scenic route that the Bill took—as it moved forward, the Government offered their response. Not only did the Bill move into the Joint Committee, but responses from the Select Committee on the Treasury and other Committees were taken on board.
Much has been said about the Joint Committee and its role as a prototype. It achieved incredible results over a short period and enjoyed excellent cross-party co-operation. As a relatively new Member in an entirely new set-up, I was struck by the genuine desire on the part of all members of the Joint Committee to get the Bill right. That is extremely important.
The shadow Chief Secretary displayed a positive attitude towards the Bill this afternoon. I read in a newspaper—I know that I should not believe everything that I read in newspapers—that he said that it had rather restored his faith. For those reasons, the Opposition agreed to the carry-over, which is remarkably helpful in dealing with legislation of this magnitude.
I pay tribute to the Chairman of the Joint Committee, Lord Burns, who was exceptional in the way in which he handled the Committee and ensured that we met our tight deadline.
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At the heart of the Bill is the objective of consumer protection and the principle of caveat emptor—buyer beware. That means that the consumer cops it if things go wrong, so he or she should take reasonable precautions. I welcome the fact that the Bill recognises the distinction between the wholesale and retail sectors of the market. I particularly welcome the acknowledgement that, within the retail sector, there are vulnerable consumers and also consumers who are much more able; and the fact that the vulnerable consumers need good advice and accurate information for their protection.
The accountability of the FSA is crucial, and the consultation process has been extremely helpful in strengthening it, in the ways that my right hon. Friend the Chief Secretary outlined earlier. It is right that Treasury Ministers should appoint board members and apply Nolan standards, that the majority should be non-executive, that there should be consumer and practitioner panels, that the FSA should have regard to their representation—it is essential that those two wings of the financial services spectrum be represented—that the chairmen of those panels should be subject to Treasury approval, and that an annual report should be published.
In cases in which the FSA has acted in good faith, it should have immunity, provided that complaints procedures are strengthened. The Government have acknowledged that the investigation of complaints should be effective and independent of the FSA. The FSA is therefore required to maintain an independent investigator, whose initial appointment and its renewal are subject to Government approval. That is absolutely right.
The FSA annual report is clearly important for the transparency and accountability of the authority. The Bill does not require a report on regulatory burdens and compliance costs, but the Government expect the FSA to take them on board and would not hesitate to use reserve powers accordingly. We should all be concerned to ensure good value for money.
With regard to discipline and enforcement, the Government acknowledged in March that internal disciplinary processes lacked fairness and transparency, and that the FSA would be able to act as prosecutor, judge and jury. There clearly needed to be a separation between those investigating complaints and those responsible for decisions. The Government responded by ensuring that investigation would be separate from enforcement, and that the adjudication tribunal would be part of the court service.
With reference to costs and fines, the Government accepted the recommendation that each side should bear its own costs, so as not to deter firms from defending themselves, but that the tribunal should have broad discretion to award costs. Checks and balances will operate. I believe that the Government's conclusion on fines is right: they should be rebated to the regulated community, so that there is no incentive to maximise fine income. Consultation will follow. I favour arrangements to even out the volatility.
The last aspect to be considered by the Joint Committee was the nature of the civil justice regime and how that would sit with the European convention. Lord Stein's comment that
"the new regulatory system must be just and must protect convention rights but…in order to serve the interests of the public it must be effective"

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was a principle reflected in the Government's response to our deliberations on the disciplinary regime.
Discipline is clearly confined to a regulated group. The Government therefore argue that it is a civil matter, and take a pragmatic approach to it. The Government's legal opinion was extremely helpful in providing case law that was quite convincing in support of their approach.
On market abuse, I am pleased that the Government have recognised that they are in danger of venturing into criminal territory, and have provided additional safeguards to ensure that those being prosecuted are covered in that respect.
I, too, am concerned that mortgages are outside the scope of the Bill. Buying a property is the biggest financial transaction that most people make in their lives, and the range of products on the market is increasingly complex and confusing.
I was worried about the investigation carried out by Suffolk trading standards officers earlier this year into the implementation of the voluntary code. Their findings were appalling. I am encouraged that the Government are reviewing how the code is working, and I know that they will look not only at the Council of Mortgage Lenders but at information from the ombudsmen. However, will they also consider asking a sample of trading standards departments to check the effectiveness of the mortgage code? That would be extremely useful. I congratulate the Government on agreeing to publish the review, as promised to the Treasury Select Committee when we carried out our inquiry.
The Government have taken on board a considerable amount of feedback and recommendations. I congratulate them on the extent to which they have consulted and on the model that they have set up for consultation on such large Bills. I slightly disagree with the right hon. Member for Wells, who said in his concluding remarks that the Bill had been delayed for too long and that he looked forward to its Committee stage. The Bill has not been delayed; it has deliberately taken a scenic route to ensure that it is as robust as possible. The impact that it will have on the financial services industry and on individuals will be significantly improved as a result.
6.22 pm
Sir Nicholas Lyell: I am glad to take part in this debate and to share in the welcome for the Bill. I approve of the way in which it has been brought before the House, with examination by a Joint Committee of both Houses before its final publication. I welcome the changes that have been made.
However, we should not underestimate the magnitude of what the Bill does. It is a blockbuster Bill, which will give to a single organisation the powers of nine current organisations, eight ombudsmen and five compensatory schemes, all rolled into one. That is an extremely big task. To a substantial degree, the Bill has an enabling structure. It contains some necessarily elaborate and complex schedules, and a great many regulations will be created following its enactment to establish an effective structure.
I, too, pay tribute to the work of the Burns Committee, but its work was necessarily focused and limited. I was not a member of that Committee, which I understand focused on six different issues. A significant number of other issues need to be examined in Committee, however, and if I find myself participating, I hope that I will be able to help in that examination.
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I shall do no more than touch on a number of significant points today. The Burns Committee rightly focused on the human rights aspect, and the Government have gone a significant way to explaining their position and meeting some of the fears. We shall have to return to the question of human rights. Today, however, I want to point out that the Government—and this applies to any Government—are ambivalent towards human rights. They do not seek to deprive people of human rights: they simply wish to hold all the cards. Be it at the Treasury or at the Department of Health, the Government seem to go for the civil or the criminal method depending on which gives them the better cards.
In the area of financial regulation, the Government believe—and I think they may be right—that the civil structure is the more desirable. I am glad to see that, as a result of the Burns Committee's recommendations, they have added some safeguards to the Bill. However, we shall wish to scrutinise carefully how those safeguards will work, because the difference between civil and criminal in this area is highly technical.
I speak as a practising barrister. Now that I am free to do so, human rights is one of the fields in which I practise. Through my professional work—I declare an interest in this respect—it has come to my notice that the Department of Health, for example, is taking the criminal route and seeking to give enormous powers to the Medicines Control Agency and to reverse the burden of proof on to those who are regulated by the agency, so that they must prove that what the MCA has done is unreasonable. That puts the cards in the Government's hands because the MCA is an offshoot of the Government.
The Treasury has its own offshoot under the Bill and is putting a great deal of civil power into the hands of that new regulatory body. We shall want to scrutinise carefully what it has done. Having read some, although not all, of the advice of my learned friend Sir Sydney Kentridge, I feel that the difference between criminal and civil depends to a considerable extent on European Union law and cases dealing with doctors, financial advisers, and so on, which are held to be regulatory. When we examine this matter, we must look at the substance, not the shadow.
Clauses 24 to 27 deal with the enforceability—or rather, the unenforceability—of agreements. Although I should like to do further work on this matter, I think that we are going down a dangerous route in the Bill, which says that, if a provider is unauthorised, its agreement will be unenforceable. That is dangerous because in the financial world there are sharks on both sides of the fence: there can be shark providers, but also shark purchasers. Rich men and women across the world trade with the City of London, or with any regulated organisation. If their investments, which are necessarily and properly risky, go wrong, they will look for ways to get out of their deal. They will look for technical errors that render the deal unenforceable.
I hope that the Government and their officials will look again at this matter to see whether a wiser course is perhaps not to make things completely unenforceable but to make them unenforceable except by the leave of the court. I hope that the Minister is taking this point in. That means that justice will be able to prevail in each individual instance.
I am not making a small point. I am talking about confidence in the City of London. If the City of London is governed by a regulatory system which means that

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sharks who do business with it can get out of their bargains too easily, we shall lose confidence in our system. I simply flag up that point for further consideration.
The question has arisen whether the chairman and chief executive of the Financial Services Authority should be the same person. We should continue to keep that question carefully under review and revisit it. We are talking about high-calibre people. We have a chairman and chief executive, for whom I have a high regard, who obviously has his own notions about how he will steer his ship. My comments are in no way personal to him. However, as the years have gone by, I have formed the view more and more strongly that nobody should be unanswerable to somebody else. Everybody should be accountable and everybody should have to look over their shoulder. Although much is said about accountability—as it is about transparency and modernisation—the meaning is not entirely clear.
There is a considerable advantage in having a chief executive, however good he is, who also has a chairman to whom he must answer, and in having a chairman who, however excellent he is, has a chief executive whom he has to control and for whom he is responsible. The advantage of having the two, especially when setting up a large and complex organisation such as the FSA—made up of nine different organisations headed by high-calibre people dealing with sophisticated concepts—is that the City, those regulated by it and those outside it, especially independent financial advisers who can work in small firms, have in the chairman somebody whom they can approach with their anxieties but who, if he is not instantly responsible for the issues, can take them up with the chief executive so that the system can work better. The cleverest people in the world cannot do everything, and dividing the jobs would make the structure of the organisation stronger.
During the Bill's progress, we should consider the question of the degree of immunity. On the whole, I favour giving immunity to a body such as the FSA. If such a body does not have immunity, the difficulty is that it is always wondering how much a decision will cost it, which leads to inhibited regulation. The organisation must not be above the law and it must be possible to obtain an injunction against it, but it could be asking too much of it to require that it must always be careful not to cause damage to a financial institution—the damages could be enormous.
I made a similar point in a speech in 1981 about Lloyd's, of which I was a member at the time and in which I declared an interest. I was in favour of its having immunity, although I have considered my position sometimes since. I still think I was right, because although Lloyd's has run into difficulties since, they were not so much structural as in the interstices of the organisation.
In the 20 years I have been in Parliament, we have greatly increased regulation of the financial market, but we have not improved the documentation that goes to the consumer. I have recently been reading mortgage documentation for a member of my family. Mortgages do not yet fall under the system in the Bill, but whether documentation is for a mortgage—in this case, with a market leader—or something else, the Plain English Campaign has made it easier to realise what one does not
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understand. The documentation is cross-referenced and it is difficult to find a single piece of paper that sets out the key elements of the bargain. One finds aspects of the bargain that leave even a commercial lawyer like me scratching his head. When I ring up to try to ask a question, I do not get a very satisfactory answer. We know only too well what someone who is not a commercial lawyer, or otherwise familiar with the financial market, does with such documentation: they do not even attempt to read it. They are right not to do so, because they would become completely befuddled.
It is a good challenge for the new organisation, its chairman and its chief executive to try to simplify the documentation. I recommend following the example of the national conditions of sale for house purchase, which provide on one or two sheets of paper a number of essential and standard clauses. The price of the house and other details are on a separate sheet of paper. It should be possible for almost every commercial contract to have standard clauses that will apply, with non-standard clauses in special type or on another sheet. At the moment, the documentation is grossly over-complex.
The Bill will give us an opportunity to make the improvements I have mentioned. We have much to scrutinise and I look forward to taking part in that. I wish the Bill well, but we have a lot of work to do.
6.36 pm
Mr. James Plaskitt: As many hon. Members have said, the Bill has followed an interesting route to get to its Second Reading, which has shown how good the pre-legislative process is: it is a better Bill as a result. That is not only because of the work of the Joint Committee, of which I was a member, but because of the speed with which the Government responded to our proposals, and their willingness to accept our points.
The nature of the debate in the Joint Committee was healthy and constructive. The debate tonight is beginning to resemble those in the Joint Committee in its character and constructiveness. However, the Joint Committee did not have enough time. As a consequence, there are some aspects of the Bill that it should have considered but did not. I personally regret that we did not have time to make more international comparisons and find out more about other regulatory regimes.
The process was constructive and will provide a useful model for other Bills. It was good for the Bill and good for Parliament. I echo the comments of the right hon. Member for Wells (Mr. Heathcoat-Amory) in praise of the Clerks. The Joint Committee had to absorb an extraordinary amount of information and we had to complete reports at short notice. The processing of our work was always done on time and the results came back to us with impressive rapidity. The excellent Clerks who served that Committee cannot have got very much sleep during the eight weeks for which we were in session, and I hope that they have caught up with it now.
The Bill is large, comprehensive and important and, although it also deals with some narrow and complex financial services issues, we must not lose sight of its importance. It is an important Bill for an industry that plays a crucial role in the health of the UK's economy, and it is an important Bill for consumers—the millions of individuals whose financial health depends on

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good-quality financial services and proper regulation. That makes the argument for good regulation, which is as much in the interests of the companies which make a living providing the services as it is in the interests of the consumers whose future living depends on the vitality and security of the industry.
The industry comprises many large and wealthy institutions, although it is volatile, with much merger and acquisition activity. The biggest players are global, and the products that they bring to the market are dynamic and, in many cases, highly sophisticated. In such a climate, it is difficult, as the Joint Committee came to appreciate, for the regulators to keep up with the nature of the market—and if it is difficult for them, we should realise how difficult it is for the consumer, who is in most instances far less well-equipped.
Moreover, the trends in the financial services market are global. During its evidence sessions, the Joint Committee heard a great deal about the need to safeguard the competitiveness of the City of London as a financial centre—and rightly so—but we also heard a fair few grumbles from companies about possible over-regulation. We heard stories about companies which, for a large number of days in the year, had to meet compliance requirements, or contained regulators engaging in some sort of activities. That struck some of us as rather negative.
I was not really convinced by that, because I think that competitiveness depends on sound regulation. We should reflect on what the impact of too many big scandals in our financial services would be on the competitiveness of the City of London. It would deter companies from being here—let alone the damage that it would do to consumer confidence.
I think that we are in line with many other major financial centres around the world. If anything, the regime introduced by the Bill may strike us as being a little on the light side when we look at some of the other major financial centres. I wish that we had had more time to engage in such instructive work in the Committee. In the United States, for instance, the Federal Reserve is busy sharpening its supervisory focus on the top 20 US banks, because it is worried about systemic risk. Part of the reason for that is the fact that the top 20 own 80 per cent. of the assets of the banking system.
The Federal Reserve is continually monitoring management information in all those banks. It has direct access to their internal audit processes, and—usually on a daily basis—inspects the credit-risk models that they employ. That contrasts with some of the action that we expect the FSA to take, and we should bear it in mind when considering whether the Bill amounts to over-regulation. Indeed, some analysts of the United States market are now saying that the regulatory climate in which certain big US financial companies live is more akin to that inhabited by public utilities than to that of private sector corporations.
The core of the Bill is intended to tidy up our regulatory structure. I think everyone recognises that we currently have too many different regulators. The present situation is costly, inefficient and confusing. I do not think it surprising that most companies that gave evidence to the Committee approved of those core measures, and the introduction of the one-stop regulatory regime.
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Nevertheless—although the Bill does that, and also brings a good many bodies together under one roof—important aspects of financial services are not included. Some—such as mortgages, long-term care and certain features of insurance—have been mentioned today. We have discussed mortgages in some detail. It has rightly been said that they constitute one of the biggest areas of the public's involvement in financial services, in that they represent a long-term commitment, along with savings and investments in private pensions. It is therefore important for the public to have confidence in the regulation of the mortgage business.
Mortgage products themselves are increasingly complex. It is becoming harder for consumers to make choices. Some 1.8 million new mortgages are taken out each year; there is a large turnover, and a lot of new purchasing. For two years the Council of Mortgage Lenders has operated a code of practice, but we have already discussed in the House whether it is sufficient, and we have heard evidence of problems with it. I think that we should expect the inclusion of mortgages in the remit of the FSA before long, and I am pleased that the door is open for that. Clearly, the FSA will have to expand if it is to deal with mortgages: it will need to recruit. I think, however, that it may be able to transfer expertise, rather than having to start from scratch.
Understandably, debates such as this tend to concentrate on practitioners, but the consumer has a considerable stake in the Bill. I think that the position of consumers will be greatly enhanced, as good regulation is clearly in their interest. The FSA has a consumer panel, and, as a result of pre-legislative scrutiny, the panel's role has been strengthened. It has been made a statutory requirement, and the appointment of the chair is subject to Treasury approval. That provides an important extra guarantee of independence from the FSA.
As I said in the Committee, I am still worried about the panel's budget. The panel is starting life with a budget of £420,000. I was pleased with the FSA chairman's commitment that the budget would be considered early in the FSA's operation. once its statutory basis had been conferred—but there is an important reason why I think the panel may be under-resourced.
The Bill specifies one of the FSA's objectives as raising public awareness of financial issues. That is an important objective, but, given that the FSA is putting £1.5 million into it, while the consumer panel is receiving a third of the amount, I feel that there is a bit of a mismatch. I should have thought that the panel would have a role in helping the FSA to deliver its obligation, and I hope that it will be more involved in that work before long.
Consumer confidence will also be helped by league tables. I am pleased to note that, as a result of the Bill, we expect more league tables to be brought into play by the end of next year, to help consumers make informed choices about the financial products that they are buying. That will be useful, alongside CAT—charges, access, terms—standards for individual savings accounts and, eventually, for stakeholder pensions. All that will increase consumer confidence, which in turn will boost the United Kingdom's reputation and that of the financial services and products that we provide.
Accountability was another important subject of the Committee's deliberations. It, too, is crucial to both practitioner and consumer confidence. After all, the FSA

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will be one of the most powerful financial regulators in the world. It has the status of a private company, limited by guarantee, and, as has been said, it enjoys statutory immunity from suits for damages. I am sure we all understand why that is the case, and should continue to be the case. Nevertheless, some companies expressed fears that the FSA might be prosecutor, judge and jury, and in that context many issues surfaced in regard to whether it complied with the European convention on human rights.
I think we have established, as a result of the improvements in the Bill that have arisen from the Committee's work, that those fears are unfounded. The Treasury will inspect the FSA's economy and efficiency. The authority will have to publish an annual report, including an auditors' report. There is to be an independent investigator. We have established that the tribunal is one of first instance. There is now no incentive for the FSA to maximise its fine income, and there is a far greater and clearer separation between discipline and enforcement. I hope that the industry will find all that sufficient to offset its initial worries about the FSA's statutory immunity.
It is worth pointing out that statutory immunity is quite common in such supervisory regimes. It applied to the Bank of England when it performed those functions. It is also worth remembering that the FSA is not immune from acts of bad faith, criminal prosecution, judicial review and, of course, challenge under the European convention on human rights.
Pre-legislative scrutiny has improved the regime in relation to market abuse. The industry cannot now argue convincingly that there is too much uncertainty about what constitutes abuse. In any case, it is crucial to have strong deterrence against market abuse; it is one of the essential purposes of the regime. Like all other aspects of the Bill, it is in the interests of consumers and companies alike.
Current criminal sanctions are not sufficient on their own; they cover only a limited range of defined abuse such as insider trading. It is clear that the anti-abuse regime needs to be broad because of the dynamic and constantly moving nature of the market, but, as we have already established in the debate, it is right that practitioners should know where the boundaries of abuse lie—hence the code of market conduct, which will be an important document for all practitioners.
As a result of our pre-legislative scrutiny, we have improved the degree of certainty and clarity. The industry should be reassured about that. We have established that the Bill provides an absolute defence where a person engages in behaviour that the code specifically states does not amount to abuse. Furthermore, where someone can prove that they took due care, their subsequent conduct will not be deemed abusive.
In their latest response to the report, the Government have given an undertaking that the code will be supplemented by further explanatory information, all the time trying to improve clarity and certainty for practitioners, so the accusations or fears of double jeopardy and so forth have been exaggerated. Today, we have heard from the Government that even further clarity will be offered. That will no doubt receive the attention of those who serve on the Standing Committee.
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We have managed to succeed in keeping a breadth to the anti-abuse regime, which is essential, while improving its certainty and clarity. It will always be a balancing act. It will be difficult to get it absolutely right, so the code of conduct will have to be kept under constant review as markets and products change.
Overall, we have erred generously towards the interests of the industry. The only people worrying are those who may consider sailing close to the margins of abusive behaviour. They are the people who should worry—that is how it should be.
All in all, therefore, the Bill contains a coherent model and constructive regime. It will be good for consumers, the industry, the City of London and the United Kingdom economy.
6.53 pm
Mr. John Greenway: I am grateful for the opportunity to contribute to the debate.
I begin, as the hon. Member for Warwick and Leamington (Mr. Plaskitt) did, by saying that there is no question but that the debate is crucial to everyone in the country: not only consumers but our financial services industry. The Chief Secretary to the Treasury reminded us that we have a world-class industry. Indeed we do, but we should remind ourselves that it became world class because of the regulatory regime in the City of London. Despite difficulties in the retail sector, the general regulatory structure that we have enjoyed in the City—as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) knows from daily working experience—has enabled innovation to flourish and brought to London major centres of banking and insurance, and an increasing number of financial services from not just Europe, but throughout the world.
The all-party group on insurance and financial services, which I have had the fortune to chair since 1992, has had numerous meetings with the industry and market, and received many representations from them over quite a number of months. I say genuinely to those hon. Members who have contributed who were members of the Joint Committee that the industry's view is that they have done an extremely good job. It is much more relaxed than it was perhaps six or nine months ago. There is still some apprehension about what the rule books will look like and how the new regulatory regime will work in practice, but it is fair to place on record the industry's gratitude for the work of Lord Burns and his Committee of members of both Houses.
The representations and meetings that the all-party group has had have been, as they are by nature, rather more informal. I sometimes wish that we had the resource of the clerical assistants that the Joint Committee has had. None the less, the group has had an interesting exchange of views and has helped to bring progress on the Bill to where it is today: it is much improved.
I want to speak mainly from the perspective of my long experience of working in the insurance and financial services industry, which has gone on since 1970, when I left the police. I worked for Equitable Life and National Provident Institution, which have both been much in the news lately in circumstances that, when I was working for them, no one would possibly have considered likely, but that is how things move on.

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Since 1973, I have been an independent financial adviser and insurance broker. Even since being elected to the House in 1987, I have retained a directorship as both an IFA and insurance broker. I am president of the Institute of Insurance Brokers. More important in terms of what I will discuss, for eight years, I have been an elected member of the Insurance Brokers Registration Council, the regulatory body for insurance brokers. I am currently the council's treasurer.
The Bill still leaves uncertain the regulatory arrangements for the independent sector, whether IFAs, intermediaries in the general insurance market or insurance brokers. I want in all genuineness to convince the House that, although my comments will clearly be influenced by special pleading—it would be impossible for them not to be because of the experience that I have had—equally, I plead for a clearer regime for consumers. At the moment, we have a recipe for confusion. We are still a long way off from being satisfied that the consumer interest has been adequately protected.
The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) asked the Chief Secretary about mortgage and general insurance regulation. I understand entirely the motivation for wanting to retain a self-regulatory approach in mortgage advice. I understand the objectives of the general mortgage code and, equally, the philosophy that lies behind the request for the general insurance industry to find a more comprehensive regime.
Therefore, on principle, I should like to make it clear—particularly to my hon. Friend the Member for Arundel and South Downs—that self-regulation is undoubtedly to be preferred. Nevertheless, in advice on both mortgages and general insurance, we have to face up to the fact that significant hurdles will have to be overcome if we are to achieve a satisfactory self-regulation regime.
One hurdle will be the major concerns about enforcement. In the general insurance market—particularly among insurance brokers and intermediaries—there is real anxiety that regulation will become merely a distribution tool, with standards being enforced and discipline imposed by withdrawing agency. Currently, such withdrawal underpins the mortgage code, as lenders will end one's ability to arrange mortgages if one does not comply with the code. Although some might think that such a sanction would be satisfactory for the general insurance market, its possible use causes anxiety as it would not be underpinned by statute or enforced transparently.
There is also a great possibility that the arrangements would create confusion among consumers. In opening the debate, the Chief Secretary mentioned one-stop shops. However, the retail financial services market does not have anything like a one-stop shop.
People who seek mortgage advice from intermediaries—who have to be registered with the Insurance Brokers Registration Council only if they call themselves a broker—will receive advice on life assurance; perhaps on investments; on whether they require health and sickness cover; on unemployment benefit, if they have been laid off work; and probably also on insuring building and contents.
The Government's proposals, however, would entail advice on those various matters falling into three different regulatory categories. Advice on mortgages, for example, would be covered by the general mortgage code, whereas
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advice on life insurance policy would have to be authorised advice—so that the firm would have to be authorised directly by the Financial Services Authority. Advice on other general insurance products—setting aside the issue of whether health and sickness insurance cover will be covered by the FSA-authorised regime—would be regulated by the General Insurance Standards Council.
Such an arrangement does not come close to resembling a one-stop shop. However, that arrangement would have to be used every second of every minute of every hour of every day, in every high street across the United Kingdom. Although the system might work, we have to face the fact that it cannot be characterised as a one-stop shop. Moreover, if firms are authorised—as their stationery letterhead will state—"by the Financial Services Authority for investment advice", and if something subsequently goes wrong with a mortgage or general insurance policy, consumers will not understand why the proclaimed FSA authorisation does not apply to those products.
There may be some scope for doing something about those potential problems. Clause 111—which I do not remember reading in the draft Bill—on non-regulated activity rules, states that the FSA may make rules
"applying to the carrying on of non-regulated activities"—
such as mortgage and general insurance advice—
"by authorised persons".
I hope that my hon. Friend the Member for Arundel and South Downs will explore that issue in Committee.
I should like to make it clear to the Minister that the proposed arrangements will certainly not enable a one-stop shop, and that there may not yet be a case for giving the FSA power directly to authorise all those activities. However, there must be a case for ensuring that regulation of non-authorised activities is not merely adequate, but equivalent to current best practice and appropriate to risk. There must be a clear complaints mechanism, with access to redress and compensation. There is clear provision for such a mechanism in dealing with authorised products, but it is not clear how such provision would apply to non-authorised activities.
As a regulator for eight years with the Insurance Brokers Registration Council, I have experience of how such concepts and provisions work in practice. I also think that the Financial Secretary, and certainly the Economic Secretary, will know that I am disappointed that the Government have announced that they are minded to repeal the Insurance Brokers (Registration) Act 1977 and to get rid of the IBRC.
Page 4, paragraph 12 of the Bill's explanatory notes states that the Government continue to hold the view that substantial parts of the 1977 Act, which established the council, should be repealed after the Bill's provisions are implemented. It is fair to say that the Bill, which I have read, currently does not provide for repealing those provisions. I should therefore be very grateful if the Minister could, either today or in a letter, tell me by what process the Act's provisions would be repealed.
When replying to the hon. Member for Newcastle upon Tyne, Central, the Chief Secretary said that the Government supported the concept of establishing a General Insurance Standards Council. Although the Minister may be aware of it, other hon. Members may not know that that proposal has not met with universal

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acclamation within the general insurance industry. Some people might like us to believe that the proposal has received such acclaim, but the truth is that many insurance brokers and non-broker intermediaries have serious reservations about it.
I should like to establish some facts. The first one is that brokers effectively volunteer to be registered on the list, so that, if they are disciplined and struck off, they may continue in business if they call themselves not insurance brokers, but consultants or intermediaries. Over the years, many small firms have been disciplined by the council and chucked out, but—if insurers were prepared to do business with them—remained in business.
In fairness to the Association of British Insurers, I should say that, gradually, many insurers are whittling away at the number of less reputable firms. Nevertheless, people are on the list entirely voluntarily; no one is forcing them to be on it. Conversely, those who give investment advice must be authorised by the Personal Investment Authority and the FSA.
Although the Government announced last year that they intended to repeal the 1977 Act and to get rid of the IBRC, as council treasurer, I am able to tell the House that more than 80 per cent. of insurance brokers have paid their 1999 membership retention fees. I believe that they have done so not only because they believe in the council and in high professional standards, but because they wish to belong to a discrete body that provides a badge of that professionalism.
Recently, and partly at my instigation, the Institute of Insurance Brokers conducted a survey of the approximately 2,700 insurance broker firms who remain on the register. Over 50 per cent. of firms responded to the survey, of whom 86 per cent. said that their preference would be to keep the council and not to be forced into the General Insurance Standards Council. If the firms that have not paid their membership fee are taken out of the survey, the figure rises to more than 90 per cent.
I make it clear to the Minister that we are not objecting to the creation of the GISC. On the contrary, insurance brokers welcome that and over the years have campaigned time and again for standards to be raised in the non-broker general insurance retail market. We welcome all moves to raise standards, especially in the non-broker sector. Equally, we are not saying that all insurance brokers are saints and angels, because clearly some are not, but the majority are brokers because they want to be seen as professional.
Why should we be so concerned? I remind hon. Members that, through the 1977 Act, Parliament provided the structure under which the Insurance Brokers Registration Council operates. Although that structure was not perfect, and we would have liked some changes to have been made over the years, it is important to understand why we believe that it has strengths. The majority of people on the council are elected to it by their peers and we have a clear disciplinary structure. Disciplinary hearings are held in public and there is a right to appeal to the High Court.
A broker who was struck off last year has appealed to the High Court because he thinks that he has been wrongly done by, which is far superior to simply taking away someone's agency because we say he has broken a
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rule that we created. There is no transparency and nothing that can inspire confidence in such a system. We have a proper code of conduct, enforceable client fund segregation and a grant and compensation scheme.
I have had the onerous duty—I am not sure that it was a pleasure—of having to agree with the FSA that the council will raise a levy of all registered brokers to contribute towards the compensation of losses from insurance broker firms that are in default in respect of about 130 cases of pensions mis-selling and the loss of more than £1 million through staff embezzlement at a firm up in Scotland. The professional indemnity insurance does not cover that so we have raised a levy and people are paying it. We have proper monitoring of professional indemnity insurance and solvency. My hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) said earlier that it will cost £4,000 for a solicitor in Scotland to be registered with the FSA, but it costs an individual insurance broker £60 and an authorised firm £325 to be on our register each year, so reasonable cost is clearly a factor.
I have outlined all that to make the point that the GISC is miles away from showing such equivalence. I welcome the fact that the chief executive of GISC, Chris Woodburn, who has been recruited from another regulator, has said that he wants to meet IBRC standards. That will be a tall order without a statutory structure. The other serious point is that we believe that he should concentrate on the non-broker part of the general insurance market because that is where the problems are.
I would wager that Members of the House have constituents who have complained about an insurance product that was sold to them and for which they could not get redress. A major reason for that is that such policies are sold not by insurance brokers, but by nonregistered intermediaries. Such people are independent and are not the responsibility of the insurer. Consequently, there is no redress, no compensation and no complaints mechanism. Standards clearly need to be raised, but how they will be enforced without statutory underpinning and the transparent disciplinary process to which I have referred remains an unanswered question. I do not believe that the threat of agency withdrawal is an adequate solution.
There is concern that regulation will become an instrument of controlling distribution and I suspect that, if hon. Members across the House share a concern, it is not the globalisation of the industry, but the fact that the big get bigger and bigger by the day. Three or four of the biggest firms control a great volume of business, which is not a bad thing in respect of ensuring that we can compete in world markets. Competitiveness has been one of the factors behind some recent mergers of general insurers and I saw in my paper yesterday that CGU and Royal and Sun Alliance may merge. Such a company would be a big player.
The danger of having self-regulation instead of regulation underpinned by statute with transparent standards that apply to all is that the big boys will get away with it and the little guys will get hit for six every time. That is not only me speaking. I am not sure whether the hon. Member for Edmonton (Mr. Love) was present, but the all-party group had dinner with the Association of Insurance and Risk Managers the other day and its

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concern on this very point was how the GISC will deal with malpractice in the big broker firms. We know how it will deal with the little guys.
The situation is not satisfactory and a lot of work has to be done. I hope that the Minister will listen to a constructive solution. We are not against the GISC—we welcome it—but it has to be given time to put right what needs putting right in the rest of the general insurance market. It also needs time to show that, although it will not be part of the FSA, it will be able to meet consumer needs and expectations wholly satisfactorily. The need for statutory regulation would then be avoided.
In the meantime, the registered insurance broker community should be left alone to get on with things. There is a great deal to be said for continuing the work that we are doing. We are some way off reaching a stage at which the GISC could apply to registered brokers. In any event, why should anyone want to stand in the way of professional insurance brokers maintaining their own professional body? Solicitors and accountants have the Law Society and the Institute of Chartered Accountants respectively.
All we in the insurance broker community are asking—particularly those in the provincial insurance broker market, although similar concerns are being expressed to me by some of the smaller London brokers who are Lloyd's brokers—is why people should want to stand in the way of allowing us to maintain our own professional body with our own disciplinary arrangements? I am sure that insurance brokers would meet whatever standards that the GISC decides that it needs to impose. We want it to bring the rest of the market up to our standards.
Unless we do something along such lines, what the Government are trying to do will not work. Unless consumers have confidence in the organisations that are supervising and regulating the activities of people who give them advice—not only about investments that have to be authorised, but about other financial services products that the Government are not minded to authorise—not only will consumer confidence be affected and that element of the proposals fail, but the Government will be seen to have failed in their wider objective of cleaning up the entire industry.
For that reason, the smaller voices of those in the independent sector who have genuine concerns about their future need to be listened to. Above all else, they know that their future lies in satisfying their policyholders and consumers, many of whom have been on their books for years. It is in their interest to keep those customers so they want a regulatory regime in which both sides can have confidence.
7.20 pm
Mr. Nigel Beard: The complexity of a modern industrial economy obscures the fact that social, financial and legal obligations all depend on trust. We must trust that what is said about goods on sale is true, that a manufacturer who places goods on the market will have them fairly judged against competing goods, that investments will be safe and that returns—perhaps years later in the form of pensions—will be as promised. We must trust that insurance companies will pay up when the occasion arises. We must trust that money invested will be honestly applied to the advertised purpose. Politically, we trust that if people can make a
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fair choice between goods and services, and if financial resources are allocated according to those priorities, we shall have an efficient and effective economy.
That will not happen if we allow events to take care of themselves. The right conditions must be created by Governments. That is not done by central planning that is too insensitive to allow for the variety of choices that people make and too inefficient to allow finance to be invested according to those choices. But nor will the right conditions be created by the disappearance of Governments from the scene, as the zealots of laissez-faire would have us believe. That would give neither a clear expression of people's choice nor an allocation of investment to match their choices, but would, as in the 19th century, create a financial oligarchy that ran things in its own interest. Unbridled laissez-faire ends in mobster oligarchy, as we have seen with the replacement of the communist elite of the Soviet Union.
There is a third way. Political democracy can create and define conditions for economic democracy by making sure that the sovereign choice of individuals is neither fettered nor deceived, and by creating a situation in which financial choice and allocation are made with the fullest possible knowledge of the risks and rewards, and in which the corruption of self-interested manipulators is eliminated.
The Competition Act 1998 was one leg of such a policy. The Financial Services and Markets Bill is a second leg. It is a regulatory measure, but one welcomed by financial and public interests. The essence of successful regulation lies in achieving a balance between countervailing forces, and the Bill achieves that balance. The novelty of pre-legislative scrutiny by a Joint Committee, on which I had the privilege to serve, contributed to the balance, as did the open-minded and constructive response of the Government to our reports.
The speed of change in today's financial markets makes it essential that the Bill should be adaptable. If it is not, it will rapidly become out of date. Natural justice requires that regulations are clear and certain so that no one is in any doubt about what is or is not permitted. An important balance must be struck between adaptability and certainty. That has been done by leaving detailed definitions to delegated legislation and codes or guidance to be produced by the Financial Services Authority. Detailed provisions can then be readily amended in the light of experience and changing market practices.
British financial services have an admirable reputation for innovation. The scale of operation and the climate of innovation attract operators to London rather than other financial centres. Neither innovation nor London's reputation would be served by lax regulations, but innovation would be suppressed if regulations were too prescriptive. If regulation extended to giving an official mark of approval to certain products or services, the entry to the market of those products would be inhibited and innovation slowed down. The Bill deliberately avoids that problem.
Similarly, if regulation added substantially to the costs of services, operators could be induced to move to Frankfurt or New York. At present, London's regulatory costs are among the lowest in the world, but they must be monitored to ensure that the position does not change. Provision is made for the publication of comparative regulatory costs in the annual report of the FSA.

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The overwhelming weight of evidence to the pre-legislative Committee came either from financial services practitioners or their collective associations, or from lawyers serving practitioners. Their concerns tended to be amelioration of disciplinary penalties and elaboration of FSA procedures in the interests of practitioners. Members of the Committee needed to compensate with a conscious concern for the general public—the so-called consumers.
The balance between practitioners and consumers also arose in dealing with the Bill's caveat emptor—"let the buyer beware"—provisions. Practitioners tend to say that customers should be responsible for their own choices, and that it is not the practitioners' responsibility to ensure that customers know what they are signing up to, but the general public cannot be expected to have the same knowledge of the market as those who are engaged in it day by day.
There is a profound split in the community of financial services practitioners, characterised by the terms wholesaler and retailer. Many practitioners who deal mainly with other practitioners—the wholesalers—have expressed the fear that the regulatory regime, needed to protect the general public, will be irksomely restrictive for them. However, light-touch regulation appropriate to those with professional knowledge, who can look after themselves, would leave the general public exposed and unprotected if it were applied to retailers—those practitioners who deal with the general public. It is crucial to the fair working of the Bill that the FSA should recognise the distinction between the needs of wholesalers and retailers in their day-to-day operations and in the culture of their organisation.
The Bill has both a service and a geographical dimension. The Joint Committee felt that the scope of the legislation should include mortgages and long-term care insurance. Mortgages are the main financial transaction that most people will ever undertake. The division between fixed and floating rates and the conditions for transferring from one to the other have made mortgages more complex, and there is a record of mis-selling of endowment mortgages. Most firms selling mortgages will come within the provisions of the Bill for related services, but the Government wish to see how the scheme launched by the Council of Mortgage Lenders will work before making a commitment to include mortgages in the Bill. As the scope of the legislation is a matter for secondary legislation, the inclusion of mortgages and long-term care insurance need not be decided now. Although the Council of Mortgage Lenders scheme might work, it would, if made permanent, conflict with the idea that the FSA should be a one-stop shop for financial services regulation.
The Channel Islands and the Isle of Man are excluded from the geographical scope of the legislation. Clearly, if the regulatory arrangements in those two offshore havens are to be more indulgent than those within the United Kingdom, business could transfer to them once this legislation becomes law. The Government will need to decide what steps are to be taken to avoid that.
The wide-ranging commitment for the FSA to consult before finally formulating rules, codes of practice or guidance is formalised by the establishment of consumers
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and practitioners advisory panels. That listening culture will seek to ensure that regulation is by consent and will enhance both public and professional confidence in the FSA.
Nevertheless, the disciplinary and enforcement provisions of the Bill are vital. When fortunes may be made by a breach of the rules, the means of enforcing them against organisations and individuals must be certain and the penalties must be deterrent.
Much of the comment on the Bill has been to ensure fairness to organisations and individuals in the disciplinary and enforcement procedures. That is important, but fairness is not served by making procedures over-complex, legalistic and protracted. In the vast majority of cases, both the FSA and those subject to disciplinary penalties have an interest in a speedy settlement of any issue.
After much debate, a balance between speed and legal procedure has been struck. Internal hearings by the FSA will provide for speedy resolution of cases, but where anyone feels that that has not delivered a fair judgment, the case can be dealt with by a tribunal applying more formal procedures.
The effective functioning of the FSA in enforcing its rules through these procedures depends upon staff freely exercising their judgment on the merits of any case. Those judgments would be distorted or become over-cautious if staff were constantly afraid of a civil suit for damages arising. Thus they are given a statutory immunity to civil liability in the discharge of their duties, as are the staff in regulatory organisations in many countries.
There is a gap between the provisions in the Bill for disciplinary and enforcement proceedings and the much more serious cases of insider dealing, misleading the market and market manipulation, which fall within the criminal law. The Bill fills that gap with provision for the FSA to deal with market abuse in those cases that are not covered by existing criminal law.
A major concern of the pre-legislative scrutiny has been to ensure that the FSA procedures proposed for discipline and enforcement and also for market abuse cases are compatible with the European convention on human rights. Legal opinion varies on just where compatibility lies. The position presented in the Bill is a good balance between those opinions. Essentially, in market abuse cases the defendant will have the safeguards of criminal procedures, whereas in all but the most serious disciplinary and enforcement cases civil law procedures will apply.
Exactly which serious cases will require criminal procedures, or indeed whether any will, is now the very limited area of uncertain compatibility with the ECHR. That question may be dealt with either by the progressive establishment of case law or by the FSA taking the precaution of applying criminal procedures to those cases that it deems serious. That limited grey area does not warrant the claim that appeared in The Daily Telegraph last week that the legislation is deeply flawed; it is not. However, it is important to have dealt with this issue exhaustively at the legislative stage. Otherwise, there was a danger that the courts might strike down significant parts of the Bill and leave no legal basis for regulation in those areas.
The Bill makes the Financial Services Authority one of the most powerful and wide-ranging regulatory authorities in the world. The future of financial services and markets

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in London can be enhanced or diminished by the way in which it discharges its responsibilities. Institutions may be closed as a result of its actions and individual careers terminated. In many respects, it is effectively defining the law as applied to the various organisations of the finance industry. It is reasonable, therefore, that the accountability of the FSA should be in the forefront of many people's comments, as it has been.
That accountability has many dimensions. The Treasury will appoint the board with a majority of non-executive directors. Executive directors will be subject to confirmation hearings by a parliamentary Committee. An annual report will be published covering a prescribed list of topics, which will be reviewed by a parliamentary Committee. Panels representing consumers and practitioners are established in the Bill and their observations will have to be answered. There is an all-pervading expectation of consultation before codes of practice or guiding principles are adopted. The Treasury will have the power to commission independent reports on the efficiency of operations and there will be an independent investigation of complaints.
The question is not so much the accountability of the FSA as the impact of all those strands of accountability on the day-to-day effectiveness and flexibility of the organisation. No doubt custom and practice will evolve a settled arrangement that balances accountability with effectiveness, but it is an issue that the board, the Treasury and the parliamentary Committee may well wish to review from time to time.
The existing self-regulatory arrangements for the financial sector of the economy are widely recognised as costly, inefficient and confusing for practitioners and public alike.
The Bill provides for a single regulator with statutory authority to replace nine regulators for different parts of the industry.
Scandals such as pension mis-selling, Barlow Clowes, BCCI and the collapse of Barings bank have disfigured the industry and jeopardised both market and public confidence. At the same time, the globalisation of the financial markets has given them a huge unaccountable influence over public policy and the daily lives of citizens in this country. It is damaging to those financial institutions and to democracy itself if they are popularly felt to be beyond the law.
Global markets make it essential that national regulatory authorities co-operate in taming what could be maverick forces distorting the world economy. The FSA will be able to co-operate in international regulatory arrangements with credibility derived from the powers and responsibilities set out in the Bill.
The public interest is secured without the threat of a heavy-handed and remote regime damaging a major sector of the UK economy. The Bill is not a behemoth designed to subdue and coerce. Any such fears are groundless. It aims for regulation by consent of the industry, with its substantial powers of enforcement applied as much for the good of the industry as for the public interest.
It is to the Government's credit that they have not allowed the existing inadequacies merely to drift but have had the courage to tackle this complex issue comprehensively as a major contribution to modernising the British economy. I am pleased that the Bill will have the confidence and support of both sides of the House this evening.
7.38 pm
Sir Peter Lloyd: I agree with much of what the hon. Member for Bexleyheath and Crayford (Mr. Beard) said. In particular, he was right to say that the Financial Services Authority will need to cater for the differences in the retail and wholesale selling of financial products. I do not think that that has been emphasised enough this evening.
First, I must declare an interest as a member of Lloyd's, although I shall not comment on the part of the Bill that deals with that much-tried organisation. Instead, I start with the general observation, which has already been made by both Front-Bench spokesmen and by most of those who have spoken in the debate and which will no doubt be repeated before it ends, that London is a hugely successful financial centre, which attracts business and practitioners from all parts of the world, to the economic benefit of the United Kingdom economy.
Despite several highly publicised scandals and failures, London has continued to flourish because financial organisations, and their customers at home and abroad, find that it is the best place to do business, and because the regulatory system compares favourably with those in financial centres in other parts of the world. The recent survey compiled by the London chambers of commerce attests to that. The comparative lightness, flexibility and honesty of our system is the attraction. With the Bill, the test for Parliament and for the Government is so to improve the regulatory regime that scandals are reduced—if not eliminated—without reducing the attractiveness of London to honest businesses from all over the world.
It is a truism to say that we live in a global market, but financial institutions can certainly relocate easily to more congenial environments in other parts of the world. The Bill will fail dismally if, along with eliminating the scandals, it manages to prevent businesses from coming here.
It is sometimes argued that a Bill such as this must strike a balance between commercial freedom and the protection of the customer. That analysis is not right. I am sure that a major reason that foreign firms locate in London is the honesty and reliability of the institutions with which they deal here—including the regulatory system. Firms with good products to sell cannot compete to best advantage if the market is not open and transparent. What is good for markets, competition and customers is bad for crooks and incompetents.
The Bill will be judged on how well it helps markets to work better; there is no underlying conflict between service providers and customers. However, that simple truth could be lost in the complexity of this measure and in the considerable discretion that will be left—quite rightly—to the FSA and its staff. I am glad that the four principal objectives of the authority have been set out in the Bill: market confidence; public awareness; protection of consumers; and the reduction of financial crime. The FSA will have those objectives before its collective mind and knows that it will be judged on them. My only complaint is the same as that made by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory); he said that there should be a fifth objective—the encouragement of competition. He is right. because

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competition is one of the best guarantees of good service to consumers and customers; that objective should also be at the front of the Bill.
Mr. Beard: If the prime purpose of the FSA was to promote competition, it would undoubtedly inhibit it from co-operating internationally with other regulators. They would feel that they were being duped in a ruse to stimulate competition in the UK. That would remove one of the great powers of the authority under the new arrangements: that it can co-operate internationally and can contribute to an international regime of regulation.
Sir Peter Lloyd: That is not true at all. Competition—internally, nationally and internationally—is highly desirable for all customers and consumers. It should be the objective of all regimes in this country and abroad. I do not accept the point made by the hon. Gentleman. It troubles me that he thinks that such an objective would make it difficult to co-operate with regimes abroad. We should not go along with them, as he suggests; they should bring their attitudes up to date in the interests of their own customers, consumers and businesses.
Like other hon. Members who have spoken in the debate, I am glad that the Government want to build on the existing structure, eliminating its shortcomings, rather than starting again from scratch. The Government were wise to proceed by consultation. The first draft of the Bill smacked too much of the Star Chamber; it was much improved as a result of the brief report of the Treasury Committee and of the fuller deliberations of the Joint Committee. As several hon. Members have pointed out, we shall need continuing parliamentary scrutiny of the FSA's use of its powers. The authority will need to be overseen regularly by a Select Committee, taking regular evidence—not merely by occasional debates in the House or a by debate on an annual report. Parliament needs to examine the authority regularly, thoroughly and carefully, through a Select Committee, so that Parliament and the public can see how the authority is working.
Part of the Bill's purpose is to streamline the bewildering array of regulatory bodies and bring them together under one roof so that the public will more easily know where to take their complaints. There will be greater consistency in the rules and their application; and duplication, and hence costs, will be reduced. However, the trouble is that large conglomerates can end up by being more, rather than less, expensive. I trust that there will be a mechanism to ensure that value for money audits are regular and searching; they should not merely publish comparative statistics, which people can take or leave, but should make an active and dynamic inquiry into the organisation of the FSA and whether it uses its powers cost-effectively. I hope that the Economic Secretary will say something about that matter when she winds up. It is important for London as a financial centre that regulation is economical as well as effective.
The Chief Secretary spoke approvingly of one-stop shopping as one of the Bill's objectives, although my hon. Friend the Member for Ryedale (Mr. Greenway), who is no longer in the Chamber, had some doubt as to whether the Bill would achieve that objective. The problem of one-stop shopping is that the shop assistants may not know well the needs of their different types of customer,
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or the characteristics of their different suppliers. At least the old system encouraged regulators to build up an intimate knowledge of their specialist area, although it failed dismally in respect of the mis-selling of private pensions. However, it is not obvious that the new system proposed in the Bill, in which the FSA will stretch across a range of different financial markets, will be any better. When all is said and done, why should the FSA be any more aware that things are going wrong than the organisations that it will subsume? That short question goes to the heart of the Bill and of the benefits that it is supposed to produce. I hope that the Minister will address that point.
Large organisations tend to develop a corporate approach; indeed they usually take pride in doing so. A real danger is that the FSA may try to deal in much the same way with very different market sectors, and with different customers with different requirements. That will cause harm to the markets and disbenefit to the customers. Having been put together as one seamless organisation, the FSA will need to decentralise and specialise, if it is to know its constituent markets intimately and to regulate flexibly and effectively. I hope that the Minister will tell us that she is aware of that potential problem, and will explain why she is confident that it will not become an actual problem.
The most glaring shortcoming of the original Bill was in the Star Chamber powers that it gave the FSA and the apparent assumption that they would be used in a Henry VIII fashion. Thanks to the Joint Committee and the Government's response to it, the Bill is greatly improved in that respect, although I fear that, in parts, it may have moved only from the 16th to the 18th century.
I am concerned that, in investigations that involve companies or individuals regulated by the FSA, there is, as I understand it, no right to silence or legal aid, and the burden of proof is only that of the civil courts, even though someone's reputation and livelihood is at risk. Despite the Minister's assurances in his opening remarks, I am not convinced that the original criticism of the Bill—that it makes the FSA prosecutor, judge and jury—has been entirely met by the recent changes. The concerns expressed by my right hon. Friend the Member for Wells still need to be addressed.
I shall not ask the Minister to respond to all of those points when she replies to the debate, not only because I have already asked enough questions for her to deal with this evening, but because that whole area is so crucial and so complex that it must be dealt with point by point in Committee. Scandals in the City have not always lain in the failure to protect customers and the public; sometimes, they have lain in what appears to be the heavy-handed and unfair way in which the authorities have occasionally proceeded against an alleged rogue trader whom they happen to have had in their sights. Such spectacles have not enhanced the respect in which the regulatory system is held.
I am glad that the Government decided to include caveat emptor in the Bill. The customer is best served if he understands that he must look out for himself. If the Government, by their legislation, give the impression that they have eliminated risk, they will have done the customer a disservice, because it will not be true, or, alternatively, it will mean that they have so circumscribed financial institutions that their risk-free products are hardly worth buying.

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What customers require is well placed confidence that they will be dealt with honestly—that they will be given sufficient information to make a reasonable assessment of risk, and objective advice that is appropriate to their level of experience and knowledge and their needs, so that they can use that information well. If the Bill ensures that that happens in future more often than it does now, without inhibiting the development of services that financial services institutions are in the business of offering, it will have justified both the support it has received from hon. Members on both sides of the House today, and the time and effort that has already been spent and that is still needed in Committee to improve it still further.
7.53 pm
Mr. David Kidney: I am pleased to hear so many constructive comments from right hon. and hon. Members on the Conservative and Liberal Democrat Benches. I especially liked the description of the Bill as a blockbuster, because I intend to concentrate on the new market abuse regime, which I am certain will be big at the box office. Today, we are all engaged in the process of creating a single modern regulator to oversee complex and sophisticated markets and a financial services sector that contributes hugely to the UK's wealth. As we do so, the eyes of the world are on us, for I am sure that others will follow where we lead.
As others have already explained, the process has been open and consultative: it started with the publication of the draft Bill last July, since when two reports of the Joint Committee have been published. There is nothing new to say about the process so far, save that public and professional interest in it has not flagged, as was most recently evidenced by the packed meetings of the Joint Committee whenever it sat in public. As the right hon. Member for Wells (Mr. Heathcoat-Amory) said, the process continues after tonight, with consideration of all the many new clauses that have escaped our scrutiny thus far—for example, those relating to open-ended investment companies—and the innovative process to carry over the Bill between Sessions.
However, as I said, I intend to concentrate on the market abuse regime—a new civil regime proposed to deal solely with market abuse. Clause 95 sets out the sort of behaviour that is regarded as unacceptable. The new regime is intended to complement the existing criminal law controls over insider dealing and market manipulation. I shall briefly explore three questions: why is the new regime needed; how will it work; and what are the European convention on human rights implications?
First, why is it needed? It is fair to say that we have a poor record on detecting the existing criminal offences. I hasten to add that it would be wrong to apply a new civil regime solely for the purpose of making it easier to catch criminal wrongdoers by widening the range of conduct that may be caught and lowering the standard of proof needed to prove our case. However, it is an inescapable fact that existing criminal offences have not been adequate to control market abuse misbehaviour.
The Department of Trade and Industry publication "Companies in 1997/98" tells us that, in the past five years, 126 cases have been referred to the DTI for investigation, but that, in the same period, there have been only five convictions for insider dealing. I suppose that an optimist would cite that as evidence of there being
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hardly any misbehaviour in the markets, but I doubt that such a claim could be sustained. The London stock exchange annual report for 1997 offers a glimpse of the pyramid of regulatory activity that precedes DTI referrals: there are about 50 potentially suspicious trades a day, and, in a year, more than 1,000 merit further investigation.
Moving the target slightly, to money laundering, in a written submission to the Select Committee on the Treasury on the subject of "money laundering suspicious transactions", the British Bankers Association tells of the number of reports rising from 490 in 1987 to 14,129 in 1998. Little wonder that one of the FSA's four regulatory objectives is to be the reduction of financial crime. Clause 117 specifically addresses the issue of money laundering by authorised persons.
If the only problem were the weakness of the existing criminal law and its procedures, the proper response would be simply to tighten the criminal law and prosecute more rigorously. However, there are other factors that tell us that the regulator needs a broader array of responses in cases of market abuse, and I shall give three examples. First, most right-thinking people would regard market abuse as wrong, but not always as criminally wrong. Secondly, civil remedies are flexible and can adapt more easily to keep pace with changing trade practices. Thirdly, civil remedies can support the integrity of the markets and protect other participants through such measures as injunctions, disgorgement of profits and restitution to injured parties.
Therefore, I welcome a civil regime to sit alongside the criminal law, always provided that, when there is a question of both the criminal law and the civil law applying, the FSA first considers the criminal route. We have received a written assurance from the Treasury that that will indeed be the case.
My second question is, how will the new regime work? Clause 95 contains a widely drawn definition of market abuse, and there has been criticism that the definition is too widely drawn. That matters because people are entitled to know what actions on their part would be likely to be regarded as contravening the law. That is a principle of article 7 of the European convention on human rights. The people who need to know what is or is not market abuse are not only authorised persons, because the provision will apply to all market participants. However, it is fair to point out that the behaviour must occur in the United Kingdom, or relate to investments traded on a market in the United Kingdom.
The Government intend that clause 95 will be supplemented by a market code drawn up by the FSA. Following many representations, the Government have at least conceded that abiding by the letter of the code gives traders an absolute safe harbour from market abuse action. That is a great reassurance for market participants.
It is clear that a person who infringes the code will be in trouble, but what will happen if the code is silent on the behaviour detected by the FSA? The FSA will then have to measure the behaviour against clause 95. Hon. Members can readily see the problem if clause 95 is so widely drawn that, at a later date, its application is regarded by a court as being uncertain. If the FSA concludes that there has been market abuse, it may seek to impose a fine and/or restitution or it may apply to the court for the same financial outcomes and/or to obtain an injunction.

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The processes that apply to a person accused of market abuse apply also to a person accused of regulatory breaches—indeed, regulatory action may also be taken with the one exception of the Government's concession on the point relating to the European convention on human rights, which I shall deal with in a moment. A person who is accused may take the case further than the notification by the FSA of the financial penalty and go to the newly established tribunal and appeal from it to the Court of Appeal on a point of law.
Thirdly, what are the European convention on human rights implications? The Government describe the market abuse regime as a civil regime. Under the European convention, a court can conclude that the procedure is criminal in nature despite its legislative label. Article 6 gives additional safeguards to persons who are accused of wrongdoings that are criminal in nature. Those safeguards include a fair and public trial, a trial within a reasonable time and legal aid in appropriate cases. A fair trial includes protection from self-incrimination—for example, protection for an accused person who is made to answer questions under section 436 of the Companies Act 1985. That person will be protected from answers that have been given under compulsion being used in evidence against him or her.
However, the Government have made the great concession that the market abuse regime is likely to be found to be criminal in nature. In that sense, article 6 safeguards will apply. I do not think that the Government should be portrayed as being dragged kicking and screaming to that conclusion, nor should it be regarded as a weakness. Article 6 is known colloquially as the "British article" because it is regarded as incorporating traditional British values of fair play and reasonableness.
Civil regimes of market abuse already apply in other jurisdictions. European Union members such as France and Spain have civil regimes for market abuse—although their systems of civil codes make comparisons slightly difficult. However, we can see from recent events that they are wrestling with the same questions about the implications of the European convention on human rights—as was shown by the Oury cases in France.
The United States has a successful civil regime that is operated by the Securities and Exchange Commission. There has been no trammelling of its powers, although there is a strong and robust written constitution. The big difference with the SEC's operation of the regime regulating market abuse in the United States is that it does not impose the fines directly—it must take the case to the civil courts—and nor does it keep the fine income, which goes to the Treasury. I am not clear that a civil regime operated through the civil courts would deny the FSA the flexibility that it requires in tackling market abuse. However, I support the FSA's having this new set of powers alongside the criminal law and regulatory powers, and I wish it well in its operations.
As I have said, the eyes of the world will be upon us as we legislate for a single regulator of financial services. We are all watching as the FSA begins to exercise its powers and carry out its duties. We have a heavy responsibility to ensure that we establish a system that works well; that allows trade in financial services to flourish, free from unnecessary restrictions; and that gives
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the public confidence that they are paying fair prices for services of integrity. In short, it must be a system of which we can all be proud.
8.5 pm
Mr. Tim Loughton: I declare an interest in the debate, as set out in the Register of Members' Interests. Those who served on the Joint Committee may be forgiven for feeling a sense of déjé vu. The Committee sat for three intensive months and we are discussing the same issues again today—albeit in a slightly different setting.
My right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said that the Bill had had a long gestation period. There have been several phantom pregnancies during it, and only now are we at the beginning of what I am sure will turn out to be a very long labour. As my right hon. Friend said, we must get on with it as quickly as possible, because the longer the delay, the bigger the Bill will become. Unless we progress quickly, we are in danger of spawning metaphorical triplets. The hon. Member for Huddersfield (Mr. Sheerman) said earlier that we are only at the outset of the Committee stage. However, the atmosphere in the Chamber during this debate has resembled more the weary resignation of Report. I fear that we are many, many months away from that.
Howard Davies, the supremo—for want of a better word—of the Financial Services Authority said that the Bill was like taking the scenic route to Buckingham Palace. I think that we have probably done several laps around Palace yard so far but we are still a long way from Parliament square and the open road to the Mall. I must issue a warning at this stage by referring hon. Members to the equivalent procedures involved in the Financial Services Bill in 1986. One hon. Member who spoke on Report at that time mentioned the fact that the original Bill had contained 167 clauses and 13 schedules. By the time it reached Report, it had 17 new clauses and 278 amendments, including 249 Government amendments. We have a lot of work before us yet.
I join Committee members—and those who did not serve on the Committee—in expressing a unanimous view about the success of the Joint Committee exercise. It was deftly chaired by the noble Lord Burns—whose ears must be burning—and serves as a good model for dealing with future legislation. As Labour Members have said, the major problem with the Committee was the time restriction placed upon it. We should remember that we were able to examine only six areas: the statutory objectives and principles, scope, accountability, discipline and enforcement, market abuse and the ombudsman scheme. During that time, we had also to cope with the progress report from the Government, the 24 consultation documents issued by the FSA and the 100 new clauses that landed on our doormat in April, with four schedules attached.
I sincerely welcome the Government's positive response to the recommendations in the Joint Committee report. However, the Government had to respond positively because the original draft Bill—which was sneaked out on the final day before the 1998 summer recess—was a complete dog's dinner. It succeeded in leaving the financial services industry in an extreme state of regulatory limbo—which will continue well into the

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next millennium. The period has seen enormous upheavals caused by the millennium bug, the introduction of the euro, new statutory savings schemes and pension problems. The potential for problems in the financial services industry must be much greater than usual, yet we have only a skeleton FSA in its current form.
Liz Blackman: The hon. Gentleman describes the draft Bill as a complete dog's dinner. A moment earlier, he referred to the 278 amendments that were made to the Financial Services Act 1986. Surely it is much better to use a pre-legislative process, as this Government have done, than to introduce a dog's dinner, which the 1986 Act turned out to be.
Mr. Loughton: I agree, and one would have thought that, after 13 years, the Government might have learned from the problems of the Financial Services Act. The hon. Lady should remember that when the draft Bill was published in July, there was no mention of setting up an innovative Joint Committee to consider it. That proposal emerged only when the Bill was introduced in the Queen's Speech last November. At that stage, no one envisaged that a pre-legislative scrutiny process would apply to the Bill. That process had to be used because the draft Bill was full of flaws or, as I more elaborately described it, a dog's dinner.
I welcome the Bill because we need it. We need a single regulator with teeth such as the one that the Bill will introduce. Despite the hon. Lady's comments, the Bill is part of an evolutionary process that started with the 1986 Act. It streamlines the multiple self-regulatory organisations. For all the criticism that has been made of the SROs, many of them have, in most cases, done a good job at a time of enormous upheaval in the financial services industry in this country and the world as a whole.
For the past 13 years, there has been a good, open relationship between the regulator and the regulated, rather than a over-prescriptive regime. We need to transfer the many successful elements of that system to the new regime. It is no good writing off everything that has happened since 1986, because there has been a vast expansion of the financial services industry—in most cases, without problems. Of course, the high-profile problematic cases that many hon. Members have mentioned today have tended to overshadow that fact.
In setting up a powerful authority, we are dealing with an industry that makes a important contribution to the British balance of payments and a business that is highly technical. It is vital—even more so here than in many areas of legislation—that we get the initial legislation right.
The draft Bill would have set up the FSA in the role of chief detective, judge, prosecuting council, jury, appeal judge, executioner and beneficiary of the victim. That is not now the case. The draft Bill gave the FSA the power to issue unlimited fines.
Ms Hewitt: Does the hon. Gentleman at least accept that the completely independent financial services tribunal was a feature of the original Bill, as published at the end of July last year?
Mr. Loughton: That was the one saving grace in a regime that did not even put up Chinese walls between
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the investigative and disciplinary processes. The original Bill lacked an awful lot, according to the noble Lords who gave legal evidence, particularly Lord Hobhouse, who used the terms that I have just used. The initial Bill gave the FSA powers to issue unlimited fines with relatively few checks, powers to enter premises in the middle of the night without a warrant, which had quickly to be retracted, and the ability to use compelled evidence in subsequent disciplinary procedures. That was clearly nonsensical. In its original form, the Bill would have made the Athenian law code of Draco pale into the insignificance of a laundry list by comparison.
As I said, the Bill is highly technical and it is vital that we get it right. As my right hon. Friend the Member for Wells said, the draft Bill had more than 200 clauses, and the final Bill now has 367 clauses and 16 schedules. I do not accept the idea that including more regulation makes this a better Bill. We want quality, not quantity, and we want regulation, but not just for regulation's sake and not at all cost. We certainly do not want to repeat the mistakes made with the Securities and Investments Board back in 1986, when the most enormous rule book was constructed by lawyers having a field day. Many of the technical terms had later to be revisited.
I welcome the mantra, which was mentioned several times this afternoon by Front Benchers, of light touch where possible, protection where necessary and fairness throughout. That must be the touchstone by which we decide whether the legislation works.
The press comment over the weekend, critical as it may have been, reminds us of why we need to get the Bill absolutely right. An article in The Daily Telegraph pointed to the
"storm brewing over FSA plans"
and quoted the Economic Secretary as promising an enormous row if the FSA imposed rules under which the costs are not justified by the benefits—because
"we do not want to tie the City up in red tape."
Rather more politically, she then asserted:
"Part of the process of creating New Labour was to change Labour's attitude to the City."
I do not disagree with any of that, but the Bill is not particularly partisan, and as many hon. Members have said, the members of the Joint Committee worked exceedingly well together.
Conservative Members suspect that much has been added to the Bill, for the sake of regulation, that is not entirely necessary by a Government who have all too often demonstrated that they are willing to introduce extra regulatory burdens on business. The cost of regulation is nothing but a tax on the financial services industry and must be seen in that light. Hon. Members should remember that while we are discussing the Bill, a comprehensive rule book is being drawn up by the FSA. We shall play no part in that rule book, other than setting down the guidelines for it in the Bill. It is therefore vital that the people who are drafting those rules have regard to a strict, detailed framework of what is required.
As hon. Members have said, much of the work of the Joint Committee was taken up with problems relating to the European convention on human rights, particularly, as the hon. Member for Stafford (Mr. Kidney) said, with regard to market abuse, the ombudsman scheme and the immunity from prosecution proposed for the FSA.

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Nothing could be more damaging than to find that the first time that the Bill's powers were used—for example, against a large firm that did not like being fined a large sum by the FSA—the FSA was struck down by the European Court of Human Rights when challenged. The noble Lord Burns has, perhaps, been misquoted, but he certainly pointed out in his response to the Bill that there is still a risk of that because of the nature of case law under the European convention.
As well as the bottom-up approach of minimal regulation, another overriding consideration for Conservative Members when scrutinising the Bill will be its cost-effectiveness for the industry and how that is passed on to the consumer. Some of the more naive submissions that we have received from consumer groups state that extra regulation and extra costs and charges to the provider of financial services and products will not feed through to the consumer. Of course they must, and the consumer will end up paying the extra costs.
Secondly, Conservative Members want a clear line of accountability for the FSA, ultimately to Parliament. Thirdly, we want clear transparency in the operations, procedures and findings of the FSA. Fourthly, we do not want to stifle entrepreneurialism in the financial markets and product innovation. Finally, as many hon. Members have said, we want recognition that the financial services industry is global, particularly now, with the use of the internet for selling financial products.
I want to highlight some of the areas where the Government have responded well to criticism in the Joint Committee's findings, and some others about which we still have concerns. The first of those areas relates to the four statutory objectives that were laid down. We had a great deal of debate about what order those should be in. The statutory objectives do not apply directly to individual acts of rule making, advice or guidance. They apply only to general policy and principles in many areas. Many of the six accompanying principles are couched in terms of desirability or form a "check list only", as they were described by Howard Davies in one of his sessions before the Committee. We would like the competitiveness of the UK financial services industry to be a core objective. It should be not only maintained but improved.
I do not take the point that that would in some way burden the FSA in its negotiations with regulators overseas. Surely it would have the opposite effect, providing an incentive for other countries' regulators to minimalise their regulation too. Regulations would not then be imposed on us by other countries' regimes—regulations that would simply not hold water over here. Establishing such a core objective must be an incentive. Indeed, the Treasury Committee agreed with that proposal. We may have the best regulated financial services industry in the world, but the regulation must be cost-effective, so that businesses, especially foreign ones, will continue to do business here.
Although we have reservations, we are pleased with the inclusion of caveat emptor. It had to be included. We did not buy the argument that one could in some way not apply the duties of financial services providers to non-business customers, as the National Consumer Council argued.
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A fool and his money are perhaps easily parted, but competition between myriad products and between houses that offer information about not only their products but the principle of saving for pensions, retirement planning, tax-free savings schemes and so on, means that a fool would have to go an awfully long way to avoid the vastly increased information that is available about financial products and the healthy competition that has brought charges down. However much information we provide and however much we try to prevent mis-selling, we cannot prevent mis-buying by somebody who chooses to ignore such information.
I certainly agree with the principle that the FSA has an educational role. That must be flagged up as a sign-posting role in the many other sources of information to which people may now look. Informed customers are a source of competitiveness in the industry, and everybody would encourage that.
However, it is not the FSA's job to regulate products, an activity which would inevitably lead to a vision of product endorsement and the sort of problems that we are already encountering with CAT—charges access terms—marking. Such practices essentially delude people into thinking that the product's performance is somehow guaranteed by the Government, although that is not the intention, and often make consumers lazy because they think that they do not have to find out about the suitability or performance record of the product.
The third area in which I still have grave concerns—the phrase reared its head many times in Committee but we never really got to grips with it because it did not come within our remit—is systemic risk. The market confidence objective is inextricably linked to it, but there is little elaboration in the Bill.
We are told that there is the tripartite relationship between the Treasury, the FSA and the Bank of England which stems from the Bank of England Act 1998—which gave the Monetary Policy Committee independence in 1997—but we know little about how the arrangement works. We are assured that there are monthly meetings between the three bodies, but I am not sure whether the minutes of those meetings are made available. I would be interested to hear from the Minister whether they are.
The inclusion of the objective concerning systemic risk is also slightly ironic because, just last September, the International Organisation of Securities Commissions published a series of sound principles and practices for regulation and the supervision of securities markets which were based on three fundamental objectives, including the reduction of systemic risk. The Bill must be rather clearer and more detailed on this subject.
What is the duty or responsibility of the FSA to reduce systemic risk in the financial services industry and in banks in the United Kingdom? What will be its attitude to allowing a bank to go bust rather than thinking that it has some special status and must be kept afloat—contrasting with the many engineering or capital goods companies that go bust every day of the week? Who will give the order to launch a lifeboat, and where will the money to man it come from?
None of those questions is properly addressed in the proposed status of the FSA, but surely must be in the Bill. Such a role will be one of the most important for whoever will claim responsibility within the tripartite arrangement.

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I should certainly like an objective in the Bill that is based on the soundness of the financial system and the role of the FSA in it.
Next, I turn to the comprehensiveness of the annual report, which has been mentioned by several hon. Members. Much hope seems to be pinned on some slightly woolly intentions for the content of the annual report. In no way do we want to make it even larger than the FSA rule book, but it should contain certain minimum specific requirements, of which the FSA should always be mindful.
The big grey area remains international competitiveness. We frequently heard of the good Australian Dr. Wallis who in 1995 produced a report on the international regulatory competitiveness regime. That appears to be just about the only meaningful bit of work on the subject. It is now hopelessly out of date, and must be redone. There is an increasing threat of regulatory arbitrage affecting our market and others in Europe and the United States. I would like full disclosure in the annual report of the increased regulatory burden of the previous year, the cost of that burden and the reasons for it, the cumulative cost of the regulatory burden and the amount of regulation introduced since the FSA began operation, and international comparisons, using consistent and easily contrasted tables and figures.
The Government say that schedule 1(10) includes a reserve power under which the Treasury can require the inclusion of particular matters in the annual report, but that is relatively meaningless. A good comparison would be the green book, which was to detail the environmental impact of Budgets, and which we were long promised would accompany each Budget. That was boiled down to just a page in the Treasury Red Book and very much sidelined.
Far too much of the Bill consists of the delegation of reserve powers to the Treasury. As one newspaper commentary said:
"Running through this Bill are the threads of the disease endemic to modern legislation, that of the reserve power. The Act, when it finally grinds on to the statute book, will allow the Government to change the rules without bothering with legislation."
That must be a worry.
The fifth area that I should like to flag up is that of scope. It was very annoying that the major press reaction to our first report, after all the work that went into it, was that the FSA's remit should include powers over mortgages—an opinion with which I personally disagree. Although I am glad that the Government are not acting on that recommendation, they are slightly woolly about taking a decision in principle by the end of the year to extend the scope of clause 20.
I fundamentally challenge the view that mortgages should be included within the FSA remit. It would completely overload the system at this early stage, from all practical points of view. It would be entirely inconsistent to include mortgages but not other substantial financial transactions, such as hire purchase on cars or long-term care insurance. The endowment element of mortgages is already covered by the FSA legislation, and no proof—no evidence, even—has been submitted to the Committee or anyone to suggest that the mortgage industry's voluntary code has in any way failed yet.
It is very early to say, but I would say that the code has been very successful. Additional information is now provided to parties to the 1.4 million mortgage
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transactions that take place every year. The mandatory qualifications of staff in the mortgage industry have been improved. Another success of the code has been in detailed monitoring and enforcement. The code has been extended to almost 100 per cent. of mortgage intermediaries. There is much to shout about, and it seems premature to slap the full rigour of the FSA on the mortgage industry at this stage. That would be unjustified and, at this stage and for the foreseeable future, entirely unworkable.
The other point on scope, as my right hon. Friend the Member for Wells said at the beginning, is one of principle, not technicality. It concerns the retrenchment of devolution from a lot of rather angry Scottish lawyers, who will now have to submit their returns to Canary wharf.
The sixth area that I want to flag up is accountability. I welcome the statutory basis on which the consumer and practitioner panels are now operating, but they must be meaningful panels, amply funded, and not predominantly staffed by compliance officers. A bugbear of mine has been that the term "practitioner" appears to extend to compliance officers who have never sold or marketed a product in the financial services world in their life but are just lawyers. I hope that the FSA will not be dominated by compliance officers, especially as compliance officers working with firms will be liable to the full rigour of the FSA; but if duff compliance officers then trot off to jobs at the FSA they will be immune from prosecution.
It seems slightly odd that there is no requirement in the new rules in clauses 7 to 9 that the FSA, when issuing a consultation paper on new rules, should consult its own panels first, to refine and better hone those rules before, perhaps, they go out to general consultation.
I welcome the majority of non-executives who will now form the main board of the FSA and the fact that the senior non-executive will be the deputy chairman, but I do not accept that the role of chairman and chief executive should continue to be combined. Splitting those roles would be an excellent way of limiting the power of and the focus on one individual. It would also enhance the roles of the non-executive directors, who would not be just yes-men. I am sure that the current line-up will not consist only of yes-men, but the relationship between non-executive directors and a non-executive chairman is very different from that between non-executive directors and a combined executive chairman and chief executive. It would also help if control of the agenda were not in the hands of one man.
As my right hon. Friend the Member for Wells said, combining the roles is completely out of kilter with good corporate governance. The Cadbury code specifically states, in relation to the board of directors:
"There should be a clearly accepted division of responsibilities at the head of a company, which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision."
It is slightly ironic that although the FSA has a format slightly different from that of a normal public limited company, the Government have chosen to go in the opposite direction.
I would query the way in which the FSA will be audited. We took suggestions that the function should be carried out by the National Audit Office, and it was probably shown that that was not appropriate. However,

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there are other alternatives. The Comptroller and Auditor General could have a right of access to undertake value for money scrutinies and report to Parliament; I hope that the Government will revisit that one. We might set up a special Committee of the House, along the lines of the Joint Committee on Financial Services and Markets, with powers to summon any FSA official to make submissions on the annual report or anything else, just as the relevant Senate Committee does in the United States.
The next aspect to which I draw attention is immunity from prosecution. It is my gut feeling that I do not like giving an organisation as strong as the FSA automatic immunity—the individuals in it perhaps, but the organisation, no—especially given the vastly increased powers that it would now have. Many City bodies that made representations to us said that there should definitely be some let-out for negligence, as there would be in the case of lawyers and doctors. In any case, that aspect may fall foul of the European convention on human rights.
I welcome the idea of the investigator for complaints, but I consider that it will be meaningless—and certainly not operating on a level playing field with the complainant—if the investigator has no power to award compensation. I do not want to go into great detail about the dilemma of civil and criminal definitions because the hon. Member for Stafford has done that in his usual erudite way, but I do not think that the problem will be resolved by the Bill.
We were told by the Treasury's legal advisers that European court case law is complex, sometimes unclear and still in an embryonic stage. If the process of the Bill becomes defined as criminal, it could become unwieldy, adversarial and expensive for the financial services industry. These are things that we want to avoid. We need to see further evidence of the Government's reasoned findings. We want to know that they have done their homework properly.
I welcome many of the innovations that the Economic Secretary mentioned. It is to be welcomed that the first instance tribunal will be independent of the FSA. Separating the investigation and sanctions roles by way of the enforcement committee is to be welcomed. There was talk of Chinese walls. That had a rather sentimental tone for me because it was all the rage back in 1986. Lo and behold, it seems that they are being repaired again. We need to know more about how the tribunal and the enforcement committee will interact.
As I have said, I welcome the submission that compelled evidence will not be used. It is also to be welcomed that legal aid will be available. That matches up with the equality of arms specification in the European convention on human rights. However, we do not know how that will be funded. The Government need to provide us with more detail. Will there be a levy on the entire industry so that there will be greater charges, which will then feed through to the consumer?
It is to be welcomed that the FSA will not include its own costs wrapped up in fines. I welcome also the availability of the safe harbour. Certainly, however, we have serious reservations about weaknesses in clause 95. I have a gut instinct against the ability to levy unlimited fines. However, I was probably persuaded that that was
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necessary to deter the larger operators, who were perhaps taking calculated risks and making a great deal of money, and that they should be hit hard where appropriate. If there is a penal fine, does the act by definition become criminal and again subject to the ECHR?
It is interesting that in the United States the FSA is part funded publicly—the stock exchange council—so that Congress retains greater control over its workings. Certainly, I welcome the proposals that fine income should be rebated gross, but I want to see how they will work in practice. Will there be aggregation over several years because of the great volatility in the fining system? What will happen about new members coming to the FSA? Will they qualify for reduced membership fees, whereas many other firms have paid increased fees for earlier years? The principle that these outcomes should not be seen as budgetary windfalls is to be welcomed.
I welcome the joining up of the eight financial scheme ombudsmen. This will give them the opportunity to raise their profile, as the umbrella group chairman told us. They will be able to make themselves better known and therefore more accessible to those members of the public who have genuine grievances that need to go to the ombudsmen.
There is still much work to be done, which is very important to the City, to the financial services industry generally and to the United Kingdom's trading position. It is also rather important to Howard Davies. As one journalist put it recently,
"Howard Davis stands to become one of the 10 most powerful people in the country, with enough independent authority and discretion at his feet to excite the envy even of a senior Cabinet Minister."
So powerful will the FSA and its governing body be that its members will be on a par with Members of the upper House and the monarch, subject to the House of Commons (Disqualification) Act 1975.
The financial services industry accounts for 7 per cent. of gross domestic product directly. We know that 90 per cent. of United Kingdom households use financial services products. The industry involves at least 34,000 regulated businesses, which will be covered by the Bill when it is enacted. It is vital that we get these matters right the first time. I hope that those who have the privilege to serve in Committee will bear that in mind.
8.40 pm
Mr. Andrew Love: Like other hon. Members, I welcome the Bill. I recognise the huge contribution that the financial services industry makes to the UK economy, and as a London Member, I acknowledge the industry's contribution to the London economy and to the standard of living of my constituents. I also recognise the many failures of the past and the complexity of the Financial Services Act 1986 and its interaction with the Banking Act 1987.
We all know that under the previous Acts, fraud in the financial services became a regular occurrence. We all remember the pensions mis-selling scandal, which is likely to cost some £11 billion. I welcome the long overdue overhaul of the previous legislation, and I particularly welcome the central role of consumers in the Bill. It is good that, as we have heard in the debate, there has been cross-party support for the Bill, and widespread support from those directly involved.

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As my right hon. Friend the Chief Secretary said, the Bill will bring about regulation that is fair, clear and accountable, safeguarding the public interest. I recognise the contribution of the Joint Committee, which formed part of the so-called scenic route of the Bill's progress. I pay tribute to members of the Joint Committee for all the work that they did in such a short time, and congratulate them on grappling with the Bill's complexities.
As the only hon. Member on the Government Benches—and as one of the few hon. Members who have spoken tonight—who did not serve on the Joint Committee, I speak with some trepidation. As my hon. Friend the Member for Huddersfield (Mr. Sheerman) said, the Bill takes us in the right direction. But I have two interlinked concerns that go to the heart of the operation of the Financial Services Authority. I hope that the Standing Committee will take both principles on board in its deliberations.
The first is the need to maintain corporate diversity, which is necessary to ensure the widest consumer choice. Our financial services market is characterised by a multitude of organisations, not all of which have the same objectives—indeed, many have widely divergent rationales. We have member-based organisations, although the majority are shareholder-based companies. Some organisations are based on self-help and thrift, and a number of them are democratic and mutual organisations. Many do not put profit at the core of their activities, but many rightly do.
We have large organisations and small, regional and national. They range from small traders, through mutuals and co-operatives, to companies and international public limited companies. Such diversity is a strength in the marketplace and, more important, provides choice for the consumer. The consumer can choose a multinational offering a wide variety of financial services products, or go to his own community, to a small, locally based, perhaps even voluntary, organisation. That choice is currently available, and it should be part of the FSA's remit to ensure that it continues.
That diversity in the marketplace is to some extent at risk. That is partly because of legislative risk, intended or unintended, and partly because of the current tendency towards consolidation in the marketplace. The tendency to reduce diversity will also undermine the Government's attempts to end social exclusion.
Why should my worries about the tendency to reduce diversity be placed at the door of the FSA? The FSA was created from a diverse regulatory structure. As was stated earlier, nine bodies have been brought together to form the FSA, including the Registry of Friendly Societies, the Friendly Societies Commission and others. Those organisations had built up a body of experience and expertise in their areas, not to mention sympathy and understanding of the unique needs of the organisations that they regulated.
That has been partly recognised in the new structure. There are separate sections for all those different organisations, but they form part of a much larger organisation, which, to some extent, is dominated by the orthodox share capital company. The worry is that the unique needs and desires of the diverse organisations that are represented will not be recognised either within the FSA or at board or senior management level.
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I have already mentioned continuing consolidation in the marketplace. Whether that is good or bad, and whether it is to be encouraged or resisted, is immaterial. The question is whether it is in the interests of the consumer. Developments in the marketplace that get rid of smaller, regionally based organisations—in some cases, efficient organisations—will disadvantage consumers because it will restrict their choice of provider.
All organisations seem to like the idea of one size fits all. If that takes hold in the FSA, it will reduce the influence of those who do not fit the standard package. That will lead to a lack of sensitivity to the different needs of those organisations, whose diversity will not be recognised. We must recognise that important principle, because organisations that do not fit the mould will be disadvantaged.
The FSA is to be funded by the financial services industry. If consolidation and domination of a particular type of organisation continue, the role of other parts of the market may be ignored or downplayed.
If the FSA is to be really effective, it must address the financial exclusion agenda that the Government have set. To do that, it must defend diversity. The organisations that have traditionally served the low-income end of the financial services market—organisations that are primarily motivated not by profit but by the desire to provide a service to their members—take many different forms. Whether they are based on voluntary action and the democratic impetus of building societies, the common bond of credit unions or the good fellowship of friendly societies, those organisations have a long history of representing the interests of low-income consumers. That should be recognised as a priority by the FSA.
According to the latest studies by the Office of Fair Trading, many people are self-excluded from the financial services market because they do not have any confidence or trust in major financial services organisations. When those people are asked about the major banks or insurance companies, they describe them as large, impersonal and far away. Such institutions do not offer the type of service that low-income consumers require, so they need to find their own solutions through their own organisations.
Most of the alternatives for low-income consumers are risk averse rather than risk taking. The simple reason for that is the alternative organisations do not have the capital to support them if they run into difficulties. However, being risk averse means that they have developed a range of low-risk products. Studies show that low-income consumers are looking for low-risk products, but if consolidation continues and the risk averse are replaced by risk takers, low-income consumers will no longer have an alternative. We will also see greater instability in the market. It should therefore be incumbent on the FSA to ensure that the market is not continually subject to the stresses and strains of the business cycle and the high-risk companies that will come to dominate financial services. In other words, diversity assists the stability of the market.
Diversity also assists competition. Anyone who examines the remaining building societies will know that, because they do not have shareholders and do not have to pay a dividend, they have a competitive advantage over ordinary share capital companies. The Consumers Association's studies over the past five years show clearly that building societies offer a better range of financial services products than their competitors. If those unique

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providers are lost to the marketplace, we shall also lose the competition that restrains the other companies from increasing their prices. It is therefore in the interests of the members of building societies and of consumers generally to maintain that diversity.
The alternatives can also assist innovation. Many of the other types of organisation have been innovative in providing products to low-income consumers—who are, after all, their bread and butter, and the market in which they have always been involved. That is why the FSA should consider corporate diversity as one of its principles.
The FSA should also recognise the need of vulnerable consumers to access financial services. That issue has been strongly promoted by the National Consumer Council, but I raise it in the context of the Government's priority of dealing with financial exclusion. The Government want the FSA to play a role in achieving that agenda, and the Select Committee on the Treasury, when it commented on the FSA, agreed that it should involve itself in tackling financial exclusion. There is a great need for it to do so. For example, very few products on the market are suitable for low-income consumers. The commission structures that operate in the financial services market militate against anyone who cannot afford the product taking up those opportunities. Everyone recognises that low-income consumers need financial advice perhaps more than any other section of the community, but they are completely priced out of the market. The recent Moser report showed that 40 per cent. of consumers had numeracy difficulties. That demonstrates the need for such financial advice.
Unfortunately, the charges for many of the products that are coming on to the market are prohibitive. One of the reasons for the personal pensions scandal was that pensions were sold to people who did not have enough income to afford the charges. Another problem is that the burden of regulation is continuing to increase. Several hon. Members on both sides of the House have mentioned that. For instance, during the past few years it has been made even more difficult for people on low incomes to do something as simple as opening a current or deposit account—those who are currently excluded from involvement in the financial services sector.
That is already having a dramatic impact. For instance, there has been an alarming decline in the old doorstep collection market. Traditionally, all the mutual and co-operative companies reached out to loan account consumers in that way, but many are having to withdraw from the market because of the regulatory burden.
Market segmentation is another factor. I do not want to go into the rights and wrongs of red lining, although I have been told that recent studies show it does not exist; but I think we can say that some communities are disadvantaged by the development of market segmentation, and certain individuals certainly seem to find themselves excluded. The consequent increase in direct marketing means that people no longer need to go to the bank; they are directly targeted at home with offers of all sorts of loans and other financial services.
That is good for those who receive the benefits. There has been an explosion of new products for people who are reasonably well off, whose choice has been enormously
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increased. However, something a little more sinister is happening at the same time. Direct marketing excludes a whole section of the community. The development of market segmentation and direct marketing has produced an enormous increase in choice for the majority, but an increasing number of people are being excluded from the services that they offer.
A recent report by the Office of Fair Trading on vulnerable consumers, resulting from a detailed study, showed how the financial services market could disadvantage a consumer on a low income, living in any form of social housing, perhaps in an isolated community, possibly disabled, and without access to information technology and all its benefits.
Mrs. Louise Ellman: Will not the financial services sector have to address the problem of excluded consumers if, for example, the Government's new deal for communities programme is to succeed?
Mr. Love: I believe that implicitly. My point is that, as the Government are committed to addressing that agenda, the FSA, which will be the main regulator of financial services, must also be committed to the agenda. One way to ensure that that happens is to get the FSA to recognise the needs of excluded consumers.
I was about to read a letter from John Bridgeman, director general of the OFT, sent with the report on vulnerable consumers. It says:
"When concerns about who benefits from financial services regulation and who pays for it are added to the findings"—
of the report—
"the conclusion that financial regulation, in its widest sense, has failed to reflect the interests of vulnerable consumers is almost inescapable."
The report documents in great detail the reasons why consumers who are on low incomes, or vulnerable in other ways, have been excluded. It makes a major recommendation, saying that greater weight must be given to those people. Recommendation 1 states:
"in assessing consumer detriment and applying Cost Benefit Analysis to policy and regulatory initiatives affecting consumer welfare, not only the OFT but other government departments, regulators, and those responsible for self-regulation should give greater weight to the detriment suffered by low income consumers."
The Government have already recognised that. When the Bill is passed, we need to ensure it will be recognised also by the new Financial Services Authority.
I understand that the Joint Committee looked at that area in some detail. It concluded that to recognise any of those concerns could detract from the FSA's role as a regulator, but it is exactly its role as a regulator that leads in part to the exclusion of those consumers.
Mr. Sheerman: Having been on the pre-legislative inquiry, I have great sympathy with much of what my hon. Friend says—he and I have been closely linked with the co-operative movement—but I am struggling to see the FSA's role, as opposed to the Government's clear role, which is accepted, in promoting access for people in our communities who are excluded. In part, what we have seen over recent years is a withdrawal from the market of traditional suppliers. People knocked on doors about

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insurance, credit and so on. One half were the saints who worked for friendly societies. The others were the sinners who charged extortionate rates of interest.
Mr. Love: I accept my hon. Friend's point. Of course, the primary role is for the Government to play. Indeed, I commend them on the priority that they are giving to dealing with social and financial exclusion. We are awaiting a number of reports—some of the committees have been chaired by the Economic Secretary to the Treasury—but the essential point with which I am struggling—badly, I accept—is that we cannot simply leave this to the Government.
There is a role for everyone who has an influence on the financial services market. Everyone has to play their part in ensuring that all consumers are recognised and receive the support that they need to be involved in the financial services market. That includes regulators. For that reason, I ask that some consideration be given to the principles that could be put in place to ensure that the FSA recognises that role for itself.
I say all that, but obviously I accept that the FSA's primary function, which I am not trying to undermine, is as a regulator: that must be its primary purpose. We should recognise that the FSA will have to adhere also to the principles stated in clause 1 of the OFT report, which should place more stress on the need to assist vulnerable consumers in gaining access to financial service products.
Many other regulators have a duty to protect vulnerable consumers. Legislation provides that the gas regulator has a responsibility for the sick, for disabled people and for pensioners, and the water regulator has some responsibility for recognising the needs of those living in rural communities. All hon. Members will accept that, if people are to have a reasonably good quality of life, gas and water services must be provided. I simply contend that some financial service products—such as those producing a decent retirement income—are also necessary in ensuring that people have a good quality of life. I therefore ask not for revolutionary changes in the Bill but for a recognition that the regulator should have some responsibilities in meeting those specific needs.
The Bill provides that the FSA will be a statutory body with a duty to protect consumers. One of the Bill's greatest innovations is that it will put the consumer at the centre of the FSA's activities, and that is very much to be welcomed. However, that duty will recognise and meet the needs only of the majority of consumers. Surely, as a minimum, the FSA should have a duty to ensure that all consumers—including those who currently do not benefit from financial services—should have reasonable access to those services. The voice of those who are unheard should be heard, and we might be able to accomplish that by giving the FSA a role to play in ensuring that it happens. I should like that principle to be enshrined in the Bill.
I welcome this long-awaited Bill—as hon. Members have said, it has been in gestation for almost two years. Its long consideration has ensured not only that it incorporates lessons learned from the past but that we have gained from the experience and expertise of all those involved.
In considering the Bill, the members of the Committee will have to address issues of consumer choice and financial exclusion—which are becoming ever-larger priorities for the Government—and of consumer access
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to financial services and organisational diversity in the financial services marketplace. If they can address those issues, the Bill will be greatly improved.
9.8 pm
Sir Robert Smith: I am pleased to follow the hon. Member for Edmonton (Mr. Love), some of whose comments are relevant to issues that I should like to raise—particularly on diversity, and on the role of regulation in ensuring diversity. The hon. Member for Huddersfield (Mr. Sheerman), in his intervention, highlighted some of the complexities of trying to deal with financial exclusion. The Committee will have to consider whether the Financial Services Authority should play a role in coping with the problems of such exclusion.
I particularly welcomed two statements in the Chief Secretary's speech: first, that burdens should be proportional; and, secondly, that he was seeking to reduce bureaucracy. I should like to express some concerns on behalf of two friendly societies in my constituency: the Braemar Royal Highland Society—which was also the first registered friendly society on the Scottish register—and the Lonach Highland and Friendly Society. Both friendly societies are probably better known by wider society for their annual gatherings and games, and both have a long history of community activity, going back to the early 19th century. However, both are also facing disproportionate financial burdens.
The Braemar Royal Highland Society was founded as the Braemar Wrights' society, in 1817, but took its current name in 1826. As I said, it is listed as No. 1 on the Scottish register. Its 1996 accounts state that, in that year, the society expended £3,208 on benefits, but had to expend £1,165 on registration and auditing. The ratio of expenses to benefits has increased considerably since the introduction of the Friendly Societies Act 1992, which increased the cost of running societies considerably and obviously made it far less cost-effective to run small, historic, community-based societies than was traditionally the case.
The Lonach Highland and Friendly Society is operating under even more severe financial strictures because its expenditure on benefits—the total fund paid out—in the 1997 account was—186, but its management expenses, on regulations and all the associated costs, came to £1,598. The cost of providing the service was 10 times the amount of benefit that the society was able to achieve. Before the introduction of the 1992 Act, it was able to maintain the cost of administration, but since then the complexity of forms to be completed, the cost of necessary legal advice and the costs that go with the triennial review that has to be carried out during production of actuarial reports have combined to outweigh its ability to function.
During proceedings on the Bill, I hope that we can find a way to make sure that such societies can thrive in their communities. Exempting historic societies that date back to a certain time would be a simple and neat way of achieving that, although there could be problems with the number of members a society has, or a de minimis amount of funds under management could be specified. That would achieve a simpler way of regulating such societies, which are clearly based in their communities.
The potential for a major financial scandal in those communities is limited because everyone is everyone's neighbour, so it may not be necessary for the full weight

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of the FSA to be used to regulate the daily activities of the societies. They have been important historically because they pre-date the welfare state and were a way for communities to provide for their future and for retirement and to safeguard against sickness. Those communities are rural and historically had larger populations so they would have been much larger societies in earlier times. In this day and age, it would be a pity if we could not find a way to allow the societies to continue to thrive in their communities.
I want to touch on a few other issues that were raised in the debate. The hon. Member for Huddersfield outlined the process undertaken by the pre-legislative Committee. I welcome that process and this is the right kind of Bill to subject to it. I hope that the membership of the Standing Committee will be diverse so that there is a different mindset as the Bill is taken forward; it needs further scrutiny and more work will have to be done.
We need a mixture of new and old minds to come together in Committee. Members on these Benches have traditionally preached and welcomed consensus. Perhaps I am going slightly off-message, but the danger in trying to achieve everything by consensus is that we lose sight of the big picture and cannot see the wood for the trees. At times, we need a little bit of grit and a little bit of diversity.
Mr. Sheerman: Is the hon. Gentleman volunteering to be a member of the Committee?
Sir Robert Smith: I am not sure that I am; I am wishing others well in that work.
This week's debate on an FSA is linked by a thread to last week's debate on another FSA—the Food Standards Agency. That thread is the problem that there is no such thing as a risk-free investment just as there is no such thing as absolutely risk-free food. An important point has been made about education and public awareness: we cannot gain something for nothing. When people enter the market to make money from an investment, they are putting that investment at risk. The risk is sometimes high and sometimes low, but if someone is offering an awful lot of money for little investment, the risk is probably much higher than that involved in achieving a small return.
It is important to help people to understand risk. Risk pervades an awful lot of decisions with which we have to cope and an awful lot of measures that go through the House. Politicians, the media and our education system need to provide people with a way of grappling with assessing risk and how to cope with it in daily life. I make a plea on behalf of the advice centres run by volunteers up and down the country. I visited an open day at such a centre in Stonehaven in my constituency. People have to pick up the pieces later, having failed to cope with financial management. It helps the industry and the public sector if advice centres are properly funded. If people in difficulty can get early advice, they have a chance to avoid getting into even greater problems that would leave the bank, the electricity board or the local council to which they owe money worse off than they would be if the problem could be sorted out.
As the hon. Member for Ryedale (Mr. Greenway) said, people will be confused by the fact that single regulation does not apply to everything. People will think that the
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product that they are buying is completely safe because part of it is regulated, but the other part may fall into another category.
I hope that the constructive spirit that has pervaded the Bill's passage to date will continue into the Committee to help the small, historic friendly societies in my constituency to thrive into the next century.
9.16 pm
Mr. Ian Taylor: The importance and dangers of a debate on the Financial Services Authority have been highlighted by the previous two speeches. I sympathise with the concern of the hon. Member for Edmonton (Mr. Love) about the disadvantaged consumer. Over the past 10 years, there has been a dramatic change in the population's financial awareness through such instruments as employee share ownership schemes—much in vogue with the Government, but which I did a great deal to encourage after entering the House in the late 1980s. However, there are risks that individual consumers will dabble in sophisticated financial instruments, or, by contrast, that people may not have access to wealth-enhancing instruments, which is wealth-damaging in a bull market.
The hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) also highlighted one of my key worries about the FSA. Although I am in favour of the FSA overall, the diversity of the nature of the consumer is of concern. I was once regulated by the Financial Intermediaries, Managers and Brokers Regulatory Association, and I know the advantages of having specific regulatory authorities for particular activities. I only hope that the enormity of the FSA's tasks do not prevent its being sensitive to the specific requirements of individual actions.
In an earlier intervention on the Chief Secretary to the Treasury, I asked about the jurisdiction problem in a global trading market, and I seek some reassurance from the Economic Secretary to the Treasury. The Joint Committee, of which I was not a member—nor, incidentally and for the benefit of my Whip, do I look forward to serving on the Standing Committee—doubtless considered the matter. However, as a former Minister for Science and Technology, I know the problems of jurisdiction in framing legislation. We are on the eve of publication of the Government's Bill on electronic communications, and we ought to be clear about what we are talking about. From one's desk one can trade on any stock market around the world. There are problems over whether the jurisdiction within which an organisation falls is at its place of work or registration. If it is a virtual company, it may be difficult to track down.
In a global competitive world, we must understand that the City of London should not be seen to be overburdened with regulation in comparison with other centres. We face difficult conundrums. The Bill must reflect the wider importance of e-commerce, which we shall discuss in more detail when the new Bill is presented to the House. The messages we send will be crucial. There is late trading. Even big houses such as Merrill Lynch are going on to the net. Specialist houses, such as Charles Schwab and Company, are doing so. It is now easy to evade national boundaries and still invest. The question is, is one investing wisely?
Finally, caveat emptor is an important criterion. Regardless of the concerns of the hon. Member for Edmonton, we must not invest so much concern in the

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financial services industry that it makes its regulatory responsibilities impossible to deliver. There is a role for Government here. Let the FSA concentrate on building up a strong competitive financial community in this country, dealing with clients worldwide.
9.20 pm
Mr. Howard Flight: It is a great pleasure to shadow the Economic Secretary to the Treasury. I hate to say that we go back as colleagues more than 30 years—at university. She has changed not at all in that time. I cannot resist recollecting a marvellous party at the joint Oxford and Cambridge Conservative ball at Blenheim in which she participated. Our paths have gone different ways since then.
I declare an interest as in the Register of Member's Interests. I have worked in the financial services industry for the past 25 years in Britain, the United States, Hong Kong, India and Europe. I hope that I may be able to make some modest contribution to the debate from that experience.
It is axiomatic that, for a successful economy, a country needs good law and regulation and honest and open government. In 1986, when regulation started, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) pointed out to me that with the big bang opening up London to the rest of the world it was inconceivable that one could manage without regulation. One could not rely on what had previously been viewed as the high standards of integrity in Britain.
The past 13 years have been successful. Standards have risen enormously in the financial services industry. Some of the weaknesses have stemmed from the fact that inadequate resources have been devoted to tracking down crookery and to educating the retail public and there has been rather too much simple checking of rules. There has been constructive dialogue and an open relationship between participant and regulator, which I hope will continue under the new regime.
This evening has been marked by quality rather than quantity. As many hon. Members have pointed out, financial services are the biggest industry in the United Kingdom—and the biggest exporter. Given that well over 1 million people are employed in that industry, it is crucial that legislation does not damage it. As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) pointed out, that is the reason why Conservative Members oppose the common European withholding tax and the dangers of the thin-end-of-the-wedge effect that it could have on our international business. Britain's success in financial services goes back 400 years and has ultimately been based on integrity. Regulation is not a substitute for integrity.
When the Government came to office, they were a little glib. They thought that they must start again and rewrite regulation, to put in a single regulator. It has proven manifestly more demanding to craft and draft the necessary legislation. We will not end up with a new regime that is any cheaper. In many areas, the so-called one-stop shop is an illusion. Compensation schemes will have to continue much as they were, but under a single name. Many businesses that have different types of activity will have to be regulated by different divisions.
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I praise the Government for the lengths that they have gone in consulting. In particular, I pay tribute to all those who took part in the Joint Committee on Financial Services and Markets, which as we all know has virtually rewritten the Bill.
In specific areas, the Bill still needs substantial amendment. I understand that the Government will be tabling many amendments; I can assure them that the Opposition will also do so.
First, we want to deal with the whole complex territory of structure that has already been alluded to. Although everyone in the House would agree that, in Howard Davies, we have an outstanding individual heading the FSA, that is not the long-term answer. The structure must be right if the authority is not to run into trouble in the future.
Another matter that has been well aired is that the Bill must not fall foul of the European convention on human rights. More to my liking, it must not fall foul of our inherited liberties, which go right back to Magna Carta. It is natural justice that people should be able to defend themselves when they are charged with serious offences.
Other aspects of the structure concern me. Hon. Members may not be aware that the FSA is already arguing that it has the power to control salaries in the City—that it is necessary that the salaries in the derivatives industry should not be so constructed as to encourage bad practice. That all sounds like jolly good stuff, but I am uncomfortable with a body that can claim such powers. As my colleagues have pointed out, there must be a powerful counter-balance to the leviathan that we will create.
In relation to maintaining both competition and competitiveness, competition is international and competitiveness is domestic; We believe that there should be objectives and not merely duties. The essential point is that if, for example, US bond dealers suddenly took all their business away from London because the code of conduct was insufficiently clear, or if the number of independent financial advisers shrank by a half, it would be possible for the industry to bring a convincing judicial review that the FSA was in contradiction of such key objectives as maintaining competition and competitiveness.
I am reasonably comfortable as to the fact that the tribunal will be sufficiently independent, but I suggest that, as well as separating investigation and enforcement units within the FSA, there are strong grounds for the enforcement unit to have a 50 per cent. practitioner content. I believe that it would be healthy if there were a built-in statutory duty to continue consultations with the industry. We need to clarify the regulatory position of accountants, lawyers and actuaries. What will require them to participate in the regime, and what will not? Rule interpretations should be available to the regulatory community; that should be a requirement in the Bill.
I also believe that transparency is at the heart of protecting citizens—I am surprised that that matter is not included in the Bill as an objective. If citizens are obliged to be told clearly about charges and the operations of financial products, they have the opportunity to digest that information. However, nowhere in the objectives can I find stated a requirement for transparency of information.
Other hon. Members have made points about the process of parliamentary accountability. The process is not democratic enough. I believe that the system under

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which the Securities and Exchange Commission reports to the US Congress is a more appropriate form of democratic accountability than that proposed in the Bill.
Several of my colleagues raised legal exemption. I argue strongly that cases in which negligent action by the FSA could prevent a person or a firm from carrying out their business should not be exempt. We should also accept the Joint Committee's recommendation that the FSA complaints commissioners should be able to award costs against the authority where damage has been done to businesses.
If we are to maintain our competitive position, we must have clear rules. Indeed, prior to the introduction of the current version of the Bill, the Association of US Bond Traders made it known that its members could not live with lack of clarity in respect of market abuse. Let us hope that that has been resolved, as the Government believe. I still believe that clause 95 is drawn too wide. I also believe that intent should be a fundamental requirement for the market abuse regime to apply. There is still a need for greater clarification of the definition of market abuse.
In many other areas, we are becoming accustomed to having to live with rules and regulations coming down from EU directives without passing through Parliament for scrutiny and enactment. Here we have three different layers: primary legislation, secondary legislation, and the main body of what will emerge from the legislation, which are the FSA rules. We all know that flexibility is necessary because markets change, but I am concerned about some powers that currently lie within rule making that might better lie within secondary legislation, if not within primary legislation.
As the House will be aware, it is currently intended that the FSA will be empowered to make rules relating to money laundering internal controls, and then itself to prosecute under those rules. Money laundering is a field of criminality that we all want to eliminate, and it is essential to police money laundering, but I personally believe that it should be more the responsibility of this House than of the FSA.
Mr. Sheerman: The hon. Gentleman keeps saying, "I believe", but I understand him to be speaking for Her Majesty's Opposition. Some of his remarks do not square with what we have heard either in Committee or from other Opposition Treasury spokesmen. That worries me. Perhaps he should read the words of wisdom contained in one the finest documents that has been produced on this subject: the House of Commons Library research paper by Christopher Blair, which was published last week. It deals, not only with the Bill, but with the whole range of achievements arising from financial services legislation to date.
Mr. Flight: I agree that that publication is an excellent publication. When I use the singular rather than the plural, I am presenting the arguments that the Opposition team has discussed and agreed.
It appears that it was only at the last minute that the Government focused on which territories and which participants in the industry the Bill would cover. Much has been said today about mortgage lending, but I shall add two further points. First, the mortgage industry is in
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limbo until it knows whether it is to be covered. Secondly, I should like to concur with the remarks of the hon. Member for Twickenham (Dr. Cable), who raised the issue of transparency of charges and offers, which applies to bank lending as well as to mortgage lending.
Much more seriously, the Government appear to have forgotten about themselves. The Government are in the business of selling financial products and giving financial advice. We are all aware of the misadvice given by the Department of Social Security in respect of the reduction in SERPS widows pensions next April. I do not perceive the logic in the private sector having a regime of rules on the basis of which it provides financial advice and sells products, but organs of Government that do the same not being the subject of the same rules.
I raised the issue of the Post Office selling gilts, to which the Treasury responded that the Post Office was covered by the Banking Act 1987. However, the Banking Act expires when the Financial Services and Markets Bill goes on to the statute book. The Opposition believe that where the Government and Government agencies are involved in the financial services industry should be covered by the Bill.
The issue of double jeopardy has also not been wholly resolved. When an individual complains to the FSA that he or she has suffered loss, it is up to the FSA to decide whether or not to award restitution. The FSA may impose a fine if it finds someone guilty, but it can also choose whether to award restitution to the person who has suffered loss. That individual may have to go to the civil courts to claim separately, and we believe that is an unnecessary double jeopardy. It overdoes things, both for the individual and for the institution involved.
Much has been said this evening about the institutional versus retail sectors, and I shall make two key points in that regard. On the institutional side, high standards of conduct are just as, if not more, important than on the retail side. For example, Barings could have not only caused a systemic crisis but generated substantial losses for ordinary citizens where Barings was a custodian of various funds. To differentiate between the two, the institutional side needs higher standards of conduct than the retail side because so much is at risk. We know that we must protect the retail investor, but that is a different issue. Educating and protecting the retail investor is important, and the Bill provides for that. However, there is some risk of overprotecting retail investors; it is dangerous if citizens believe that compensation schemes or Governments will cover any wrong decisions that they might make.
My hon. Friend the Member for Ryedale (Mr.Greenway) pointed out that financial advisers require the machinery to allow them to check immediately whether the advice that they have given is compliant if we are to avoid the problems of retrospective and inconclusive debate.
I refer finally to the point made by my right hon. Friend the Member for Wells. In the area of banking supervision, it is crucial that decisions are taken speedily when a systemic crisis arises. Although the same Bank of England team has moved to the FSA and there will be ongoing consultation, we are concerned that, in a systemic crisis, two different arms will deal with the institutions involved. That is unfortunate, as Alan Greenspan also pointed out. I remember how close this country came to a systemic crisis in 1974.

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That point touches also on the crucial issue of the chairman and chief executive. It has been argued that, like the Bank of England, the buck must stop with one man in the FSA. That is clearly true, but it is certainly not an argument for not having an experienced senior non-executive chairman with whom the chief executive may consult—which is the general practice in commerce nowadays. We want to see powers to that effect in the legislation.
This is not a red-hot party political issue. As we have heard this afternoon and this evening, there is a great deal of agreement, consent and support for the Bill as it has emerged from the Joint Committee process. However, it is one of the most important and complex pieces of legislation that the Government have brought forth. Contrary to some public perceptions, only a small number of hon. Members have experience of the financial services industry. The Bill still requires considerable improvement and we will be interested to see what amendments the Government will table. We will also table many amendments in the areas that we have discussed. There is still no requirement for cost benefit analysis and many definitions in the Bill remain unclear.
We must get the legislation right. The jobs of more than 1 million people are at risk, as is our biggest single export. We are nearly there but, as other hon. Members have said, there is much more work to be done on the Bill.
9.40 pm
(Ms Patricia Hewitt): I begin by congratulating the hon. Member for Arundel and South Downs (Mr. Flight) on his first appearance as a member of the Opposition Treasury team. He is right in recalling that we were at Cambridge together, but our ways parted after that: he went into the City and I went off to protect civil liberties, and I shall continue to protect civil liberties in helping to pass the Bill.
We have had an extremely well-informed and thoughtful debate. Excellent contributions were made by several hon. Members who served on the Joint Committee of both Houses, including my hon. Friend the Member for Huddersfield (Mr. Sheerman), who served as an outstanding deputy Chairman, and my hon. Friends the Members for Stafford (Mr. Kidney), for Bexleyheath and Crayford (Mr. Beard), for Warwick and Leamington (Mr. Plaskitt) and for Erewash (Liz Blackman). The quality and tone of the debate reflects the high standards established in the Joint Committee to which my hon. Friends and many other hon. Members have referred.
I want to echo the thanks offered by hon. Members on both sides of the House to the noble Lord Burns for the exceptional way in which he chaired the Joint Committee. His transition from outstanding permanent secretary to outstanding parliamentarian is complete. I want to thank the members of the Committee from all parties and the Clerk to the Committee for their work within an exceptionally tight time scale. As well as contributing substance to our reflections on the Bill, the two reports were a pleasure to read, and I think, Madam Speaker, that you will forgive me for saying that one cannot always say that of reports produced by Committees of the House.
As many hon. Members have said, the Bill marks a new era in financial services regulation. It also marks a new approach to legislation. That has been reflected in many speeches in this debate, which have endorsed the
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contribution made by the process that we adopted for the introduction of the Bill to modernising our procedures and ensuring that legislation, particularly on complex and technical matters, is as good as we can possibly make it.
The consultation process was excellent, and I thank Treasury officials and, in particular, parliamentary draftsmen for their outstanding work. There is no doubt that as a result of our consultation with the industry and consumer groups, and of the work of the Select Committee on the Treasury and the Joint Committee, this is now a much better Bill. Of course, there will still be plenty of work to do in Committee, but we have a Bill of which we can all be proud.
I turn now to the helpful contribution made by the right hon. Member for Wells (Mr. Heathcoat-Amory). On behalf of the Government, I thank him for confirming that the Opposition have agreed to our proposed use of the carry-over procedure for the Bill. I know that the City and the industry will be greatly reassured to hear that there is now a clear timetable for proceeding with this enormously important work, that the House has adopted such a sensible approach to legislation about which there is no partisan disagreement, and that there is recognition across the House of the importance of the industry and the importance of the Bill to that industry. I thank the right hon. Gentleman for his kind remarks on my two appearances before the Joint Committee, which I thoroughly enjoyed.
The right hon. Gentleman raised several issues and I shall try to respond briefly to them. He mentioned the draft codes and secondary legislation. The Financial Services Authority has already published a draft code on market abuse and consulted extensively on that. It has now made an initial response to the consultation and is working with practitioners to develop a new draft of the market abuse code. That is, of course, only one consultation process that the authority is carrying out. The Treasury is itself consulting on the scope of regulated activities. We published a draft order on the scope earlier this year.
The right hon. Gentleman also raised the issue of Scottish solicitors and the devolution question. As my right hon. Friend the Chief Secretary to the Treasury made very clear, the Financial Services Authority will be responsible for regulating financial services throughout the United Kingdom, which is right. The matter is clearly reserved under devolution.
There is a technical issue of whether amendments to the Solicitors (Scotland) Act 1980 will be necessary and what the relevant procedures would be if amendments were required. We are looking at that further, although the FSA is considering the proposed regulatory regime that should apply to professionals who require regulation. I am glad to say that the Financial Services Authority is holding a special conference in Edinburgh today as part of that consultation.
The right hon. Member for Wells and several other hon. Members raised the issue of statutory immunity. I must make it clear that in no way is this immunity from criminal prosecution. It is very important that we keep in our minds the distinction between civil and criminal procedures, which crops up at various points. I remind the House that, first, it is the first principle of the Basle committee that banking supervisors should have immunity

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from civil actions for negligence—otherwise it would be quite impossible, as some hon. Members have pointed out, for such supervisors to carry out their task effectively.
Secondly, as my hon. Friend the Member for Erewash pointed out in a very careful and thoughtful speech, the Joint Committee accepted that statutory immunity was the right position to take, provided that there was in turn a strengthened complaints process. We have sought to implement that through the redrafted Bill. Statutory immunity does not apply to actions in bad faith; nor does it apply to actions under the Human Rights Act 1998 or to actions for judicial review. The Financial Services Authority remains fully accountable to the law and the courts.
The right hon. Member for Wells and several other hon. Members, including the hon. Member for East Worthing and Shoreham (Mr. Loughton), raised the fear of over-regulation of financial services and thus a threat to competitiveness. That is a very important consideration, and one that was uppermost in our minds in formulating policy and drafting the Bill.
The essential points on the matter were made by my hon. Friend the Member for Warwick and Leamington in a very well-informed speech. Competitiveness, as he stressed, depends on sound regulation. In the modern global economy, particularly in the financial services industry, regulation is a vital source of competitive advantage. One must get it right. If one gets it wrong, regulation can become a source of competitive disadvantage. That is why we have included in the Bill the principles to which the FSA must always have regard: competitiveness and competition. I have no doubt that we shall return to these matters in Committee, but I would be concerned about trying to impose on the FSA yet another objective.
I should stress a point that has not yet been made. There is a significant innovation in the Bill: we are subjecting the FSA, as the regulator, to competition scrutiny. The Office of Fair Trading will be able to scrutinise the FSA' s rules for the impact on competition, and if there is a concern that the rules have an unjustifiably and anti-competitive effect, the matter will go to the Treasury.
Several hon. Members referred—rightly so—to the importance of the City of London as a major financial centre. I can inform the House that, just today, we have announced the recognition of Eurex Zurich as an overseas investment exchange, giving participants in the London markets even greater choice and a new opportunity to deal directly with another overseas exchange. More overseas exchanges do business in the United Kingdom than in any other country, and today's announcement emphasises our pre-eminence as a global financial capital.
The hon. Members for Twickenham (Dr. Cable) and for Ryedale (Mr. Greenway) and my hon. Friends the Members for Erewash and for Bexleyheath and Crayford raised the extremely important question of the regulation of mortgages. We dealt with that subject in some detail in our response to the first report of the Joint Committee. The hon. Member for East Worthing and Shoreham rightly stressed that many aspects of mortgage sales are already regulated under the Consumer Credit Act 1974 and the unfair contract terms regulations, and that the sale of endowments in connection with mortgages is regulated.
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We must consider the costs and benefits of bringing all aspects of mortgage sales and advice within the scope of the new Bill. In 1995—the latest year for which I have full figures—there were about 50,000 complaints in relation to some aspect of mortgages. That is about 0.5 per cent. of the 10.5 million mortgages that there are in this country. We shall review the matter very carefully. As I have said in the House on various occasions, we want to study the impact of the new code of practice of the Council of Mortgage Lenders, and we shall return to the House with a decision on the issue before the end of the year. I have received extremely useful information from some trading standards officers—notably those in Suffolk—but I shall see whether further information can be gleaned from them that would help.
As one would expect, the right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell) made a most interesting and learned contribution. He specifically drew attention to the non-enforceability of contracts where one party to the contract is a non-authorised person but should have been authorised—a matter covered by clauses 24 and 26. Those clauses reproduce what has been the law since 1986. They are not a new feature of the situation. I draw the right hon. and learned Gentleman's attention to the fact that they do not make contracts in those circumstances completely unenforceable, because clause 26 gives the courts discretion to enforce a contract if it would be just and equitable to do so and if the person involved reasonably believed that there was no unlawful activity. I hope that he will be reassured on that point, but I am sure that we shall return to it in Committee.
The right hon. and learned Member for North-East Bedfordshire, the right hon. Member for Wells, the hon. Member for Arundel and South Downs and several other hon. Members spoke about the structure of the Financial Services Authority board and the split between the roles of chairman and chief executive. That is a matter on which we have reflected further following the first report of the Joint Committee. We explained in our response to the Committee why we felt, despite its recommendation, that it was wise to keep a single post holder for both posts. The FSA is not a public limited company operating in the marketplace with shareholders to whom it is accountable as well as an internal organisation to run.
The memorandum from the non-executive members of the board of the FSA, which we published in our response, clearly expressed their conviction of the need for one person to be vested with the responsibility for clear and authoritative decision making, possibly in conditions where very fast and very important decisions are required, and of the need for a clear line of accountability, not least to Ministers and, through us, to the House. We shall continue to reflect on that issue. I draw hon. Members' attention to the fact that the Bill is silent on that point.
The right hon. Member for Fareham (Sir P. Lloyd) raised the extremely important question whether the Financial Services Authority in the new regime will be better than what it replaces. My hon. Friend the Member for Stafford cogently explained the need for the new regime and the benefits that we shall obtain from it.
I shall summarise some of the advantages of having a single regulator. We avoid the danger of the inconsistency, overlaps and gaps inherent in having nine different regulators—an underlying problem that helped to give rise to the scandal of personal pension mis-selling.

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We shall reduce costs. It is highly significant that the FSA in 1999-2000 will have lower real operating costs than its predecessor bodies had in 1997-98. By bringing together the staff and the rule books of the nine predecessor regulators, it will be able to share best practice and to establish the highest standards.
Perhaps most important of all, the new regime fits the new marketplace. The boundaries between the old sectors of financial services are increasingly being dissolved under the pressures of global competition and the opportunities as well as the pressures created by modern information and communications technology. As we see financial services supermarkets being created, offering a variety of different services and products, so we need a regulatory supermarket that can keep up with their regulatory requirements.
We are already seeing the advantages of the single regulator as the FSA creates its new complex group division: a complex financial services company, instead of having to deal with two or even three regulators, to manage those relationships and to meet all the compliance costs to which they give rise, can now deal with one group of staff within the FSA. As the regulatory impact assessment makes clear, we shall see real savings in compliance costs.
The hon. Member for Ryedale has extensive knowledge of the insurance industry, not least as treasurer of the Insurance Brokers Registration Council. It is our intention to repeal the main provisions of the Insurance Brokers (Registration) Act 1977. The Bill includes the power to make repeals by order, but I propose that we shall bring forward some of the more substantial or significant repeals through amendments to schedule 17, so that they can be dealt with directly in Committee.
I am sure that the House is grateful to the hon. Member for Ryedale for his interest and his efforts in making sure that the successor arrangements to IBRA command the confidence of consumers. It is far too early to conclude that the General Insurance Standards Council will not be a success. We are encouraged by the response of the industry to the challenge that we have set. I am sure that the new council will work well with the FSA to achieve high standards in this important area.
The hon. Member for East Worthing and Shoreham and some other hon. Members raised the important question of systemic risk and how dangers would be averted. The respective responsibilities of the Treasury, the Bank of England and the FSA were clearly set out in the memorandum of understanding that was agreed and
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published in 1997. It is a flexible mechanism, and necessarily so given the fast-moving conditions with which regulators have to deal.
The minutes of the meetings of the three bodies are not published, and rightly so. By their very nature, these discussions are likely to concern commercially sensitive and highly confidential matters that it would not be appropriate to make public. However, there is now clarity in the responsibilities of the three bodies, not least because the Bank of England is responsible as the lender of last resort. The FSA is responsible for regulation. There can be no risk of any suspicion of banks being bailed out to conceal failures of regulation.
This is an excellent Bill. I have no doubt that the excellence of tonight's debate will be reflected in our proceedings in Committee.
Question put and agreed to.
Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

FINANCIAL SERVICES AND MARKETS BILL [MONEY]
Queen's recommendation having been signified—
Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
That, for the purposes of any Act resulting from the Financial Services and Markets Bill, it is expedient to authorise the payment out of money provided by Parliament of—

(a) any expenditure incurred by a Minister of the Crown in consequence of the Act; and

(b) any increase attributable to the Act in the sums so payable by virtue of any other Act.—[Mr. Mike Hall.]

Question agreed to.

FINANCIAL SERVICES AND MARKETS BILL [WAYS AND MEANS]
Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
That, for the purposes of any Act resulting from the Financial Services and Markets Bill, it is expedient to authorise the imposition of charges to income tax and corporation tax by provisions of that Act relating to the treatment for the purposes of the Income and Corporation Taxes Act 1988 of payments made as a result of any provision of the Financial Services and Markets Compensation Scheme providing for the repayment of levies paid under the Scheme.—[Mr. Mike Hall.]
Question agreed to.

Alzheimer's Disease
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]
10 pm
Dr. Vincent Cable: It is a pleasure to introduce the debate, which is essentially concerned with the problem of Alzheimer's disease and the accessibility of drugs with which to treat it. The Minister is well aware of my interest in the subject, as I put an oral question to him recently, which he answered sympathetically, without quite giving the answer that I sought. I have a broader interest in the subject of age discrimination in the health service, or the lack of priority given to medical treatments that apply particularly to the elderly part of the population.
My interest in these matters is supported by substantial groups outside the House of which I know the Minister is aware, in particular Age Concern and the Alzheimer's Disease Society. In many respects I am speaking on their behalf.
There are 700,000 people in the United Kingdom who suffer from senile dementia, about 400,000 of whom suffer from Alzheimer's. Despite their substantial number, sufferers are largely hidden. They do not have a strong voice in the community, in many cases for obvious reasons. Those in the advanced stages of the disease cannot communicate; they do not vote or write. Even those who are not in the advanced stages are not paraded in public by their relatives. Often they are very old.
Alzheimer's is still an embarrassing illness. There are some famous people, including Sir Harold Wilson and Ronald Reagan, who have suffered from the disease, but in general it is not something that society chooses to advertise. Therefore the problems associated with the illness are frequently hidden.
Those who saw a powerful television programme last week on ITV—"Malcolm and Barbara: A Love Story"—saw in a graphic way what Alzheimer's disease does, particularly when it strikes prematurely. The programme described eloquently and movingly how it starts with loss of memory—in this case, a journey down the wrong side of the M 11 signalled the onset of the disease—followed by increasing inability to function, to pay bills or to hold down a job; a medical diagnosis that was wrong—the patient was treated for depression; and then the worsening of the disease.
That was a particularly sad case, involving a highly talented, creative musician in a strong, loving relationship that was put under strain. As the disease advances, people cannot cope any more and lose the capacity to make love. In the case described by the programme, after four years the gentleman had to go into a home, which is where most sufferers finish.
A few days ago I encountered a rather similar case in my surgery—a 51-year-old man who had been through most of that progression and faced all those problems, with the additional problem of poverty. In the early stages of Alzheimer's, people lose the capacity to hold down a job, and because they have not had a job, they have not made contributions, so they do not qualify for incapacity benefit. In this case the man was on the lower levels of disability living allowance, so he and his partner were facing not merely all the indignity and the pain of Alzheimer's, but poverty as well.
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However, this debate is not about the social aspects of Alzheimer's or about benefit. It is about how the NHS deals with it, and specifically about the drugs available to deal with it. Although I am not a medical doctor, I shall summarise the present state of play. There are drugs available—Aricept and Exelon are the most well known—that have, as established by the medical profession, an impact on the disease. They cannot treat all patients—they cannot treat patients in an advanced stage of the disease—but for the early and middle stages of the encroaching disease of Alzheimer's, they have a significant effect in alleviating the symptoms. Because they alleviate symptoms, they ease the psychological pain of the people suffering the illness and the burden on carers.
There is an established medical consensus that that is the case. I am sure that it is known in the Department that two influential academic studies were published in March, which brought much of the research together. I shall summarise the last sentence of the papers, which shows where the research now stands. The first said:
"Thus, despite variations in local diagnostic and treatment practices, this big multinational study demonstrates that…therapy is an effective and well tolerated symptomatic treatment for patients with mild to moderately severe Alzheimer's disease."
The other, which concluded in much the same way, said:
"This study provides evidence of the efficacy of'—
the drug
"in alleviating the core cognitive and functional symptoms of patients with mild to moderately severe Alzheimer's disease over 6 months."
Drugs with demonstrated, scientifically proven results are therefore available.
This brings me to one of my main concerns about the Government's handling of the problem. The Alzheimer's Disease Society is concerned that, despite scientific research, the Government are still carrying out clinical tests in which patients are fed placebos. Clearly, those have no therapeutic benefit. The society has even suggested that medical ethics are being infringed, because it is wrong to carry out experiments that involve feeding patients a placebo when it is known that a drug which alleviates their symptoms is available.
Medical research shows that the availability of drugs brings not merely physical and psychological benefits to patients, but substantial benefits to carers, many of whom have to give up their jobs to struggle with patients in physically and emotionally difficult circumstances. In the terminal stages of the illness, a substantial burden of care is placed on local authorities, many of which have to fund treatment in residential homes.
In those circumstances, one has to question how the national health service deals with the problem. In a parliamentary answer to me several months ago, the then Minister gave a slightly disingenuous reply. He said that the drugs for Alzheimer's disease were prescribed in 99 per cent. of health districts. Technically, that is correct; the 1 per cent. represents Croydon, where there is no NHS prescription at all. The fact remains that, throughout the United Kingdom prescriptions are hard to come by. Indeed, there is an enormous divergence. Apparently, the drugs are freely available in Northern Ireland. That reflects the fact that a liberal spirit operates there, probably because NHS doctors collaborate closely with social services, where the benefits to carers are more clearly apparent.

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In many parts of the country, however, carers of Alzheimer's patients have to buy the drugs on private prescription at a cost that ranges from about £70 to £140 a month, which is beyond the means of anyone who is not relatively well-heeled, and certainly way beyond the means of most elderly people.
The question arises about why the Government do not move more quickly to make those drugs available on prescription. Why are those divergences tolerated and why are not the Government more positive in promoting treatments that would benefit patients and their carers, and possibly provide an aggregate saving to society as a whole? One factor that probably lurks behind all this is cost. If one does a mechanical calculation of £1,000 a year, which is the approximate cost to the health service, and multiplies it by 400,000, which is the number of patients, one comes up with the substantial sum of £400 million. In practice, however, the cost is nothing like that because patients in the advanced stages of the disease would probably not respond to the drug and for others it would not be appropriate. In any event, we must set the cost, even if it is substantial, against the benefits that would derive from improved care.
Will the Minister look carefully at how the NHS approaches the problem? I have one specific request, which I put to the Minister in my parliamentary question. He did not answer then, but I hope that he will do so now. What priority will the drugs have under the National Institute for Clinical Excellence system that is being established? Many of us welcomed that system as a rational, scientific way in which to approach priorities in the NHS, but—given the powerful case for treating the drugs that I have mentioned as a priority—it would be reassuring to those dealing with the issue professionally and socially to know that their case will be one of the first to be considered by NICE.
I hope that the Government will take this opportunity to show a willingness to deal positively with some of the medical problems associated with ageing. Many people have an underlying concern that if Alzheimer's disease applied to the young or had a higher profile, like AIDS, much more money would be spent on research and the drugs that I have mentioned would be more easily dispensed. However, the aged are relatively unfashionable and a politically less attractive group and have therefore perhaps escaped the high priority that they otherwise might have enjoyed. I hope that the Minister will be able to reassure me on that point, which would advance the agenda for the victims of Alzheimer's disease.
10.11 pm
The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): I congratulate the hon. Member for Twickenham (Dr. Cable) on raising this subject tonight and on his thoughtful and well informed comments. I shall try to address his specific questions later in my remarks.
The hon. Member for Twickenham is clearly aware that Alzheimer's disease and other forms of dementia are among the biggest challenges to health and social care both now and into the next century. Some 600,000 people in the UK have some form of dementia, and of those, over half are affected by Alzheimer's disease. About one person in every five over the age of 80 has dementia, but it is not just a disease of old age. It can begin in
114
someone's 30s or 40s with a devastating impact upon their employment, family life and life expectancy. The hon. Gentleman referred to some of those situations.
Although much has been discovered about Alzheimer's disease, for example its genetic basis and the molecular biology of its pathology, there is no treatment yet available to reverse its course or provide a cure. Current treatments are therefore more concerned with reducing its impact, either by treating symptoms or by offering support to patients or their carers.
In considering the treatment of Alzheimer's disease, it is important to think about more than just drug treatments. The hon. Member for Twickenham raised the subject of recently licensed drugs, but before I turn to that issue there are other aspects to consider, including personal care and daytime activities. I know that the hon. Gentleman is concerned about the treatment provided within the NHS, but we should not lose sight of the other aspects of care. We also need to consider psychological treatments, nursing care and general medical support. Patients may require referral to specialist mental health services for diagnostic assessment or advice about medication or other aspects of their care.
I must stress to the hon. Member for Twickenham that the Government take the issue of equality in every area of health care very seriously. The NHS White Paper "The New NHS" sets out proposals for a new national performance framework for the NHS which focuses on areas of performance that really matter. One of those areas is fair access to health services in relation to people's needs, irrespective of geography, class, ethnicity, age or gender. There can be no exceptions to the fundamental rule that the NHS is there to provide services for everybody on the basis of clinical need.
I have heard the complaint, as many other hon. Members probably have, that the NHS is discriminating against people with Alzheimer's by limiting the prescription of certain new drugs. I will come to that issue in a moment, but let me make it clear that if a consultant prescribes those drugs as part of NHS treatment of an older person, they are provided free at the point of use. It makes no difference if the older person is in hospital, at home, or in a care or nursing home: if they are receiving NHS care their drugs are free. Some people may choose to seek private treatment, which may include receiving such drugs on private prescription, but that is a matter between them and the doctor they are consulting.
It is however important to recognise that priority setting is a necessary part of any health care system, as I am sure the hon. Gentleman agrees. It has always occurred in the NHS and will continue to do so. It is right and proper that we set priorities that give the best results for the population as a whole, as well as meeting individual needs.
The national health service always does its best to help to meet people's legitimate health concerns, but the fact is that not all treatments are proven to be effective, and it would be wrong of the NHS to divert resources from treatments that are known to work to fund others that do not. But prescribing is not just about access to treatments; older people may also be at risk from the over-prescription of drugs. All prescribing for older people should be undertaken and monitored very carefully, particularly for those in residential and nursing homes.

115
People with dementia may be especially sensitive to the side-effects of drugs acting on the nervous system. Neuroleptics can be useful in treating agitation and aggressive behaviour in people with dementia, but such drugs may have serious side-effects, such as sedation, decreased mobility and a propensity to fall and to suffer accidental injury.
Guidance in regard to prescribing and monitoring is available to doctors from such sources as the British National Formulary and the Drugs and Therapeutics Bulletin. The report "Drugs and Dementia", published by Age Concern in 1998, usefully recommends attempting to reduce neuroleptic dosages at least every six months.
Perhaps the main issue raised by the hon. Member for Twickenham was that of drugs. Of course, we all hope that drugs will soon become available to reverse the underlying disease process, and prevent the inexorable decline into dementia; however, no drug is yet available that can be regarded as a cure.
So far, two drugs have been licensed in the United Kingdom for use in the treatment of Alzheimer's disease. The first, to which the hon. Gentleman referred by its trade name of Aricept, was licensed in February 1997, after evaluation by the Medicines Control Agency of all the evidence. That included clinical trials, following the advice of the Committee on Safety of Medicines. The second drug, rivastigmine—known as Exelon—was licensed last year. Both drugs have a similar mode of action, in that they are a symptomatic remedy aimed at boosting levels of one of the neuro-transmitters, or brain chemicals, which are known to be depleted in Alzheimer's disease. Several other drugs of the same kind are well under development, but are still awaiting licences.
Published clinical trials indicate that both donepezil—the generic name for Aricept—and rivastigmine produce modest improvement in memory for some but by no means all patients. There are currently no means of predicting which patients will show a good response. So far, there is a lack of evidence that the response that is seen is clinically significant, or that prescribing either drug is cost-effective. Several reviews, including in the Drugs and Therapeutics Bulletin—the hon. Gentleman might have referred to that—have concluded that the evidence was insufficient to warrant widespread use.
In view of concerns about the possible costs and about potential inequities in prescribing, through the Standing Medical Advisory Committee we have produced guidelines on the use of these anti-dementia drugs. The guidelines recommend that treatment should be initiated and supervised only by a specialist experienced in the management of dementia, that benefit should be assessed at 12 weeks, and that treatment should continue only when there is clear evidence of benefit. Given the deficiencies in evidence regarding clinical benefit and cost-effectiveness, a large trial known as AD2000 is currently under way in the west midlands to examine the issues, including the possible impact of donepezil on the need for respite and other forms of long-term care.
The hon. Gentleman expressed concern about the ethical basis of those trials. I hope I can reassure him: I understand that the trials comply fully with all the appropriate ethical standards.
116
Several other agents are being evaluated for possible use. Some are drugs with licences for other conditions—for instance, anti-inflammatory agents, or oestrogens—while others are preparations available over the counter, such as vitamin E and gingko biloba. There is modest evidence that each of those may help some patients, but there is currently not enough evidence to recommend widespread prescribing. There is certainly no evidence that any represents a cure for Alzheimer's disease.
The Government are committed to providing support for research into dementia. This year, the Medical Research Council spent over £6 million on such research. It has supported 53 projects in the last three years. In addition, the council has made a number of substantial investments in the area of dementia. A new development grant for research into brain ageing has been awarded in partnership with the university of Newcastle for the examination of the pathology and diagnosis of dementia. That will commence next year. There is also the multi-centre study of cognitive function on ageing, a major 10-year study funded in collaboration with the Department of Health.
In that context, the hon. Member for Twickenham asked a specific question about the work of the National Institute for Clinical Excellence. I will not be able to confirm the institute's early-work priorities in the debate, but I think that an announcement will be made in the near future.
On health services for patients with Alzheimer's disease, the hon. Gentleman and the House will be aware of the Government's commitment to improving the position of older people in general, including those suffering from Alzheimer's disease. This is the United Nations international year of the older person. The Department of Health is actively supporting the year—a grant of £200,000 has been made available to support the campaign's good management and operation.
The Department of Health's policies form part of the Government's overall drive to promote the independence of older people, giving them more say and more control over the services that they receive. We wish to include people, to modernise services, to reduce inconsistency in access to services, to raise standards and to disseminate good practice through evidence and pilots.
The discussion document "Partnership in Action", which was issued last September, set out the Government's proposals to address the barriers that prevent health and social services from working more closely for the benefit of service users. "Partnership in Action" includes proposals to allow health authorities and trusts to pool budgets with local authorities and to delegate their commissioning and providing functions to one another. The proposals in "Partnership in Action" can be seen as part of a much wider Government strategy to address institutional and organisational barriers that prevent individuals from receiving the services that they need.
The national priorities guidance for 1999–2002 sets "promoting independence" as a key objective for health and local authorities. It requires authorities to reduce the risk of loss of independence following unplanned hospital admissions, and to develop prevention, recuperation and rehabilitation services.
Health improvement plans will bring together all local players, including the national health service, social services, education, housing, transport and police, to

117
develop cross-cutting plans to tackle the range of factors that can cause ill health. Alongside those plans, health and local authorities were asked to produce joint investment plans from April this year. The first cover services for older people. Their implementation will contribute to the Government's commitment to promote the independence of older people, including those with dementia.
In autumn 1997, we set out the medium-term agenda for meeting the needs of the vulnerable, including older people who need continuing health care, under the title "Better Services for Vulnerable People." It requires work in three inter-linked areas: delivering effective joint investment plans to meet the continuing and community care needs of local populations; improvement in the content and process of multi-disciplinary assessment of older people in both hospital and community settings; and the development of health and social care services that focus on optimising independence through timely recuperation and rehabilitation opportunities.
We are developing a long-term care charter called "You and Your Services", which is a joint initiative between my Department and the Department of the Environment, Transport and the Regions. It will give a framework for the setting of local standards by authorities to enable users and carers to see what they can expect from health, housing and social care services.
Discussions have been held with users, carers, frontline staff, professional bodies, voluntary organisations and statutory agencies about the possible details of the charter. It was launched for formal consultation last month. Following the consultation, the Government intend to publish it in the autumn, for implementation in April 2000.
The royal commission on long term care has obvious implications for people with Alzheimer's disease. The Government are considering its report with great care. The royal commission's remit spans a wide range of policy areas and Government Departments. Work is already taking place in several areas highlighted in the report, such as a national strategy for carers and the extension of direct payments to older people. The Government now need to spend some time considering the royal commission's proposals in detail.
The hon. Member for Twickenham will be aware of the enormous volume of care provided for people with Alzheimer's disease by families and other informal care givers. Many carers are themselves elderly and many may be infirm or suffering from stress. That is why, in February, we published the national strategy for carers.
118
A new special grant, an extra £140 million over three years, will enable local authorities to provide a wider range of services to support carers.
That will require local authorities to consult carers about their current services and to look into the possibility of greater diversity of provision. My right hon. Friend the Prime Minister has personally demonstrated his support for improving services for carers, as was clearly demonstrated in his foreword to the report.
Finally, and perhaps most importantly, there is the national service framework for older people, which will set national standards and define service models for NHS care of older people; put in place strategies to support implementation of those models; and establish performance measures against which progress within an agreed time scale will be measured.
The national service framework is being developed with the assistance of an external reference group, which brings together health professionals, service users and carers, health service managers, partner agencies and other advocates. The external reference group is backed up by several task groups, including one for consulting older people and one for listening to carers. Among the task groups, one relates specifically to mental health in older people, including people with Alzheimer's disease. We expect to publish emerging findings in the autumn, and to publish the framework itself in the spring of next year.
I believe that the national service framework will be able to drive up the quality of, and reduce variations in, the care received by older people, including those who suffer from dementia. I hope that the national service framework will also make a real difference to the treatment of people suffering from Alzheimer's disease. I am also glad to tell the hon. Member for Twickenham that the director of the Alzheimer's Disease Society is helping us with development of the new national service framework.
Alzheimer's disease remains a terrible affliction, blighting the lives not only of those who suffer from it but of those around them, for whom it can be a form of living bereavement. The Government are committed to improving the health and social care of people with Alzheimer's disease and to providing more effective support to those who care for them. I hope that the hon. Member for Twickenham shares those ambitions, and will therefore feel able to give his support to the initiatives that I have outlined.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes past Ten o'clock.

SOCIAL SECURITY

  Disability Living Allowance
  Mr. Cotter
  To ask the Secretary of State for Social Security how many applications for Disability Living Allowance have been allowed(a) at the appeal stage and (b) after an initial refusal, in each of the last three years; and how many applications have been allowed in total. [88229]

  Mr. Timms
  The administration of Disability Living Allowance is a matter for Mr. Peter Mathison, Chief Executive of the Benefits Agency. He will write to the hon. Member.

  Letter from Peter Mathison to Mr. Brian Cotter, dated 25 June 1999:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question about how many applications for disability living allowance have been allowed (a) at the appeal stage and (b) after an initial refusal, in each of the last three years; and how many applications have been allowed in total.
  The information you have requested is as follows:

  1996–97

  1997–98

  1998–99

  DLA claims allowed at appeal by ITS

  13,346

  12,710

  16,261

  DLA claims allowed on review

  44,784

  44,288

  31,629

  Number of DLA claims awarded

  239,669

  211,249

  175,597

  Total number of claims awarded 1996–99

  —

  —

  626,515

  Note:

  Independent Tribunal Service

  I hope you find this reply helpful.

  Gay Relationships
  Mr. Gordon Prentice
  To ask the Secretary of State for Social Security if he will assess the advantages and disadvantages to the social security system of recognising gay relationships. [87348]

  Angela Eagle
  In the contributory benefits system, all rights to contributory benefits derived from another person's contributions are based on the concept of a legal marriage.

  In income-related benefits, a couple is treated as a single unit, and benefit is calculated on the basis of the couple's combined needs and resources. A couple means either a married couple, or a man and a woman who are living together as husband and wife. In this country, current legislation permits a contract of marriage between members of the opposite sex only. Income-related benefits rules, which define an unmarried couple as comprising a man and a woman, follow this principle.

  Currently, we have no plans to carry out an assessment of the Social Security system as proposed. However, we do keep the system under review and aim to build a modern Social Security system which reflects today's changed society.
  2

  Millennium Compliance
  Mr. Rendel
  To ask the Secretary of State for Social Security what independent assessment he plans to make of the Year 2000 compliance of his Department's business-critical information technology systems. [88402]

  Angela Eagle
  Aspects of the Department's Year 2000 Programme as well as the Programme overall have already been subject to more than 20 independent assessments since work commenced in 1995. The latest one was conducted by IMPACT consultancy in May. This assessment was undertaken to fulfil our part in Action 2000's Independent Assessment Project of essential sectors of the national infrastructure. Findings will be disclosed at the National Infrastructure Forum on 13 July.

  The Department will be commissioning a further round of independent assessments of all delivery organisations later in the year and the results will be made available as part of the National Infrastructure Project monitoring phase.

DEFENCE

  Territorial Army
  Mr. Key
  To ask the Secretary of State for Defence (1) if he will list the TA units due to be disbanded within the next six months; [88378]

  (2) if he will list the TA units which have been disbanded since 28 November 1998. [88365]

  Mr. Doug Henderson
  In accordance with the announcement on the restructuring of the Territorial Army made by my right hon. Friend the Secretary of State for Defence on 17 November 1998,Official Report, columns 749-71, the following battalion and company units are due to disband by 1 July 1999:
  Royal Armoured Corps

  Scottish Yeomanry—elements are to transfer to the Queen's Own Yeomanry

  Kings Own Yorkshire Yeomanry (Light Infantry)—the elements are to re-role

  Royal Armoured Corps Pool of Officers

  Royal Regiment of Artillery

  201 (St. Albans) and 202 (Swaffham) Batteries 100 Regiment Royal Artillery

  289 Commando (Poole) Battery Royal Artillery

  Royal Engineers

  72 Regiment Royal Engineers

  106 (Dewsbury), 350 (Chilwell) and 575 (Buxton) Field Squadrons 73 Engineer Regiment Royal Engineers

  74 Independent Field Squadron

  125 (Stafford) and 202 Field Squadrons 75 Engineer Regiment Royal Engineers

  76 (less HQ and Workshop) and 78 (less Tunbridge Wells) Engineer

  Regiments Royal Engineers

  77 Engineer Regiment Royal Engineers

  220 Field Squadron, 101 Engineer Regiment (Explosive Ordnance Disposal)

  198 Field Park Squadron Royal Engineers

  Military Works Force-will be reduced

  3
  Infantry1

  Lowland Volunteers

  3rdBattalion Royal Highland Fusiliers

  3rdBattalion The Black Watch

  3rdBattalion The Highlanders

  7th/8thBattalion The Argyll and Sutherland Highlanders

  5thBattalion Princess of Wales's Royal Regiment

  6th/7thBattalion The Princess of Wales's Royal Regiment

  The London Regiment

  5thBattalion Royal Regiment of Fusiliers

  6thBattalion Royal Regiment of Fusiliers

  6thBattalion Royal Anglian Regiment

  7thBattalion Royal Anglian Regiment

  4thBattalion The Kings Own Royal Border Regiment

  5th/8thKings Regiment

  3rdBattalion The Prince of Wales's Own Regiment

  4th/5thGreen Howards

  4thBattalion The Queen's Lancashire Regiment

  3rdBattalion The Duke of Wellington's Regiment

  4thBattalion Devonshire and Dorset Regiment

  3rdBattalion The Cheshire Regiment

  3rdBattalion The Royal Welch Fusiliers

  2ndBattalion The Royal Regiment of Wales

  2ndRoyal Gloucestershire, Berkshire and Wiltshire Regiment

  3rdBattalion the Worcestershire and Sherwood Foresters Regiment

  The Staffordshire Regiment

  5thBattalion The Light Infantry

  6th Battalion The Light Infantry

  7thBattalion The Light Infantry

  4thBattalion Royal Green Jackets

  5thBattalion Royal Green Jackets

  4th/5th Battalion The Royal Irish Rangers

  4thBattalion The Parachute Regiment

  10thBattalion The Parachute Regiment

  Royal Logistic Corps

  562 Transport Squadron, 151 Transport Regiment Royal Logistic Corps

  67 Stores Squadron Royal Logistic Corps

  166 Logistic Support Regiment Royal Logistic Corps

  143 Stores Squadron Royal Logistic Corps

  209 Printing Troop

  241 General Support Squadron Royal Logistic Corps

  280 and 281 Movement Control Squadrons Royal Logistic Corps

  65 Petroleum Squadron Royal Logistic Corps

  68 Vehicle Squadron Royal Logistic Corps

  HQ 86 Postal and Courier Regiment Royal Logistic Corps

  Explosive Ordnance Disposal Squadron Royal Logistic Corps

  Royal Electrical and Mechanical Engineers

  202 Port and Reclamation Company 105 Battalion Royal Electrical and Mechanical Engineers

  207 Workshop Company 105 Battalion Royal Electrical and Mechanical Engineers

  HQ Royal Electrical and Mechanical Engineers Pool of Officers

  TA Specialist Increment REME

  4
  Adjutant General's Corps (Royal Military Police)

  152, 163, 164, 165, 251 and 254 Provost Companies Royal Military Police

  Bands

  Royal Gloucestershire Hussars Band

  South Nottinghamshire Hussars (Yeomanry) Royal Horse

  Artillery Band

  Royal Signals Band

  Royal Highland Fusiliers (Territorial) Band

  Warwickshire Band Royal Regiment of Fusiliers

  Yorkshire (Volunteers) Band

  Berkshire and Hampshire Band

  Light Infantry Burma Band

  Army Medical Services (Territorial Army) Band

  No further units other than those affected by SDR and listed above are due to disband between 1 July and 31 December 1999.

  115 new Infantry Battalions with a total of 64 companies will be formed as opposed to the current 33 battalions. Capbadge affiliations will remain at Company level.

  Mr. Key
  To ask the Secretary of State for Defence how many TA soldiers have left the service since November 1998(a) voluntarily and (b) compulsorily. [88364]

  Mr. Doug Henderson
  In the period of 1 November 1998 to 30 April 1999, 7,980 soldiers left the Territorial Army and 3,690 joined. Of those leaving, 7,271 left on completion of their engagement, 194 left voluntarily before their term of engagement was complete and 515 were compulsorily discharged for reasons including failure to complete training, misconduct, inefficiency or poor health.

  Departmental Spending (Scotland)
  Mr. Galbraith
  To ask the Secretary of State for Defence how much his Department spent in Scotland in the last year for which figures are available; and if he will make a statement. [87419]

  Mr. Doug Henderson
  Information on total defence expenditure is not generally held on a regional basis. However defence expenditure on equipment in UK regions is available. The latest available figures for equipment expenditure in Scotland (as published in "UK Defence Statistics 1998") are as follows:

  Year

  £million

  Perccentage

  1990–91

  600

  18

  1993–94

  550

  7.5

  1994–95

  550

  8.5

  1995–96

  600

  9

  1996–97

  550

  8

  1Of total UK expenditure on equipment

  Note:

  These figures are VAT-exclusive and rounded to the nearest £50 million and 0.5 per cent. respectively. They relate to the locations of the defence equipment contractors and do not take account of those of sub-contractors. If the latter could be allowed for, the regional distribution might differ significantly from that shown.

  Peacekeeping Force (Kosovo)
  Ms Drown
  To ask the Secretary of State for Defence if it is Her Majesty's Government's policy to follow the
  5
  UN Department of Peacekeeping Operations' guidelines on the minimum age for peacekeepers in relation to the UK members of the NATO peacekeeping force in Kosovo. [88015]

  Mr. Doug Henderson
  [holding answer 24 June 1999]I refer my hon. Friend to the answer I gave to the hon. Member for Richmond Park (Dr. Tonge) on 24 June 1999,Official Report, column 451.

  Location/unit

  Notes

  Kosovo

  The 1st Battalion The Irish Guards

  Battalion Headquarters, 2 companies, fire support company

  The 1st Battalion The Royal Highland Fusiliers

  1 company

  The 1st Battalion The Green Howards

  1 company

  The 1st Battalion The Parachute Regiment

  Includes a company from The 3nd Battalion The Parachute Regiment

  The 1st Battalion The Royal Gurkha Regiment

  —

  The 1st Battalion The Royal Irish Regiment

  Includes a company from the 1st Battalion The Royal Gloucestershire, Berkshire and Wiltshire Regiment

  Bosnia

  The 1st Battalion The Royal Highland Fusiliers

  Battalion Headquarters, 2 companies, fire support company Includes a company of Gurkhas

  The 2nd Battalion The Parachute Regiment

  Includes a company of Gurkhas

  Northern Ireland

  The 1st Battalion The Green Howards

  Includes a company from the 1st Battalion The Black Watch

  The 1st Battalion The Royal Scots

  Includes a company from The 1st Battalion The Duke of Wellington's Regiment

  The 1st Battalion The Grenadier Guards

  —

  The1st Battalion The Cheshire Regiment

  —

  The Royal Dragoon Guards

  Armour in the infantry role

  32 Regiment Royal Artillery

  Artillery in the infantry role

  The 1st Battalion The Royal Welch Fusiliers

  Resident

  The 1st Battalion The Scots Guards

  Resident

  The 1st Battalion The Royal Anglian Regiment

  Resident

  The 1st Battalion The Queen's Lancashire Regiment

  Resident

  The 1st Battalion The Royal Green Jackets

  Resident

  The 1st Battalion The King's Regiment

  —

  In addition, there are six Home Service battalions of the Royal Irish Regiment, comprising both full-time and part-time members, which are wholly committed to Northern Ireland.

  Units are not 'deployed' to Germany. The following infantry battalions are, however, currently in Germany:

  Location/unit

  Notes

  Germany

  2nd Battalion The Royal Regiment of Fusiliers

  —

  2nd Battalion The Royal Green Jackets

  —

  lst Battalion The Royal Regiment of Wales

  —

  Kosovo
  Mr. Bercow
  To ask the Secretary of State for Defence what assessment he has made of the command structure of the KLA; what measures he is taking to ensure co-operation with KLA elements which are not part of the central structure; and if he will make a statement. [87301]

  Mr. George Robertson
  The KLA's command structure is presently based on military lines. It consists of the KLA Interim Government of Kosovo (IGOK) below which is the KLA's General Staff. The staff commands and controls the seven Operational Zones (OZ) found throughout the province. The OZs in turn command a number of KLA brigades and independent battalions.
  6

  Infantry Battalions
  Mr. DuncanSmith
  To ask the Secretary of State for Defence which Army infantry battalions are currently deployed in(a)Kosovo, (b)Bosnia, (c)Northern Ireland and (d)Germany. [88125]

  Mr. Doug Henderson
  [holding answer 24 June 1999]The information requested is as follows:

  It is for General Jackson and his military commanders on the ground to determine how to deal with individual groups with whom they may have contact. They will be dealt with on an impartial basis but will be expected to act in accordance with the undertaking on demilitarisation given by the KLA to KFOR on 21 June.

  Mr. Duncan Smith
  To ask the Secretary of State for Defence which units now not deployed in Kosovo are warned to deploy to Kosovo; and where are these units now deployed. [88126]

  Mr. George Robertson
  [holding answer 24 June 1999]I am withholding this information on the future movement of units in accordance with exemption 1 of the Code of Practice on Access to Government Information relating to Defence, Security and International Relations.

  Submarine Spent Nuclear Fuel Cores
  Mr. Corbyn
  To ask the Secretary of State for Defence how many submarine spent nuclear fuel cores are currently held at(a) HMS Vulcan, (b) Rosyth, (c) Devonport and (d) Sellafield. [87707]

  Mr. Spellar
  [holding answer 22 June 1999]The number of submarine spent fuel cores currently held is as follows:

  (a) Vulcan Naval Reactor Test Establishment: 2 fuel cores

  (b) Rosyth Dockyard: 1 fuel cores

  (c) Devonport Dockyard:1¾ fuel cores

  (d) BNFL Sellafield: 46¼fuel cores.

  7
  Mr. Corbyn
  To ask the Secretary of State for Defence on what day the new Used Core Transport Package for transporting submarine spent fuel cores entered into service. [87704]

  Mr. Spellar
  [holding answer 22 June 1999]The first operational use of the new Used Fuel Flasks (UFFs) was Thursday 10 June 1999.

  Nuclear Transfers (USA)
  Mr. Alan Simpson
  To ask the Secretary of State for Defence how many flights of special nuclear material from RAF Brize Norton to the United States and vice versa have occurred in each of the last five years. [88142]

  Mr. Doug Henderson
  The number of flights carrying special nuclear material each year between UK and US depends on programme requirements which are confidential between the two governments. I am therefore withholding the information requested under exemption 1 of the Code of Practice on Access to Government Information relating to defence, security and international relations.

  Sports Grounds
  Mr. Nigel Jones
  To ask the Secretary of State for Defence how many sports grounds there are on MOD sites. [88494]

  Mr. Spellar
  The information sought is not held centrally and will have to be collected from various sources. I will write to the hon. Member as soon as the information is available and a copy of my letter will be placed in the Library of the House.

  Veterans Advice Cell
  Mr. Ottaway
  To ask the Secretary of State for Defence what is the planned expenditure on the Veterans Advice Cell for each of the next five years. [88703]

  Mr. Doug Henderson
  Planned expenditure for the Ministry of Defence Veteran's Advice Unit is currently set at £172,000 per year until 2002–03, which is the duration of our current formal forward spending plans. It is anticipated that provision will continue at the same level in future years. This amount covers the employment costs for the three Warrant Officers operating the Unit and associated costs, including telecommunications, apportioned clerical support, training and publicity material.

  Environmental Programmes
  Mr. Sheerman
  To ask the Secretary of State for Defence if he will reward those sectors of the armed forces that achieve higher levels of performance in environmental programmes, with particular reference to recycling. [88441]

  Mr. Spellar
  All sectors of the armed forces are required to comply with the Secretary of State's environmental policy statement and the environmental policies and practices set out in JSP 418, the Ministry of 8
  Defence's environmental manual. JSP 418 encourages all personnel to identify opportunities for recycling. The Secretary of State' s environmental policy statement is incorporated into JSP 418, a copy of which is in the Library of the House.

  Mr. Sheerman
  To ask the Secretary of State for Defence what steps he is taking to encourage all sections of the armed forces and their bases to participate fully in environmental joint programmes, with particular reference to re-cycling. [88442]

  Mr. Spellar
  All sections of the armed forces comply with the guidance provided in the MOD's environment manual, JSP 418, which provides detailed policy on waste reduction initiatives based on recycling.

  RAF Pilots
  Mr. Key
  To ask the Secretary of State for Defence how many RAF pilots are serving in(a) the Balkan theatre,(b) Turkey, (c) Kuwait, (d) Saudi Arabia, (e) Cyprus, (f) the Falkland Islands, (g) Northern Ireland and (h) elsewhere outside the United Kingdom. [88369]

  Mr. Doug Henderson
  The following table shows the number of trained RAF pilots serving in various theatres of operations as at 1 June 1999.

  Theatre of operations

  Number of RAF pilots

  Balkans1

  108

  Turkey

  22

  Kuwait

  16

  Saudi Arabia

  35

  Cyprus

  10

  Falkland Islands

  23

  Northern Ireland

  67

  Other overseas

  195

  1 Balkans theatre includes personnel serving in: Italy, Corsica, Bosnia, Croatia and Macedonia

  Mr. Key
  To ask the Secretary of State for Defence what is the cost of training a pilot in the RAF from entry into service to active flying service for(a) fast jets, (b) transport and other aircraft and (c) helicopters. [88371]

  Mr. Doug Henderson
  I will write to the hon. Member and a copy of my letter will be placed in the Library of the House.

  Mr. Key
  To ask the Secretary of State for Defence what discussions he has had with representatives of commercial airlines since May 1997 on the recruitment of former service men as pilots; and if he will make a statement. [88372]

  Mr. George Robertson
  I wrote to representatives of seven major UK commercial airlines on 5 April of this year to develop a dialogue on the recruitment of former Royal Air Force personnel as pilots. No Ministerial discussions have taken place.

  Mr. Key
  To ask the Secretary of State for Defence what was the total number of(a) fast jet pilots, (b) transport and support aircraft pilots and (c) helicopter pilots on active service in each of the past 10 years; and if he will make a statement. [88370]
  9
  Mr. Doug Henderson
  The information requested is set out by Service in the table:

  Fast jet

  Multi engined

  Rotary wing

  Date

  RN1

  RAF

  RAF

  RN

  Army 3

  RAF

  1 April 1999

  52

  874

  837

  512

  369

  518

  1 April 1998

  49

  943

  866

  536

  370

  507

  1 April 1997

  57

  991

  898

  564

  344

  506

  1 April 1996

  66

  1,062

  1,002

  594

  323

  524

  1 April 1995

  67

  1,090

  1,050

  624

  311

  530

  1 April 1994

  67

  1,124

  1,119

  612

  286

  532

  1 April 1993

  2—

  1,371

  1,046

  2—

  282

  539

  1 April 1992

  2—

  1,397

  1,081

  2—

  258

  552

  1 April 1991

  2—

  1,394

  1,122

  2—

  218

  542

  1 April 1990

  2—

  1,389

  1,200

  2—

  215

  544

  1 Figure excludes Royal Marines for which no historical data held. However, as at 1 June 1999 there were an additional 32 Royal Marine officer and 20 Royal Marine other ranks helicopter pilots on the trained strength.

  2 RN figures by specialisation, prior to 1 April 1994, could only be provided at disproportionate cost.

  3 The figures for Army Helicopter pilots exclude reservists mobilised for operations in Bosnia as well as: member of Royal Irish Regiment (Home Service), Gurkha's Locally Employed Personnel and individuals engaged on Full Time Reserve Service.

  Sexual Discrimination
  Mr. Key
  To ask the Secretary of State for Defence what (a) estimates he has made of the number of cases involved and (b) provision his Department has made in respect of future compensation claims for sexual discrimination. [88374]

  Mr. Spellar
  It is inherently difficult to forecast the number of applications likely to be made to Employment Tribunals in which sexual discrimination is alleged. However, based on the number and value of cases settled in the previous two years and cases outstanding my Department could expect about 10–12 applications at a total value of some £250,000 will be settled this financial year from Service or former Service personnel.

  Similar information relating to civilian employees of the Department is not held centrally.

  Army Families Federation
  Mr. Key
  To ask the Secretary of State for Defence when he last met representatives of the Army Families Federation; and what was discussed. [88362]

  Mr. George Robertson
  I met representatives of the Army Families Federation at their annual conference on 23 September 1998. In my speech and in the question and answer session I discussed the Policy for People initiative announced as part of the Strategic Defence Review. This included the Service Families Task Force, education, health and welfare. In addition, last week I met AFF representatives and Army families in Germany to hear their current concerns at first hand.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Secretary of State for Defence on what date his Department was first informed 10
  that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88795]

  Mr. Doug Henderson
  My Department, together with others, was informed earlier this month that there was some doubt whether these provisions had been effectively renewed by the 1998 and 1999 Continuance Orders, and that advice was being sought on this point.

  Strategic Stock
  Ms McCafferty
  To ask the Secretary of State for Defence what percentage of the United Kingdom's strategic stock of(a) ordnance and (b) fuel was used during NATO operations in Kosovo; what assessment he has made of the impact on the United Kingdom's defence capability; and what estimate he has made of (i) the length of time required and (ii) the cost to replace the stock used. [87196]

  Mr. George Robertson
  I am withholding information on the percentage of the United Kingdom's ordnance stock used during the NATO operation in Kosovo, and the length of time taken to replace ordnance stocks, under exemption la of the Code of Practice on Access to Government Information (information where disclosure would harm national security on defence). The UK does not hold a strategic stock of fuel. Stocks of fuel are continually replenished in order to maintain them at appropriate levels.

  We have not yet conducted a full analysis of the impact of operations in Kosovo. While timely and measured steps are being taken to replace ordnance, it is too early to make a meaningful estimate of the cost involved.

  St. Malo Accord
  Mr. Bercow
  To ask the Secretary of State for Defence if he will list the instances of military co-operation which(a) have arisen and (b) are planned consequential to the St. Malo Accord. [85218]

  Mr. George Robertson
  The Letter of Intent on co-operation in crisis management and operations, signed between the UK and France at St. Malo in December 1998, has moved work forward on planning for non-combatant evacuation operations; joint exercises; improved links between operational headquarters; co-ordination of naval deployments; information exchanges on peacekeeping activities; Year 2000 computer problems; logistics; and arrangements for dealing with the media. We will continue to develop our co-operation in these areas.

ATTORNEY-GENERAL

  Crown Prosecution Service
  Mr. Lepper
  To ask the Attorney-General if he will announce the Government's final response to the recommendations contained in Sir Ian Glidewell's report following his review of the Crown Prosecution Service; and if he will make a statement. [88910]

  The Attorney-General
  Shortly after coming into office, I set up a review of the Crown Prosecution Service. Its terms of reference, 12 June 1997,Official Report, columns 533–34, went to the fundamentals of the Service.
  11
  An examination of the organisation and structure of the CPS was required along with consideration of what changes might be necessary to provide for more effective and efficient prosecution of crime.

  The terms of reference reflected the concerns expressed in the Labour Party paper, "The Case for the Prosecution". That paper was prepared while in opposition after considering the disquiet expressed by a wide range of individuals about the criminal justice system.

  As is well known by now, Sir kin Glidewell conducted the review, assisted by Sir Geoffrey Dear and Robert McFarland.

  I published Sir lain' s Report on 1 June 1998,Official Report, columns 42–52. The report was widely and warmly received. It acknowledged the achievements of the CPS including, most importantly, the establishment of an independent, national, prosecution service. However, it also confirmed many of the concerns that had been expressed about the CPS. It made 75 recommendations.

  I was able to accept immediately the broad thrust of the Report which sets an agenda for re-ordering the priorities of the CPS to focus on the core business of prosecuting. A key recommendation concerned the appointment of a Chief Executive. That was a specific recommendation I was able to accept immediately: Mark Addison was appointed and took up the post within a matter of days. David Calvert-Smith QC was appointed DPP in November 1998. The Director and Chief Executive have together given a strong lead, driving forward the reform of the CPS.

  While some of the recommendations affect the internal operation of the CPS, other recommendations are relevant to a number of criminal justice agencies, including the Lord Chancellor's Department, the Home Office and the police. These inter-agency recommendations have been taken forward by the relevant agencies working together in co-operation.

  On 30 November 1998 I was able to announce an interim Government response to the Glidewell Report, 30 November 1998,Official Report, columns 67–70. That interim response identified what had by then been achieved and what remained under consideration.

  Today, I am able to provide the final Government response to Sir lain Glidewell's Report. I have placed in the Library of the House a chart which identifies whether the Government accepts or otherwise each individual recommendation. Where necessary, the chart shows how recommendations are planned to be taken forward with a timetable for action. Sixty-four recommendations are shown as accepted, accepted in part or in principle, or implemented. Only two of the recommendations are rejected; these are identified below. The remaining few recommendations are shown as noted or considered. I shall focus on some of the key aspects.

  On 19 April 1999 I announced a new national framework for Criminal Justice Units building on a key recommendation in the Glidewell Report, 19 April 1999, Official Report, columns 397–98. The Criminal Justice Units will provide joint police/CPS administration, having sole conduct of fast-track cases and responsibility for the prosecution of cases in the magistrates' courts. Chief Crown Prosecutors working together with Chief
  12
  Constables must produce by the end of November this year joint outline plans for implementing the Criminal Justice Units. Progress will be monitored.

  I can now announce that CPS Trial Units will also be established, again building on a key recommendation in the Glidewell report. The Trial Units will be responsible for all prosecutions in the Crown Court. They will provide a means by which CPS lawyers can focus on the most serious cases and a structural mechanism through which CPS Higher Court Advocates will be able to exercise their rights of audience to the benefit of the justice system.

  The creation of Criminal Justice Units and Trial Units will go a long way to defining more clearly the relationship between the key agencies of the police, CPS and courts, as the Glidewell Report recommended. One crucial area of local co-operation concerns the listing of cases at court. The Glidewell Report made recommendations regarding listing practices at both Magistrates' Courts and Crown Court centres. These recommendations have been accepted. Improved case preparation by the CPS and inter-agency moves towards better case management should lead to more effective listing practices which will ensure that cases are prepared and listed for trial more quickly. Work is underway on the preparation of national protocols to guide local arrangements in this respect.

  Over a period, as a result of fast-tracking and effective listing, the CPS will be able to deploy more lawyers on the more serious cases and thereby achieve the shift in the centre of gravity recommended by the Glidewell Report.

  After careful consideration, two of the Glidewell Report recommendations have been rejected, though the concerns that prompted the recommendations are being addressed in other ways.

  First, the Glidewell Report recommended that the CPS install a new costing system. The CPS commissioned an independent consultant to consider this complex area in close detail. As a result, it has been decided that the existing activity based costing system should be retained but improved to reflect the objectives identified by the Glidewell Report.

  Secondly, the Glidewell Report recommended that as soon as practicable the CPS should take over from the police responsibility for witness warning. The possibility of transferring this responsibility has been considered carefully but is not thought to be a practical option, or a proper reflection of the respective constitutional priorities of the CPS and the police. Though the recommendation is rejected, the new framework for joint CPS/police administration will enable the police and CPS to work together to provide a better service to victims and witnesses by building on established arrangements.

  Related to this second recommendation is the Glidewell recommendation that responsibility for giving information and explanations to complainants/victims should transfer from the police to the CPS as soon as resources permit. The Government are committed to improving the service that the criminal justice system as a whole provides to victims and the Glidewell recommendation is accepted in principle. The issues raised with implementing this recommendation will be taken forward on a national basis as part of on-going work on the treatment of victims and witnesses. This will involve a scoping/options study,

  13
  and a detailed analysis of the resource implications. In the meantime, the CPS and criminal justice agencies will consider what immediate action can be taken to improve the current level of service which victims receive.

  The reforms brought about by the Glidewell Report must be seen alongside the re-structuring of CPS Areas. When this Government came into office, I announced our intention that the CPS national structure should move from the existing 13 geographical Areas to 42 geographical Areas coterminous with police areas (save for London in which the Metropolitan Police Service and the City of London Constabulary should be counted as one CPS Area). This initiative is aimed at enhancing local effectiveness, promoting local inter-agency co-operation and local accountability. It is an initiative which the Glidewell Report endorsed believing it to provide the basis for a genuinely new start for the CPS.

  In April, the 42 CPS Area structure was implemented. The selection process for the new Chief Crown Prosecutors (CCPs) took into account Sir lain Glidewell's vision of their role and responsibility as individuals of stature whose competence and integrity would be crucial to the success of the move to a decentralised, locally accountable, national service. The Glidewell Report also recommended that Area Business Managers (ABMs) be appointed to take responsibility for Area management and administration, thereby enabling the CCPs to focus on the business of prosecuting. The CCPs and ABMs are now in post helping to implement locally the reform of the CPS.

  The move to 42 CPS Areas is an important part of what I intend to be a significant cultural change for the CPS, one which will greatly enhance the public service provided by its staff. There are encouraging signs that the cultural change is well underway with the CPS becoming a more flexible and locally accountable organisation, responsive to local needs and circumstances.

  In turn, this means a changing role and a changing culture for CPS national headquarters. It will provide the national framework for prosecuting, manage the resources available to the Service as a whole and facilitate the joined-up approach to improving the criminal justice system to which the Government are committed. Its principal role will be to provide support to the Areas, enabling them to deliver a prosecution service locally. The signs are that this new emphasis is already being noticed and welcomed by the Areas. As a public service responsible for spending £0.3 billion of public funds each year and accountable to Parliament there must be accounting and monitoring systems. The DPP and Chief Executive are continuing to work together to ensure that the central demands made of Areas are reviewed and that bureaucracy is minimised.

  The Glidewell Report acknowledged that there would continue to be a need for a structure separate to the local Areas responsible for handling the most serious and sensitive of cases which require resources not normally available in CPS Areas. The Report recommended two separate but parallel management structures to handle this category of casework. First, a central pool and secondly a national network of CPS staff with a division of the casework between the two and each reporting into CPS headquarters. These recommendations have been accepted in principle but with the CPS taking forward a proposal that there should be a single management structure for
  14
  this category of casework embracing both the central pool and the national network of CPS staff reporting into CPS headquarters. This will provide a cohesive framework for prosecuting this category of cases with a clear line of responsibility and answerability.

  The move to 42 CPS Areas coterminous with police force areas is a significant opportunity for the CPS and other criminal justice agencies to work together locally to deliver the Government's objectives for the criminal justice system as a whole, namely, to reduce crime and to deliver justice fairly and effectively. The structure of local criminal justice liaison bodies is being revised, as the Glidewell Report recommended, to take account of the 42 Area structure. A joint measure and targets on the timeliness in dealing with cases through the prosecution process are being established to complement existing targets for improving the time taken to prosecute persistent young offenders. Joint targets reinforce the message that agencies must work together to make the whole system more effective, not just to improve individual parts sometimes to the detriment of other agencies.

  Accepting another of the recommendations, work is progressing to identify common casework statistics so that meaningful comparisons can be made agency-by-agency, facilitating a better understanding of how the system is working.

  I announced in November that the Glidewell Report recommendations concerning the CPS Inspectorate were accepted with some modifications. I can now announce that the Government propose to put the Inspectorate on an independent statutory basis as soon as the legislative timetable permits. With this in mind, a new Chief Inspector, Stephen Wooler, took up his post in March of this year. He is driving forward the work necessary to the reform of the Inspectorate which will enhance its independence, expand its role and responsibilities and thereby provide the scrutiny of the Service which will support public confidence in the CPS.

  Two other key initiatives have inter-acted with the Glidewell report. First the Narey reforms for reducing delay in the criminal justice system, and, secondly, the publication of the criminal justice system's Strategic Plan and Business Plan published as a response to the two strategic objectives set by the Government. Additionally, the Glidewell reforms of the CPS must take into account the Government's response to the recommendations contained in Sir William Macpherson's Report of his inquiry into the murder of Stephen Lawrence. This is not the moment to focus on each of these matters. Suffice it to say that they, along with the Glidewell reforms and the move to 42 CPS Areas, represent a key theme of this administration, namely the modernisation of public service by developing a cohesive and coherent approach to policy with agencies and Departments working together for the benefit of the community as a whole. This approach will, I believe, deliver a modern criminal justice system worthy of that title.

  The cultural, structural and organisational changes that are happening to the CPS must be carefully managed. A lesson of the past is that a rush to change is a recipe for error. Whilst I intend proper progress will be made I also

  15
  intend the changes to be managed with care, ensuring that we get it right for society as a whole while being sensitive to CPS staff.

  I am pleased to take this opportunity of commending all those who have worked together so hard to take forward the recommendations. I include, of course, not only members of the CPS but those of other agencies and Government Departments within the criminal justice system. The good-will and determination to work together to make for a better system has enabled brisk progress to be made on what is a substantial initiative within the criminal justice system.

  As superintending Minister for the CPS I pay particular tribute to all members of CPS staff who have faced a period of uncertainty with professional resolve. The reforms will, I believe, enhance their individual roles, increase their job satisfaction, and lead to improved morale.

  I believe that the Glidewell reforms have laid a sure foundation for a better Crown Prosecution Service and a better criminal justice system working for the benefit of the community. The CPS has embarked on its new start; by taking forward Sir Iain Glidewell's recommendations it is well on the road to fulfilling what Sir Iain described as its potential to become a lively, successful and esteemed part of the criminal justice system.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Attorney-General on what date his Department was first informed that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88798]

  The Attorney-General
  As is now known, a lawyer in my office read an article in Criminal Law Week suggesting that the provisions were not in force. This was drawn to the attention of the Home Office and following a request for advice I reached the view on 17 June that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force.

NORTHERN IRELAND

  RUC (Portadown)
  Mr. Corbyn
  To ask the Secretary of State for Northern Ireland what is the distance between Portadown RUC station and the location of the attack on 27 April 1997 on the late Robert Hamill. [85502]

  Mr. Ingram
  The RUC have advised that the distance a person would have to travel between these locations is around 250m.

  Mr. Corbyn
  To ask the Secretary of State for Northern Ireland how many Royal Ulster Constabulary officers were on duty within Portadown RUC Sub-Division between 11 pm on Saturday 26 April 1997 and 4 am on Sunday 27 April 1997. [85501]

  Mr. Ingram
  The RUC have advised that there were 19 police officers on duty in Portadown Sub-Division between 11.00 pm on Saturday 26 April 1997 and 4.00 am on Sunday 27 April 1997.
  16

  Location of Victims' Remains
  Mr. Moss
  To ask the Secretary of State for Northern Ireland if she will make a statement on her review of the operations to locate the disappeared in Northern Ireland. [88335]

  Mr. Ingram
  The Agreement between the United Kingdom and Irish Governments signed on 27 April includes a formal reporting mechanism. The Agreement requires the Independent Commission for the Location of Victims' Remains to report to both Governments on its activities no later than one year after its establishment and annually thereafter. Through that formal mechanism, the two Governments will be in a position to review the operation of the Commission's activities. At this time, developments at the search sites are being followed with close interest and we continue to hope that the remains of the victims will be located.

  Young Offenders
  Mr. MacKay
  To ask the Secretary of State for Northern Ireland what plans she has to replace the open provision juvenile justice Provisions by a single closed provision at Lisnevin Centre; when she expects to announce her decision on the provision; and what assessment she has made of the option of retaining open provision facilities for children in the Province. [88467]

  Mr. Ingram
  Following recent changes in the law relating to juvenile offenders, only the most serious or persistent offenders can be placed in custody. Most boys in custody are held in the only secure accommodation available—this is at Lisnevin. There has been a significant fall in the numbers in custody due to this legislation and also the introduction of a new determinate sentence and there is considerable spare capacity in the system. A review of the need for custodial places—both open and secure–is being carried out. The outcome of the review will be published in due course.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Secretary of State for Northern Ireland on what date her Department was first informed that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88800]

  Mr. Ingram
  The Northern Ireland Office was first so informed on 21 June 1999.

PRESIDENT OF THE COUNCIL

  Millennium Compliance
  Ms Dari Taylor
  To ask the President of the Council what steps the Government are taking to inform the public on the principal issues relating to the millennium date change. [87242]

  Mrs. Beckett
  As part of the Government's continuing public information programme, "The Millennium Bug—Facts Not Fiction" booklet has been produced and widely distributed earlier this month. The quarterly returns of Government Departments, agencies and key parts of the wider public sector are available too on the Internet, as is
  17
  the Government-commissioned tracking research of public perceptions of the Bug. Preparations across the national infrastructure are being brought together and disclosed through the National Infrastructure Forum.

  Privy Council Meetings
  Mr. Gordon Prentice
  To ask the President of the Council if she will make a statement on arrangements for convening meetings of the Privy Council. [87244]

  Mrs. Beckett
  The Queen normally holds a meeting of the Council every month except January, August and September. Additional Councils are convened if urgent business requires it.

HOUSE OF COMMONS

  EU Question Time
  Mr. Bercow
  To ask the President of the Council what plans she has to institute a separate ministerial question period for European Union matters. [87243]

  Mr. Tipping
  European Union matters feature in questions to virtually every Department and so are answered on the Floor of the House every sitting day. I do not think it would be either practical or desirable to confine such questions to a single, separate period or to create an additional period just for such questions.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the President of the Council on what date her Department was first informed that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88799]

  Mrs. Beckett
  On 18 June 1999.

FOREIGN AND COMMONWEALTH AFFAIRS

  Russian Military
  Mr. Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations have been made to the Russian Federation Government concerning the level of civilian control over its military; and if he will make a statement. [88330]

  Ms Quin
  The Prime Minister discussed the rapid deployment of Russian paratroops to Pristina with Russian Prime Minister Stepashin at the G8 Cologne Summit on 18 June. My right hon. Friend the Foreign Secretary raised this incident with Foreign Minister Ivanov on 13 June. The Russians agreed that trust is important for closer co-operation between our forces on the ground in Kosovo. We have also supported training courses for the Russian military on civilian and democratic management of the armed forces.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Secretary of State for Foreign and Commonwealth Affairs on what date his 18
  Department was first informed that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88794]

  Mr. Tony Lloyd
  The Home Office informed the Foreign and Commonwealth Office on 21 June 1999.

  Ethiopia-Eritrea (Conflict)
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what reports he has received concerning casualties from the conflict in Ethiopia and Eritrea. [88359]

  Mr. Tony Lloyd
  We have seen differing reports of casualties throughout the conflict between Ethiopia and Eritrea. We have no reliable figures, but estimate that total casualties are high on both sides: approximately 40,000 Ethiopian and 20,000 Eritrean.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Governments of(a) Ethiopia and (b) Eritrea, concerning the conflict between the two countries. [88360]

  Mr. Tony Lloyd
  We have always supported UN and OAU efforts to resolve the conflict. I discussed the issues with the OAU Secretary General on 28 May and with the UN Secretary General on 25 June. I have also discussed the war with the Ethiopian Foreign Minister and Deputy Foreign Minister and the Ambassadors of Ethiopia and Eritrea in recent months. Our message has been clear: both sides must stop fighting immediately and implement the OAU Framework peace proposals.

  Democratic Republic of the Congo
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what reports he has received concerning the meeting of the heads of seven African states in Pretoria on 17 June to discuss the civil war in the Democratic Republic of the Congo. [88358]

  Mr. Tony Lloyd
  Reports from the region reinforce our view that the meeting was a positive step in preparation for a regional summit scheduled to take place in Lusaka. If real progress is to be made there all parties will need to show the political will and commitment to achieve a peaceful, negotiated settlement to the conflict in the Democratic Republic of the Congo.

PRIME MINISTER

  Public Interest Immunity Certificates
  Mr. Gerald Howarth
  To ask the Prime Minister how many public interest immunity certificates have been issued by Ministers or their officials since 1 May 1997; and if he will list the occasions on which such certificates have been issued. [85359]

  The Prime Minister
  My right hon. and learned Friend the Attorney-General's statement on 11 July 1997,Official Report, columns 616–17, made clear that, in accordance with the approach adopted by the previous Government, public interest immunity will not be asserted by the Government unless the relevant Minister believes

  19
  that disclosure of a document or piece of information will cause real damage to the public interest and that this test would be applied rigorously.

  Where public interest immunity applies, the Government's policy is to make voluntary disclosure if it considers that the interest of justice outweighs the public interest in withholding the document or information in question. In all cases a claim for public interest immunity is subject to the power of the court or other tribunal to order disclosure.

  Prior to 1 May 1997, no centrally maintained record for Government public interest immunity certificates was kept. However, on the best information available from a trawl of the main relevant Departments, I can disclose that PII certificates have been issued and other parties notified on the following number of occasions:

  Year

  Home Departments1

  NIO

  FCO

  1995

  17

  8

  1

  1996

  10

  0

  2

  1997

  15

  5

  1

  1998

  14

  220

  1

  1999 (to date)

  4

  8

  1

  1 Peior to 1997, DTI, MOD and HO only are included; after 1997, all relevant Departments

  2 13 of the 20 cases in 1998 relate to a single occasion involving the movement of 13 prisoners with HMP Belfast

  Honours List
  Mr. Gordon Prentice
  To ask the Prime Minister how many nominations for honours in respect of the most recent Honours List were received broken down by each English county; and what percentage were successful. [87352]

  The Prime Minister
  Each year the Nominations Unit receive in excess of 7,000 nominations direct from members of the public. In addition, Government Departments will have received several thousand nominations from national organisations and members of the public. Information on nominations is not held in a form which relates them to particular counties or particular Honours Lists. Nor is it normal practice to release information about nominations.

  However, my hon. Friend may wish to refer to the 1999 Birthday Honours List within the features section in the News Centre on the No.10 Downing Street website (http"//www.number-10.gov uk/i ndex.html) which contains information about those who have received honours.

  Kosovo
  Mr. Bercow
  To ask the Prime Minister at what level of command the decision was made to supply Russian troops occupying the airport at Pristina; and what items were supplied in what quantities. [88465]

  The Prime Minister
  Following receipt of a request from the commander of the Russian forces in Kosovo, Commander KFOR, Lieutenant General Mike Jackson, took the decision to provide the supplies that were needed. The priority was for bottled water, and 15,000 litres were 20
  supplied on 16 June. In addition, a small number of maps of the local area were provided. Offers of fuel and medication were turned down by the Russians.

  EU Charter of Rights
  Mr. Bercow
  To ask the Prime Minister if he will list his priorities for the inclusion of topics in an EU charter of rights. [88608]

  The Prime Minister
  As my right hon. Friend the Foreign Secretary told the House on 25 May 1999,Official Report, column 118, we welcome this initiative. We believe that the Charter should make the fundamental rights which already exist and are applicable at Union level more visible to the Union's citizens. The incoming Finnish Presidency has been given responsibility for taking this work forward and we look forward to working with them.

  Wal-Mart
  Mr. Gummer
  To ask the Prime Minister what communications(a) by telephone or (b) directly he received from the White House relating to his meeting with the Chief Executive Officer of Wal-Mart. [88700]

  The Prime Minister
  None.

  Mr. Gummer
  To ask the Prime Minister if (1) during his meeting this year with the Chief Executive Officer of Wal-Mart, there was discussion of planning matters; [88697]

  (2) what other Ministers were present at his meeting with the Chief Executive Officer of Wal-Mart; [88698]

  (3) for what reason the Minister for Trade was not present at his meeting with the Chief Executive Officer of Wal-Mart; [88699]

  (4) what discussions he has had about the planning issue raised during his meeting with the Chief Executive Officer of Wal-Mart with the Secretary of State for the Environment, Transport and the Regions. [88707]

  The Prime Minister
  I refer the right hon. Member to the answer I gave him on 6 May 1999,Official Report, columns 451–52.

  Mr. Yeo
  To ask the Prime Minister (1) how many meetings he has had with representatives of the American Government where the proposed merger of Wal-Mart with Asda was discussed; [88508]

  (2) how many meetings his staff have had with representatives of the American Government where the proposed merger of Wal-Mart with Asda was discussed; [88509]

  (3) how many meetings (a) he and (b) his staff have had with representatives of Wal-Mart in connection with their proposed merger with Asda. [88803]

  The Prime Minister
  None.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Prime Minister on what date(a) he and (b) his Office were first informed that

  21
  Parts IV A and IV B of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88731]

  The Prime Minister
  My office was informed on 18 June. I received an updated briefing note on Monday on my return from the Cologne European Council.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Rural Bus Services
  Mr. Rammell
  To ask the Secretary of State for the Environment, Transport and the Regions if he will place in the Library figures for each relevant local authority in England of the number of(a) new bus services and (b) enhancements to existing bus services in rural areas which have resulted from the use of rural bus subsidy grant; and if he will give examples for each authority of such new and enhanced services. [82636]

  Ms Glenda Jackson
  The information provided by each local authority has been placed in the Library. It shows that the first year of this new grant has been a success with a total in England alone of 658 new services and 842 enhanced services as a result of the grant's introduction.

  Mr. Peter Bradley
  To ask the Secretary of State for the Environment, Transport and the Regions what subsidies have been provided to(a) Shropshire County Council and (b) Telford & Wrekin Council to support rural bus services in (i) 1997–98, (ii) 1998–99 and (iii) 1999–2000. [88148]

  Ms Glenda Jackson
  1998–99 was the first year of the new Rural Bus Subsidy Grant. In that year Shropshire County Council and Telford & Wrekin Council were allocated the sums of £630,354 and £76,048 respectively, for the support of rural buses. The same amounts have been allocated for 1999–2000.

  Multi-modal Transport Study (London and South-West Corridor)
  Jane Griffiths
  To ask the Secretary of State for the Environment, Transport and the Regions what account the multi-modal study of the London to South West Corridor announced in the Trunk Roads Review will take of the Railtrack report on the feasibility of reducing the peripherality of the western extremities of the rail network. [86197]

  Ms Glenda Jackson
  A key objective of the London to South West and South Wales multi-modal study is to examine the scope for reducing congestion by better management and modal shift. The study will, therefore, encompass the main rail routes, and assess the potential for encouraging the transfer of passenger and freight trips from road to rail. The Railtrack report has already indicated that the railway to Penzance can be upgraded to provide higher speeds with corresponding reductions in journey times to London, reducing the peripherality of the far south-west. The report also considers enhancement of the freight gauge and the provision of intermodal terminals. We will ensure that its findings are taken into account in the multi-modal study.
  22

  Coastguard (Donaldson Report)
  Mrs. Curtis-Thomas
  To ask the Secretary of State for the Environment, Transport and the Regions what the terms of reference are for Lord Donaldson's report on the future of coastguard stations; when Lord Donaldson was asked to advise his Department; when the report will be completed; and if it will be made available to the public. [87194]

  Ms Glenda Jackson
  Lord Donaldson's Terms of Reference were set by agreement with the Trade Unions and management of the Maritime and Coastguard Agency.

  Lord Donaldson accepted the Terms of Reference in early May and he will reply to the Deputy Prime Minister as soon as possible.

  Local Authority Publicity
  Mr. Pond
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to amend legislation regarding the code of practice on local authority publicity so that local authorities must not only have regard to this code but actively enforce it. [88075]

  Mr. Meale
  We have no plans to amend the legislation on the Code of Recommended Practice on Local Authority Publicity. In the paper "Local Leadership, Local Choice", laid before the House on 24 March 1999 (Cm 4298), we have made proposals, including a draft Bill, for a new framework to deliver high standards in all aspects of conduct throughout local government.

  Highways Agency Estate
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions how many of the surplus properties held by the Highways Agency are held for road schemes that have been cancelled. [88088]

  Mrs. Liddell
  The Highways Agency currently holds 563 surplus properties on cancelled schemes. The Agency sells all its surplus property through a phased disposals programme which is designed to ensure the greatest return to the public purse, while not flooding any local property market. Existing tenancies are honoured and in some cases it will be necessary to complete statutory procedures, such as the making of revocation orders, before property can be sold.

  Road Schemes
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions which road schemes are(a) currently in progress and (b) planned for the next two years on motorways and trunk roads. [88112]

  Mrs. Liddell
  The major new schemes currently under construction are listed. Those we plan to start in the next two financial years are listed. In addition we plan this year to spend £765 million on maintenance and £187 million on making better use of the existing motorway and trunk road network.
  23 Major new road schemes currently under construction:

  Al2 Hackney—M11 Contract 1

  Al2 Hackney—M1l Contract 3

  A12 Hackney—M11 Contract 4

  A564 Derby Southern Bypass Contract B

  A13 West of Heathway—Thames Avenue

  London Primary Route Signing South West Contract

  Manchester Outer Ring Road Re-signing Contract 2

  London Primary Route Signing East Contract

  M5 J18–19 (Bridge Strengthening)

  M60 Denton—Middleton Contract 1

  M60 Denton—Middleton Contract 3

  A30 Honiton to Exeter Imp (Part of A30/A35 Exeter—Bere Regis). This scheme is being built under a Design Build Finance and Operate contract (DBFO)

  Major new road schemes planned for next two years:1999–2000

  A2/M2 Cobham—Junction 4

  AI Tempsford Junction Improvements

  London Primary Route Signing North West Contract

  A13 Ironbridge—Canning Town1

  A13/A117 Woolwich Manor Way1

  Al3 Movers Lane1

  A13/A112 Prince Regent Lane (contingent scheme subject to satisfactory completion of statutory procedures)1

  2000–01

  AI Willowburn—Denwick

  A6 Great Glen Bypass

  A27 Polegate Bypass

  A41 Aston Clinton Bypass

  A43 Silverstone Bypass

  A43 Whitfield Turn—Brackley Hatch Improvement

  A1033 Hedon Road, Hull Improvement

  1 These schemes are part of the A13 Thames Gateway DBFO Project for which a contract will be awarded this year. The actual start of works dates will be determined by the DBFO Company.

  Motor Vehicle Tax Rises
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions what the effect has been on the annual costs of his Department of the changes in fuel duty and vehicle licence fees since May 1997. [88089]

  Mrs. Liddell
  This information is not available. Records are not kept centrally.

  Ministerial Transport
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions (1) on how many days over the last six months he has used(a) a car, (b) a bus and (c) a train for his official duties; [88101]

  (2) on how many occasions in the last six months he has travelled to work at his office by (a) car and (b) public transport. [88097]

  Mr. Prescott
  I travel by car and by public transport on a regular basis on my official visits and journeys to my office.
  24
  Ministers are required under the Ministerial Code to always make efficient and cost-effective travel arrangements.

  London Underground
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions what are(a) the cost to date and (b) the anticipated future cost of legal, financial and other professional advice in respect of the Public-Private Partnership for the London Underground. [88102]

  Mrs. Liddell
  I refer the right hon. Gentleman to the answer given on 12 May 1999,Official Report, columns 154–55. We have made a commitment to provide the House with updated figures at six monthly intervals. London Transport will not know the overall requirements or costs for external advice until the Public-Private Partnership (PPP) transaction has been completed, but the Government are working together with LT to ensure that we receive the best advice while minimising the overall costs of implementing the PPP.

  Public Sector Housing
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions how many public sector houses for rent are currently empty. [88098]

  Ms Armstrong
  On 1 April 1998 there were an estimated 95,300 vacant public sector properties in England.

  Urban Development Corporation
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions when each of the urban development corporations was wound up; and what residual costs fall to be paid in 1999–2000. [88065]

  Mr. Caborn
  The following urban development corporations ceased operations on 31 March 1998 and were dissolved on 1 July 1998:

  Birmingham Heartlands

  Black Country

  London Docklands

  Merseyside

  Plymouth

  Teesside

  Trafford Park

  Tyne and Wear.

  Residual property, rights and liabilities were transferred to the Commission for the New Towns, now part of English Partnerships (EP). Its budget for unavoidable liability costs in 1999–2000 amounts to £24.2 million.

  Home Energy Efficiency Scheme
  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions if additional money beyond the £300 million so far allocated to the New Home Energy Efficiency Scheme will be required to provide the average grant to the number of homes given in his answer of 25 May 1999,Official Report, column 88, and to make grants at equivalent levels in Scotland and Wales; and if he will make a statement. [88151]
  25
  Mr. Meale
  The estimated average grants under the proposed New Home Energy Efficiency Scheme (HEES) are based on the use of seven year operating leases to fund the installation of central heating systems under New HEES Plus. They include the full cost of the lease over the term.

  The resources allocated to this area cover the estimated number of properties improved through New HEES and also the separate programmes in Scotland and Wales in 2000–01 and 2001–02, including the operating lease charges during these years.

  The nature of the separate programmes in Scotland and Wales is a matter for the Parliament and the Assembly respectively.

  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 25 May 1999,Official Report, columns 88–89, what obligation will there be under the New Home Energy Efficiency Scheme to target the most vulnerable households. [88154]

  Mr. Meale
  The objective of the New Home Energy Efficiency Scheme is to target the most vulnerable households, and this will be carried through the operation of the scheme and the specification for work set for scheme managers.

  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 25 May 1999,Official Report, columns 88–89, if the figures for average value of grant-assisted work given there included administrative costs. [88150]

  Mr. Meale
  They do not include administrative costs incurred by scheme managers but include those incurred by installers.

  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 25 May 1999,Official Report, column 87, what value of grant-assisted work was assumed in his model to calculate the reduced heating costs for an average three bedroom semi-detached house. [88155]

  Mr. Meale
  Under the New Home Energy Efficiency Scheme (HEES), the value of the work on each individual property will be up to £700 in the case of New HEES, and up to £1,800 with New HEES Plus, depending on the energy efficiency of the property prior to improvement.

  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 25 May 1999,Official Report, column 87, what is the basis for his statement that New Home Energy Efficiency Scheme and New Home Energy Efficiency Scheme Plus will substantially move households out of fuel poverty. [88157]

  Mr. Meale
  Our view that the New Home Energy Efficiency Scheme (HEES) and New HEES Plus will substantially move households out of fuel poverty is based on a careful assessment of the fuel cost savings which householders will derive from the comprehensive packages of assistance provided.

  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions what estimate he has made of the expenditure required (i) per household and (ii) for all households in England, to achieve a minimum 26
  SAP rating of 30, and a minimum SAP increase in houses included for treatment of 10 points, in all homes with a current SAP rating of (a) less than 10, (b) less than 20, and (c) less than 30. [88156]

  Mr. Meale
  Estimates of the expenditure required were published in the English House Condition Survey 1991, Energy Report, SO 1996. (Page 225, Table 19.4). A similar analysis using data from the 1996 English House Condition Survey is planned.

  Household Projections (Hampshire)
  Mr. Swayne
  To ask the Secretary of State for the Environment, Transport and the Regions what was the projected estimate of the number of new households in Hampshire in 2016(a) in 1992 and (b) at the most recent date; and if he will make a statement. [88121]

  Mr. Raynsford
  The 1992-based household projections gave a projection of 0.783 million households for Hampshire for 2016. Preliminary information on counties from the 1996-based household projections was sent to Regional Planning Conferences in May. These new figures show a projected 0.81 million households in Hampshire in 2016.

  Out-of-town Supermarkets
  Mr. Cohen
  To ask the Secretary of State for the Environment, Transport and the Regions if he will estimate the number of car journeys made to out-of-town supermarkets in the last year for which figures are available. [88328]

  Ms Glenda Jackson
  Data are not available on the number of car journeys made to out-of-town supermarkets.

  Local Authority Housing (Single Mothers)
  Lorna Fitzsimons
  To ask the Secretary of State for the Environment, Transport and the Regions how many local authorities do not make housing provision for single mothers under the age of 18 years. [88393]

  Mr. Raynsford
  Under Part VII of the Housing Act 1996 (the homelessness legislation), all housing authorities are obliged to secure temporary housing for homeless single mothers under the age of 18 years if they are not intentionally homeless and there is no other suitable accommodation available for them to occupy in the district. Local authorities are also empowered to allocate housing under Part VI of the 1996 Act to people on their housing registers. Information on the number of local housing authorities who make provision of housing for young single mothers through their housing registers is not held centrally.

  Walking
  Mr. Bob Russell
  To ask the Secretary of State for the Environment, Transport and the Regions how many officials in his Department are directly employed promoting walking policies; and what proportion this figure represents of the total number of people employed by his Department. [88163]
  27
  Ms Glenda Jackson
  Work in support of walking policies, including research, accounts for the whole of one post and a significant part of nine others. On 1 April 1999 there were 3,450 full-time equivalent civil servants working in DETR (Central).

  A5/M1 Link (Bedfordshire)
  Mr. Sayeed
  To ask the Secretary of State for the Environment, Transport and the Regions what additional funding he plans to make available for the A5/M1 link road in Bedfordshire. [88171]

  Ms Glenda Jackson
  The possible A5/M1 link road in Bedfordshire would form part of the Luton Northern Bypass, which is a major long-term local authority scheme. Bedfordshire County Council and Luton Borough Council are currently working on a joint 5-year local transport plan submission for the area. I understand that the Translink public transport scheme is likely to be their highest priority major project.

  In the Trunk Road Review the A5 Dunstable Bypass and the M1 Junction 6A-10 Widening were included in the London to South Midlands Study area—which is in the Tranche 2 of the Government funded study programme. The study will address a range of transport issues including motorway congestion, development pressures and access to major urban areas such as Luton and Dunstable and possible local solutions including any A5/M1 Link North of Dunstable.

  Rail Services (North Kent)
  Dr. Stoate
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what discussions he has had with Railtrack regarding the introduction of 12 car trains between North Kent and London; [88203]

  (2) what discussions he has had with Railtrack regarding the introduction of trackside equipment to allow North Kent Networker trains to make use of their REGEN braking system; [88202]

  (3) what discussion he has had with Railtrack regarding the upgrading of the power supply on North Kent lines to allow longer trains to run; [88204]

  (4) what discussions he has held with Railtrack regarding the completion of new track signalling systems for North Kent commuter lines. [88201]

  Ms Glenda Jackson
  This is a matter for Railtrack who are currently discussing with OPRAF and Connex the options for introducing 12 car trains between North Kent and London and the related issues of new track signalling systems, upgrading the power supply and facilitating the use of REGEN braking system in Networker trains.

  Station Refurbishment
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions what powers he has to require a train operating company to implement a refurbishment of a particular station. [88401]

  Ms Glenda Jackson
  Train operating companies are obliged to meet certain minimum standards at stations which are set out in their franchise agreements. These do 28
  not cover refurbishment of stations which is primarily the responsibility of Railtrack with the train operating companies.

  Millennium Dome (Transport Links)
  Mr. Gapes
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on transport links and access to the Millennium Dome from East London and Essex. [87234]

  Ms Glenda Jackson
  The Millennium Experience will be a 'car free' event, with parking at the Dome site restricted to Orange Badge Holders only and extensive parking controls in place on and around the Greenwich peninsula. The transport strategy devised for the Experience therefore focuses on access to the Dome site being made by public transport.

  For visitors travelling from East London and Essex, the most convenient public transport route will be travel by surface rail to either Stratford or West Ham stations, or where appropriate the Docklands Light Railway to Canning Town station, and transfer on to the extended Jubilee Line to make the short journey to North Greenwich station, which is located adjacent to the entrance of the Dome site.

  For visitors who seek to make the first leg of their journey by car, the New Millennium Experience Company is intending to manage a small number of formal park and ride facilities around London at which a limited number of visitors each day, who pre-book in advance, will be able to leave their vehicles before completing their journey on convenient public transport links. For visitors travelling from East London and Essex, the most convenient park and ride facility will be the proposed site in the north east sector of London which, subject to planning permission, will be located at Stratford. Visitors parking at the Stratford site would be transferred the short distance to Stratford station by shuttle bus, where they would again take the extended Jubilee Line to North Greenwich Station.

  House Building (Green-field Land)
  Mr. Green
  To ask the Secretary of State for the Environment, Transport and the Regions what is his estimate of the amount of green-field land that will be required to meet the Government's targets for new house-building by(a) 2010 and (b) 2015. [88785]

  Mr. Raynsford
  The Government does not set targets for new house-building. Housing requirements are derived both locally and regionally and land for housing is allocated through the planning process. The Government's target is that 60 per cent. of additional housing should be built on previously developed land or should re-use existing buildings.

  Charity Shops (Rate Relief)
  Mr. Lock
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment the Government have made of the effects of rate relief granted to charity shops on the development of small and medium-sized towns. [88615]
  29
  Mr. Meale
  No assessment has been made of the effects of granting rate relief to charity shops. However, as part of the Treasury's overall review of charity taxation my Department is considering whether there is a need to issue further guidance to local authorities to ensure that only those charity shops which 'wholly or mainly' sell donated goods receive rate relief.

  Specialist Shops (Local Government Assistance)
  Mr. Lock
  To ask the Secretary of State for the Environment, Transport and the Regions what financial assistance is available through local government to support small and specialist shops in small and medium-sized towns; and if he will make a statement. [88616]

  Mr. Meale
  There is no specific financial assistance available for small and specialist shops in small or medium sized towns. The Single Regeneration Budget (SRB) does fund comprehensive regeneration schemes put forward by local partnerships (which may include local authorities) in deprived areas. These schemes usually have multiple objectives and it is not possible to quantify their benefit to particular business groups. However, small shops may benefit from schemes which assist business start-ups, living over the shop, environmental improvements and provision of security measures.

  The Government are considering measures to reduce the rate burden on small businesses as was stated in our White Paper "Modern Local Government—In touch with the People" published last July. We intend to consult further on proposals in the autumn.

  Horse Riders
  Mr. Maclean
  To ask the Secretary of State for the Environment, Transport and the Regions when he expects to publish proposals permitting horse riders to use certain footpaths; and if he will make a statement. [88351]

  Mr. Meacher
  We are considering recommendations for improvements to rights of way legislation submitted by the Countryside Commission (now the Countryside Agency) and expect to issue a consultation paper shortly.

  London and South Wales Multi-modal Study
  Jane Griffiths
  To ask the Secretary of State for the Environment, Transport and the Regions what account the London and South Wales multi-modal study has taken of the report by MDS Transmodal on the benefits of increasing the gauge to allow piggyback freight. [88736]

  Ms Glenda Jackson
  The study will address these issues.

  EU Regional Chambers
  Mr. Mitchell
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 10 June 1999,Official Report, column 377, who appoints the members of European Regional Chambers; what are their duties; with what other regional bodies they are in partnership; by what tests they are considered suitable for designation under the Regional Development Agencies Act 1998; and what further responsibilities arise from that designation. [88686]
  30
  Mr. Caborn
  As I said in my answer on 10 June 1999,Official Report, column 377, regional chambers have no formal status in relation to the European Union; they are therefore not "European" regional chambers.

  Regional chambers are voluntary partnerships formed by local authorities and other regional stakeholders with an interest in the economic, social, and environmental well-being of the region. Membership is decided by the stakeholders themselves. However, for the chamber to achieve designation the basis for the selection of the membership must meet criteria set out in the White Paper 'Building Partnerships for Prosperity' published in December 1997, and general principles set out in further guidance issued by the Department in August 1998. The White Paper criteria and the further guidance also cover non-membership issues. Copies are in the Library.

  The Regional Development Agencies Act 1998 imposes no duties or responsibilities on regional chambers but designation enables them to play a consultative and scrutiny role in relation to the Regional Development Agencies. The Government also believe that regional chambers are well placed to take over the role of regional planning bodies, but it is for the existing planning bodies to decide whether and how this should be done.

  Otherwise, it is for the regional chambers themselves, as voluntary partnerships, to decide their own work programmes and the extent of their partnership activity.

SCOTLAND

  Salmon Fishery Boards
  Mrs. Ray Michie
  To ask the Secretary of State for Scotland what plans he has to restructure the district salmon fishery boards; and if he will make a statement. [87691]

  Mr. Macdonald
  The District Salmon Fishery Boards Order 1999 came into effect on 3 May. It replaced the previous provisions of Schedule 2 of the Salmon Act 1986 on the composition of district salmon fishery boards, allowing boards greater freedom to determine optimum size and structure for themselves. The Order will facilitate mergers of boards, through offering the scope for pooling resources and promoting more science-based fisheries management in line with the Report of the Scottish Salmon Strategy Task Force. A number of boards have already elected to take advantage of the new Order and this is reflected in the Lochaber Salmon Fishery District Designation Order 1999, the Conon Salmon Fishery District Designation Order 1999 and the North and West Salmon Fishery District Designation Order 1999.

  From 1 July 1999, this will be a matter for the Scottish Parliament.

  Oncologists
  Mr. Paul Marsden
  To ask the Secretary of State for Scotland how many clinical and medical oncologists are employed per head of population in Scotland; and if he will make a statement. [87869]
  31
  Dr. Reid
  The information available is shown in the table.

  Medical and clinical oncologists employed in the NHS in Scotland

  (30 September 1998)

  Rate per 100,000 population

  Headcount

  WTE1

  Headcount

  WTE1

  Medical oncologists

  38

  30.7

  0.74

  0.60

  Clinical oncologists

  75

  70.3

  1.46

  1.37

  1Whole-time equivalent

  Source:

  Information and Statistics Division of the Common Services Agency

  From 1 July 1999, this will be a matter for the Scottish Parliament.

  Local Government Finance
  Mr. David Stewart
  To ask the Secretary of State for Scotland what plans he has to cap local authority spending in the current year. [89115]

  Dr. Reid
  None. This year we fulfilled our Manifesto commitment to abolish crude and universal capping; instead Scottish local authorities were issued with indicative expenditure guidelines. Most authorities have exercised their new discretion sensibly. Eight authorities have set budgets in excess of the guideline, although in most cases by small amounts. Three authorities have made large increases; they are East Dunbartonshire, Aberdeenshire and Perth and Kinross.

  I have consulted the First Minister, who will be responsible for this matter after 1 July. We have decided not to cap any authorities this year. However we have called in the three authorities named above to discuss why they have made such large increases and put them on warning that we will expect them to return to guideline next year.

WALES

  Hospital Waiting Lists (North Glamorgan)
  Mr. Rowlands
  To ask the Secretary of State for Wales (1) what estimate he has of the number of patients within the North Glamorgan Trust who are awaiting cardiac surgery(a) at the University of Wales Hospital and (b) at Morriston Hospital; and what is the average waiting time for each list; [86834]

  (2) what estimate he has made of the number of patients with the North Glamorgan Trust who are awaiting orthopaedic surgery (a) at the University of Wales Hospital and (b) at Morriston Hospital; and what is the average waiting time for each list. [86835]

  Mr. Jon Owen Jones
  Data are not held centrally on the numbers of patients waiting for in-patient or day case treatment in one NHS trust following an out-patient consultation in a hospital of another NHS trust.

  Following the transfer of functions, this issue will be a matter for the National Assembly for Wales.

  Community Hospital, Porthmadog
  Mr. Wigley
  To ask the Secretary of State for Wales if he will make a statement about the letter from Keith Blake of the Health Services and Management Division of the Welsh Office, addressed to Gwynfor Hughes of Porthmadog, dated 9 June, in relation to the future of the proposals for the new community hospital at Porthmadog. [88588]

  Mr. Jon Owen Jones
  The Department's letter of 9 June set out the current position regarding funding for the North Merionydd/East Dwyfor Community Hospital scheme.

  An Outline Business Case for the new hospital was approved by the Department in February 1999 and the scheme was considered for public funding in 1999–2000.

  The Secretary of State's spending decisions for 1999–2000 made provision of £83 million for NHS capital expenditure to complete on-going schemes and for discretionary capital expenditure by Trusts. Funding was not allocated to this scheme.

  Following the transfer of functions, this will be a matter for the National Assembly.

  Mr. Wigley
  To ask the Secretary of State for Wales if the business plan submitted by North Wales Heath Authority for a new community hospital to serve North Meirionydd and Eastern Dwyfor was accepted by his Department; and what the current position is with regard to this project. [88620]

  Mr. Jon Owen Jones
  The Outline Business Case for the North Merionydd/East Dwyfor Community Hospital was formally approved by the Department in February 1999.

  Funding has not been allocated for this project to commence in 1999–2000.

  I am unable to comment on the funding position for 2000–01.

  Following the transfer of functions, this will be a matter for the National Assembly.

  Mr. Wigley
  To ask the Secretary of State for Wales if it is his Department's policy that the decision on whether to include in the 1999–2000 Capital Programme provision for a new community hospital to serve North Meirionnydd and Eastern Dwyfor, at Porthmadog, is a matter for the North Wales Health Authority. [88619]

  Mr. Jon Owen Jones
  It is a matter for the North Wales Health Authority to decide if it wishes to continue its support for the provision of a new Community Hospital at Porthmadog.

  The Department's policy is that NHS Trusts must provide confirmation of Health Authority support before a Business Case can be approved.

  North Wales Health Authority did support in full the proposals from Gwynedd Community Health NHS Trust for the new Community Hospital at Porthmadog, and the Outline Business Case was subsequently approved by the Department and the scheme was considered for public funding in 1999–2000.
  33
  The Health Authority has confirmed that its position remains unchanged and it will continue to support the Trust's proposals.

  Following the transfer of functions, this will be a matter for the National Assembly.

TRADE AND INDUSTRY

  Textphones
  Mr. Burstow
  To ask the Secretary of State for Trade and Industry what is the current number of public textphones; and what plans Her Majesty's Government have to increase the level of provision. [88411]

  Mr. Wills
  There are currently 84 public textphones in the country, provided by BT. The Government are planning to consult on the provision of public textphones in a consultation later this year on improving access to telecommunications for the disabled. This is part of its further implementation of the Revised Voice Telephony Directive (98/10/EC). This should result in an increase in the provision of public textphones, especially in places such as railway stations and shopping centres.

  Nuclear Reactors
  Mr. Cohen
  To ask the Secretary of State for Trade and Industry if he will list the Chernobyl-type nuclear reactors, indicating those which are in operation. [88398]

  Mr. Battle
  The RBMK (Chernobyl-type) nuclear reactors of which we are aware are Chernobyl 1–2, Chernobyl 3*, Ignalina 1, Ignalina 2*, Kursk 1–4*, Kursk 5 (under construction), Leningrad (Sosnovy Bor) 1–4* and Smolensk 1–3*. Those marked with an asterix are in operation.

  Mr. Cohen
  To ask the Secretary of State for Trade and Industry what assessment he has made of the safety of remaining Chernobyl-type nuclear reactors; and if he will make a statement on programmes of remedial action to which Her Majesty's Government have contributed. [88397]

  Mr. Battle
  The UK continues to work with our G7 and European partners to improve nuclear safety in the countries concerned. This is undertaken through a number of multilateral assistance programmes funded through the G7 Nuclear Safety Account (NSA), International Atomic Energy Authority (IAEA) Technical Co-operation Programme and the European Bank for Reconstruction and Development managed Chernobyl Shelter Fund. The UK also funds a bilateral programme of activities through its Nuclear Safety and Health Budget which is administered by the DTI.

  The most recent assessment of the safety of Chernobyl-type nuclear reactors was undertaken in June at the IAEA in Vienna where there was a meeting of strengthening nuclear safety in Eastern Europe. All nuclear countries who operate Chernobyl-type nuclear reactors (RBMK) attended along with leading international organisations that provide nuclear safety assistance to them. The meeting concluded that there is no question that considerable progress on nuclear safety has been made in
  34
  Eastern Europe and in their operation of nuclear power plants where they have demonstrated clear progress in operational safety improvements.

  Papers distributed at the meeting and copies of the presentations can be accessed through the IAEA website.

  Electricity Generation
  Dr. Kumar
  To ask the Secretary of State for Trade and Industry in what way the climate change levy will promote the efficient generation of electricity; and if he will make a statement. [88200]

  Mr. Battle
  The proposed climate change levy will be levied downstream on energy supplied to industrial and commercial users. This will ensure that domestic consumption of energy is excluded. Since it is a downstream tax there will be relatively little impact on the mix of fuels used, and efficiency, in generation.

  However, the Government are looking closely at the possibility of exempting new forms of renewable energy, like wind power, from the levy. The consultation document issued by Customs and Excise sought views on whether, and if so, how this could be done. The treatment of Combined Heat and Power plants is also being considered. In addition, the Government have announced that there will be an extra £50 million a year for schemes aimed at promoting energy efficiency and additional support for renewables.

  Finally, the White Paper, "Conclusions of the Review of Energy Sources for Power Generation", sets out the Government's broad energy policy, including radical reforms to the electricity market. These reforms will bring greater competition to electricity generation and lower prices for consumers.

  Climate Change Levy
  Dr. Kumar
  To ask the Secretary of State for Trade and Industry if he will publish a breakdown of(a) the current emission levels and (b) the estimated emission levels following the introduction of the climate change levy by industrial sector; and if he will make a statement. [88300]

  Mr. Battle
  The following table showing 1997 emissions of greenhouse gases by source was published by the Department of the Environment Transport and the Regions on 13 May 1999. Emission levels by industry following the introduction of the climate change levy will depend upon the structure and rate of the levy. However, in total the levy is expected to save around 1.5 million tonnes of carbon a year by 2010 thereby making a significant contribution to meeting both the legally binding target for reducing greenhouse gas emissions set under the Kyoto protocol and the Government's domestic goal of a 20 per cent. reduction in carbon dioxide emissions by 2010.
  35

  Summary report of UK greenhouse gas inventory in 1997, by IPCC source categories—United Kingdom

  Thousand tonnes

  CO2 emissions

  CO2 removals 1

  CH4

  N2O

  NOx

  CO

  NMVOC

  SO2

  HFC

  PFC

  SF6

  Greenhouse gas source and sink categories

  (CO2 equivalent)2

  All energy (fuel combustion + fugitive)

  528,775

  —

  862

  23.3

  1,827

  4,701

  1,138

  1,644

  —

  —

  —

  Fuel combustion

  520,944

  —

  94

  23.2

  1,823

  4,676

  748

  1,632

  —

  —

  —

  Energy industries3

  184,615

  —

  20

  6.7

  468

  95

  10

  1,213

  —

  —

  —

  Manufacturing industries and construction4,5,6

  914,401

  —

  13

  3.1

  214

  428

  27

  242

  —

  —

  —

  Transport

  123,756

  —

  21

  11.8

  965

  3,818

  647

  54

  —

  —

  —

  Other sources5,7,8

  118,205

  —

  40

  1.6

  142

  330

  63

  114

  —

  —

  —

  Other8,9

  2,967

  —

  —

  0.1

  35

  5

  1

  8

  —

  —

  —

  Fugitive emissions from fuels

  7,832

  —

  768

  —

  4

  25

  390

  12

  —

  —

  —

  Solid fuels10

  1,566

  —

  327

  —

  —

  4

  6

  5

  —

  —

  —

  Oil and natural gas3

  6,265

  —

  441

  —

  4

  21

  384

  7

  —

  —

  —

  Industrial processes4

  11,839

  —

  1

  69.4

  5

  385

  223

  16

  3.067

  0.095

  0.053

  Mineral products

  9,531

  —

  —

  —

  —

  —

  8

  —

  —

  —

  —

  Chemical industry6

  814

  —

  —

  69.3

  2

  —

  113

  11

  —

  —

  —

  Metal production4

  1,495

  —

  1

  —

  3

  385

  2

  5

  —

  0.035

  0.030

  Other production

  —

  —

  —

  —

  —

  —

  100

  —

  —

  —

  —

  Production of halocarbons and SF6

  —

  —

  —

  —

  —

  —

  —

  —

  1.350

  0.001

  —

  Consumption of halocarbons and SF611

  —

  —

  —

  —

  —

  —

  —

  —

  1.717

  0.060

  0.023

  Solvent and other product use

  —

  —

  —

  —

  —

  —

  582

  —

  —

  —

  —

  Agriculture

  —

  —

  1,004

  98.9

  —

  —

  —

  —

  —

  —

  —

  Enteric fermentation12

  —

  —

  893

  —

  —

  —

  —

  —

  —

  —

  —

  Manure management12

  —

  —

  111

  5.0

  —

  —

  —

  —

  —

  —

  —

  Agricultural soils

  —

  —

  —

  93.9

  —

  —

  —

  —

  —

  —

  —

  Land use change and forestry

  27,075

  11,557

  —

  —

  —

  —

  —

  —

  —

  —

  —

  Changes in forest and other woody biomass stocks13

  —

  10,457

  —

  —

  —

  —

  —

  —

  —

  —

  —

  Forest and grassland conversion. Abandonment of managed lands. CO2 emissions and removals from soil14

  23,409

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  Other15

  3,667

  1,100

  —

  —

  —

  —

  —

  —

  —

  —

  —

  Waste

  29

  —

  861

  0.5

  —

  1

  8

  —

  —

  —

  —

  Solid waste disposal on land16

  —

  —

  826

  —

  —

  —

  8

  —

  —

  —

  —

  Wastewater treatment16

  —

  —

  35

  0.5

  —

  —

  —

  —

  —

  —

  —

  Waste incineration

  29

  —

  —

  —

  —

  1

  —

  —

  —

  —

  —

  Total national emissions and removals

  -567,719

  1,557

  2,727

  192.0

  1,832

  5,088

  1,951

  1,660

  3.067

  0.095

  0.053

  CO2 emissions from biomass17,18

  5,749

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  International bunkers19

  30,262

  —

  5

  1.2

  258

  103

  56

  124

  —

  —

  —

  1 Removals of CO2 reported as negative.

  2 To express in terms of weight of carbon emitted the figures for emissions and removals of CO2 should be multiplied by 12–44.

  3 Includes emissions from own-energy gas use on offshore installations.

  4 Combustion emissions of CO2 from iron and steel are included in "manufacturing industries and construction". Process emissions from the iron and steel industry are included in "metal production". Limestone use in the iron and steel industry is classified under "mineral products".

  5 Emissions from off-road vehicles are reported under "manufacturing industries and construction" and "other sectors".

  6 The emissions of CO2 from ammonia manufacture are reported under "chemical industry".

  7 Small combustion sources including residential, commercial and institutional sectors.

  8 Emissions from stationary combustion at military installations are reported under "other sectors".

  9 Naval vessels and military aircraft.

  10 Fugitive emissions of CO2 from coke ovens and patent fuel production are calculated according to a carbon balance on the coal consumed and the coke, patent fuel, blast furnace gas and coke oven gas produced. Emissions from flaring of coke oven gas are also included.

  11 Emissions arise from refrigeration, electronics applications, electrical insulation, foams, aerosols and training shoes.

  12 Emissions from cattle, swine, sheep, goats, horses, farmed deer and poultry.

  13 Removals include removals to forest soil and litter (-2,151 Gg CO2) and to forest products (-1,111 Gg CO2).

  14 Emissions include removals to soils from set aside of arable land and emissions from soils from liming. CO2 emissions arise from limestone and dolomite use.

  15 Emissions include emissions from soils as a result of upland drainage (1,467 Gg CO2), lowland drainage (1,467 Gg CO2) and peat extraction (733 Gg CO2). Removals are increases in crop biomass. CO2 removal from salt marshes is no longer reported because it is considered anthropogenic.

  16 Sewage sludge disposed of by landfill is included under "solid waste disposal on land".

  17 Emissions arise from wood, straw, biogases and poultry litter combustion for energy production.

  18 CO2 emissions are given for information only and are not included in totals.

  19 Emissions are given for information only and are not included in totals.

  Source:

  NETCEN
  36 37

  Electrolysis Process
  Dr. Kumar
  To ask the Secretary of State for Trade and Industry what estimate he has made of the number of people employed(a) directly and (b) indirectly in UK companies who use the electrolysis process; and if he will make a statement. [88197]

  Mr. Battle
  This information is not available from official statistics. One of the main industries which uses electrolysis is the chloralkali industry, and estimates from the Chemical Industries Association for employment in the chloralkali industry suggest that 4,000 people are directly employed in this industry.

  Dr. Kumar
  To ask the Secretary of State for Trade and Industry what assessment he has made of the amount of energy used by UK companies in the electrolysis process within the chemical industry; and if he will make a statement. [88173]

  Mr. Battle
  ETSU, part of AEA Technology, estimate that 16 peta joules of energy were used in the manufacture of chlorine through the electrolysis process in the UK in 1990. This represented roughly 1 per cent. of the amount

  Petroleum

  Gas

  Electricity

  Coal3

  Total

  Percentage change between 1990 and 1998 1

  Industry4

  -15.4

  23.8

  2.8

  -26.6

  0

  Domestic

  42.9

  19.9

  16.6

  -46.8

  13.5

  Transport

  9.8

  —

  46.6

  —

  10.1

  Other users5

  -25.6

  39.6

  21.4

  -64.8

  12.8

  All final consumers

  5.3

  24.1

  13.4

  -35.7

  8.8

  Energy consumption by final users 19981 (thousand tonnes of oil equivalent)

  Industry4

  6,973

  16,734

  8,898

  6,044

  38,648

  Domestic

  3,544

  30,983

  9,404

  2,325

  46,267

  Transport

  52,892

  0

  667

  0

  53,562

  Other users5

  3,275

  10,281

  7,804

  325

  21,684

  All final consumers6

  66,684

  57,999

  26,774

  8,695

  160,162

  Energy consumption by final users 19901 (thousand tonnes of oil equivalent)

  Industry4

  8,242

  13,522

  8,655

  8,237

  38,655

  Domestic

  2,480

  25,835

  8,066

  4,368

  40,758

  Transport

  48,179

  0

  455

  2

  48,635

  Other users5

  4,402

  7,364

  6,426

  922

  19,217

  All final consumers6

  63,302

  46,720

  23,601

  13,529

  147,265

  1Based on final consumption of energy as given in table. 1998 figures are provisional. 1990 figures are published in the "Digest of United Kingdom Energy Statistics 1998" and 1998 provisional figures are published in "Energy Trends" May 1999

  2 Includes coke oven gas used by industry

  3 Consists of coal and other solid fuels

  4 Manufacturing industry, construction, mining and quarrying of non energy materials and water supply industries

  5 Comprises of public and commercial services and agriculture

  6 Totals may not sum due to rounding

  Vibration White Finger
  Mr. Rowlands
  To ask the Secretary of State for Trade and Industry how many validating doctors to examine claims for vibration white finger have been approved; and if he will list the location of each of these doctors. [87454]

  Mr. Battle
  Many claims received by the Department are accompanied by reports from Vascular Consultants. However, many of these reports contain insufficient detail on which to assess a claim. The Department is making offers on the basis of reports, wherever possible, but only where we are satisfied that the resulting offer is fair and properly reflects the individual's entitlement. The Department has satisfied itself that it can make offers 38
  of energy used by manufacturing industry in 1990. No later information is available and it should be noted that the figures for energy consumption for the manufacture of chlorine through the electrolysis process may have changed significantly since 1990.

  Assisted Areas
  Mr. Redwood
  To ask the Secretary of State for Trade and Industry what changes the Government plan in the extent of assisted areas coverage. [88111]

  Mr. Wills
  We will announce the results of the review as soon as we are ready to do so.

  Utilities (Consumption)
  Dr. Kumar
  To ask the Secretary of State for Trade and Industry what assessment he has made of the percentage increase in the consumption of oil, gas and electricity by(a) industry and (b) the general public since 1990; and if he will make a statement. [88000]

  Mr. Battle
  The percentage changes in, and levels of, final consumption of fuels between 1990 and 1998 are as follows:

  based on the reports of 19 consultants. These consultants are based in Chesterfield, Sheffield, Doncaster, Nottingham, Cardiff, Dundee, Newcastle Upon Tyne, Paisley, Washington Tyne and Wear and Edinburgh.

  The Department has always made clear to the plaintiff solicitors that making offers, based on acceptable consultant's reports, was an interim measure to allow payments to be made until the tendering process for the delivery of the agreed Medical Assessment Process (MAP) was completed. We hope to award the contract for the delivery of the medical assessments shortly and are hopeful that significant offers of full and final payments will start flowing in the late summer.
  39

  Agricultural and Pharmaceutical Biotechnology Industries
  Joan Ruddock
  To ask the Secretary of State for Trade and Industry what estimate he has made of the number of people employed in the(a) agricultural and (b) pharmaceutical biotechnology industry in (i) 1997–98, (ii) 1998–99 and (iii) 1999–2000. [87769]

  Mr. Battle
  This information is not available from official statistics.

  A report published earlier this year by the Biolndustry Association1 estimates employment in dedicated biotechnology companies to be between 35–40,000 (with the sector growing annually by over 20 per cent. over the period 1995–98). Of these it estimates that 8–10,000 are employed in the biopharmaceuticals sector, and 3,000 in the biotechnology dedicated area of agriculture.

  In addition there is a significant number of people engaged in biotechnology related-work among the 60,000 UK employees of established pharmaceutical companies2 and the 615,000 employed in the UK agriculture sector.3
  1"Industrial markets for UK biotechnology—trends and issues"2 Monitor Company: The UK Pharmaceutical Industry at a Crossroads3MAFF Statistics

  "Processing the Future"
  Dr. Kumar
  To ask the Secretary of State for Trade and Industry when the Government are preparing to implement the recommendation of the report of the Foresight Process Industry Group, "Processing the Future". [87266]

  Mr. Battle
  The Process Industry Group has made a valuable contribution to the Foresight programme. We welcome their "Processing the Future" report. We are pleased that they are willing to develop their ideas in the second round of Foresight. These will be of special interest to the new Manufacturing 2020 and Chemicals Foresight Panels.

  The Government emphasised the importance which it attaches to multi-disciplinary research and closer joint working between the Research Councils in allocating the Science Budget last autumn. The Research Councils are implementing these policies, and are taking account of the report's recommendations in their planning.

  As the process industries are so diverse, there is a wide range of innovation initiatives supported by Government and the Research Councils. For example, 21 per cent. of the Engineering and Physical Science Research Council's research grant support is of relevance to process industries. EPSRC also have a number of joint activities in the process industries with other Research Councils. These include the process industries sector of the Innovative Manufacturing Initiative (EPSRC with the Biotechnology and Biological Science Research Council), Biomolecular Science (BBSRC) and a Medical Engineering LINK programme (EPSRC, BBSRC and the Medical Research Council). In the chemicals sector (perhaps the biggest process industry), DTI and EPSRC support initiatives on process plant instrumentation, catalysis, polymer processing and colloid technology.
  40
  Since the publication of the report, we have engaged trade associations from across the processing industries in discussions on the implications of the report. PIG members have made presentations to various learned societies and industrial sectors. As they refine their ideas within the Foresight agenda, we will play close attention to developments.

LORD CHANCELLOR'S DEPARTMENT

  Family Mediation
  Mr. Kidney
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on the availability of legal aid for family mediation under the provisions of the Access to Justice Bill[Lords]. [88008]

  Mr. Vaz
  The current availability of legal aid for family mediation, contained in Part III of the Family Law Act 1996, will be maintained following the implementation of the Access to Justice Bill. The detailed provisions, including the assessment of the suitability of cases for mediation under section 29 of the Family Law Act, will be contained in the Funding Code, which is being developed by the Legal Aid Board for use by the future Legal Services Commission in assessing applications for public funding. The Bill provides that the criteria set out in the Code shall reflect the principle that, in many family disputes, mediation will be more appropriate than court proceedings. The Board is currently assessing responses to a consultation paper on the Code. Before coming into effect, the Code will be subject to Parliamentary approval through the affirmative procedure. Only organisations with a suitable contract will be able to conduct family mediation sessions for publicly funded clients.

  Mr. Kidney
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will list the measures taken by his Department since May 1997 to support family mediation. [88006]

  Mr. Vaz
  Since May 1997 the provision of publicly funded mediation for family proceedings under Part III of the Family Law Act has been implemented by means of contracts for family mediation services granted by the Legal Aid Board. Funding has been provided to assist national mediation bodies and local mediation services with the development of mediation services to meet the contract requirements in appropriate circumstances. The provisions of Section 29 of the Family Law Act, requiring applicants for legal aid funding for family proceedings to attend a meeting to consider whether mediation might be suitable for their case, have been implemented across England and Wales on a pilot basis and the pilot will be extended later this year.

  Mr. Kidney
  To ask the Parliamentary Secretary, Lord Chancellor's Department what measures his Department intends to take to promote an increased take-up of family mediation. [88007]

  Mr. Vaz
  The provision of legal aid funding for mediation in family disputes is already available in many areas and will be made available throughout England and Wales. As part of the process of providing publicly funded mediation, funding is being provided for the support and development of mediation services in appropriate
  41
  circumstances. The provisions of Section 29 of the Family Law Act, requiring applicants for legal aid funding for family proceedings to attend a meeting to consider whether mediation might be suitable for their case, are being implemented in some areas on a pilot basis and will also be implemented throughout England and Wales.

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Parliamentary Secretary, Lord Chancellor's Department on what date his Department was first informed that Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 were no longer in force. [88797]

  Mr. Vaz
  The Lord Chancellor was informed on 21 June 1999.

CULTURE, MEDIA AND SPORT

  Lifelong Learning
  Ms Rosie Winterton
  To ask the Secretary of State for Culture, Media and Sport how the lifelong-learning initiative announced by the new opportunities fund will benefit local libraries. [87208]

  Mr. Chris Smith
  The £200 million New Opportunities Fund stream for Community Access to Lifelong Learning will make a substantial contribution towards developing the infrastructure for a Public Libraries IT Network, linking local libraries to each other and to the National Grid for Learning by 2002.

  Seaside Resorts
  Mr. Waterson
  To ask the Secretary of State for Culture, Media and Sport what assistance he plans to provide for English seaside resorts. [87210]

  Janet Anderson
  Seaside resorts represent a very important sector of our domestic holiday market. "Tomorrow's Tourism", our tourism strategy, sets out the action that resorts need to take to adapt to changes in holiday-taking trends. It includes a model eight-stage regeneration plan. The English Tourism Council will work with regional and local authorities to encourage adoption of this model plan and the sharing of best practice by seaside resorts.

  Hotels Rating Scheme
  Shona McIsaac
  To ask the Secretary of State for Culture, Media and Sport what benefit tourists will gain from the new harmonised rating scheme for hotels and guesthouses. [87211]

  Janet Anderson
  The consistency of ratings made under the new schemes by the AA, RAC and new English Tourism Council will be much easier to understand than the different ratings we have now and will therefore reflect better what tourists want to know. The new ratings place more emphasis on quality and so provide greater incentive for improved standards. There should be a greater incentive also for providers of accommodation to participate in the schemes, thus increasing the proportion of accommodation which is inspected and rated for use 42
  by tourists. These and other benefits should quickly begin to be found when the schemes are launched to consumers this September.

  BBC Funding
  Mr. Grogan
  To ask the Secretary of State for Culture, Media and Sport if he will make a statement on the review of the future funding of the BBC.[87213]

  Mr. Chris Smith
  I asked Gavyn Davies to report to me on the future funding of the BBC by the end of July. I understand that the panel are on course to do this.

  Mr. Ben Chapman
  To ask the Secretary of State for Culture, Media and Sport when he expects to receive the final recommendations from the BBC funding review panel; and if he will make a statement. [87224]

  Mr. Chris Smith
  I expect to receive the review panel's conclusions by the end of July. I will then consult publicly on the findings.

  Sports Council
  Mr. Bill O'Brien
  To ask the Secretary of State for Culture, Media and Sport what benefits he expects to secure for the public and sporting clubs from the new funding agreements with the Sports Council. [87214]

  Mr. Banks
  The funding agreements for Sport England and UK Sport provide an explicit and challenging statement of the outputs and levels of performance we expect to be delivered in return for our public investment in sport.

  Rugby Grounds
  Mr. Watts
  To ask the Secretary of State for Culture, Media and Sport what steps his Department is taking to improve safety and spectator comfort at rugby grounds. [87215]

  Mr. Banks
  The Government are determined that spectators of all sports should be able to enjoy the action in safety and comfort. In April I announced new roles for both Sport England and the Football Licensing Authority in our drive to modernise sports grounds across the country. Sport England is to fund a £10 million improvement scheme over the next four years to help top rugby league and rugby union teams, and the major cricket counties to improve safety at their grounds. In addition, the Football Licensing Authority will be reconstituted as the Sports Grounds Safety Authority and will have an advisory role on safety issues associated with all sports which use outdoor sports stadiums, including rugby. I am sure my hon. Friend will agree that these are welcome developments.

  Tourism
  Valerie Davey
  To ask the Secretary of State for Culture, Media and Sport if he will ensure that tourism companies and organisations in all parts of the country are consulted on the implementation of the Government's new tourism strategy. [87216]
  43
  Janet Anderson
  We shall. We are currently engaged in a 10-venue series of events across England both to further publicise our strategy, "Tomorrow's Tourism", and to consult with tourism companies and organisations on its implementation in their own regions.

  Green Spaces Initiative
  Mr. Pound
  To ask the Secretary of State for Culture, Media and Sport what facilities for children will be provided by the green spaces initiative funded by the New Opportunities Fund. [87217]

  Mr. Chris Smith
  By 2002 the New Opportunities Fund will have committed £125 million to projects throughout the UK designed to help urban and rural communities improve their environment by creating access to green spaces of educational, recreational, or environmental value to the community.

  Many of the wide variety of projects which may be funded under the initiative will be of specific benefit to children. These are likely to include community use of green spaces for play and recreation, or the creation of safe routes to schools.

  The New Opportunities Fund is consulting widely on the development of the initiative and plans to invite the first applications by the end of this year.

  BBC (Impartiality)
  Mr. Bercow
  To ask the Secretary of State for Culture, Media and Sport if he will make a statement on the BBC's obligation to guarantee political impartiality. [87219]

  Mr. Chris Smith
  Broadcasters are required to treat matters of political controversy and those relating to current public policy with due impartiality. They must aim for accuracy and ensure that, over a reasonable period of time, a proper balance of different points of view is achieved. The Governors of the BBC are well aware of their obligations in this respect.

  New Opportunities Fund
  Mrs. Heal
  To ask the Secretary of State for Culture, Media and Sport what directions he has given to the new opportunities fund about how it should allocate the extra £80 million it has been awarded. [87220]

  Mr. Chris Smith
  None. The New Opportunities Fund is pursuing six initiatives which will receive funding altogether of £1.5 billion. The revised forecast for Lottery income during the licence period means that money will be available earlier to meet these commitments.

  Museums Access (Disabled)
  Joan Ruddock
  To ask the Secretary of State for Culture, Media and Sport if proposals to secure access to museums and galleries for disabled people have been included in funding arrangements negotiated with organisations sponsored by his Department. [87223]

  Mr. Chris Smith
  Yes. All the funding agreements between my Department and the sponsored national museums and galleries include proposals related to promoting access for people with disabilities.
  44

  Tobacco Sports Sponsorship
  Mr. Hinchliffe
  To ask the Secretary of State for Culture, Media and Sport what steps he is taking to ensure the removal of tobacco sponsorship from sport. [87226]

  Mr. Banks
  Draft regulations banning tobacco advertising were published on 17 June 1999. It is our intention, subject to consultation, to bring the general advertising regulations into force on 10 December. Tobacco sponsored sports events will have until 2003, or (in exceptional global cases) 2006, in order to allow them time to secure alternative sponsors.

  Millennium Dome
  Miss McIntosh
  To ask the Secretary of State for Culture, Media and Sport what special arrangements and fares exist for people travelling from north Yorkshire to the Millennium Dome. [87230]

  Mr. Hinchliffe
  To ask the Secretary of State for Culture, Media and Sport what steps he is taking to encourage visitors from the north of England to the Millennium Dome. [87232]

  Janet Anderson
  The New Millennium Experience Company working with the travel industry, including rail and coach operators, aims to deliver packages combining travel and Dome entry. These will give visitors value for money and encourage all those who wish to visit the Dome to do so. Following the company's announcement of ticket prices on 18 March, the travel industry has already confirmed a range of attractive and competitive packages. For example, National Express has announced return coach travel and entry to the Dome for just £29.99 from anywhere in England, Scotland or Wales. I am sure that the people of North Yorkshire will take advantage of these good value packages.

  Mr. Pound
  To ask the Secretary of State for Culture, Media and Sport what measures his Department is taking to promote the Millennium Dome overseas. [87231]

  Mr. Chris Smith
  The British Tourist Authority (BTA) is promoting the Millennium Dome overseas as part of its campaign—"Britain: Now is the time". In addition the BTA's website www.visitbritain.com has information on the Dome as well as links to the New Millennium Experience Company (NMEC). The Department's website www.culture.gov.uk also contains information on the Dome and links to NMEC's site.

  Mr. Wyatt
  To ask the Secretary of State for Culture, Media and Sport what plans there are for a religious service or moment on the opening night at the Millennium Dome. [87235]

  Janet Anderson
  The New Millennium Experience Company (NMEC) is discussing the arrangements for the Opening Celebrations at the Dome with a number of interested parties including the Royal Household, the Government and Lambeth Palace. The nature and scope of the Celebrations will be announced in due course.

  Ms Oona King
  To ask the Secretary of State for Culture, Media and Sport how many temporary and permanent jobs he estimates will be created through the Millennium Dome. [87233]
  45
  Janet Anderson
  I refer my hon. Friend to the reply that I gave to my hon. Friend the Member for Doncaster, Central (Ms Winterton), today,Official Report colunn 13.

  Mr. Amess
  To ask the Secretary of State for Culture, Media and Sport what estimates he has made of the numbers likely to visit the millennium exhibition in the first year. [87236]

  Janet Anderson
  The Millennium Experience is planned as a one-year event running from 1 January 2000 to 31 December 2000. The New Millennium Experience Company estimates that it will attract 12 million visitors during the year of operation.

  Mr. Cox
  To ask the Secretary of State for Culture, Media and Sport if he will list the private companies which(a) have made and (b) are to make, financial contributions to the Millennium Dome. [86238]

  Janet Anderson
  The following businesses and organisations have been announced as sponsors: BAA, Barclays, Boots The Chemists, British Aerospace, British Airways, BSkyB, BT, Camelot, CGU, Coca Cola, Corporation of London, De Beers, Ford, GEC, Kodak, L'Oreal, Manpower, Marks and Spencer, Mars, McDonald's NatWest Group, Premier Brands, Prudential, Reuters, Roche, Tesco, Wall's, Woolwich and 3Com.

  In addition, financial support for the Faith zone is being provided by organisations with Christian affiliations (the Laing Family Trusts, the Jerusalem Trust, three other trusts and foundations, and an international company with links to the UK), and from the Vedic tradition (the Hinduja Foundation). Payment of sponsorship moneys depends on the contractual arrangements made with the sponsors. NMEC's Annual Report and Financial Statements 1998–99 will be placed in the House Libraries in due course and will include audited figures for that financial year.

  Museums and Galleries (Children's Visits)
  Mr. Martlew
  To ask the Secretary of State for Culture, Media and Sport how many children have visited national museums and galleries since 1 April. [87212]

  Mr. Chris Smith
  There were over 338,000 visits by children to the national museums and galleries and their branches sponsored by my Department during April and May this year.

  Sporting Excellence
  Mr. Amess
  To ask the Secretary of State for Culture, Media and Sport what recent representations he has received about promoting sporting excellence in the United Kingdom. [87218]

  Mr. Banks
  I have regular discussions with representatives from a wide range of organisations with an interest in the development of sporting excellence in this country.

HEALTH

  HIV/AIDS
  Dr. Strang
  To ask the Secretary of State for Health (1) if he will list the cumulative number of people who had been diagnosed HIV positive(a) broken down by
  46
  probable means of transmission and (b) in total in (i) England and (ii) each region of England, for each year from 1981 to 1998, and for 1999 to date; [84802]

  (2) how many people diagnosed with AIDS and not known to have died there were in (a) England and (b) each region of England in each year from 1981 to 1998, and in 1999 to date; [84797]

  (3) if he will list the cumulative number of people diagnosed with AIDS in (a) England and (b) each region of England in each year from 1981 to 1998, and in 1999 to date; [84800]

  (4) if he will list the cumulative numbers of people with AIDS who died in (a) England and (b) each region of England in each year from 1981 to 1998, and in 1999 to date; [84799]

  (5) how many people were newly diagnosed HIV positive (a) broken down by probable means of transmission and (b) in total in (i) England and (ii) each region of England, for each year from 1981 to 1998, and for 1999 to date; [84801]

  (6) if he will list the cumulative number of people who had been diagnosed HIV positive and are not known to have died (a) broken down by probable means of transmission and (b) in total in (i) England and (ii) each region of England, for each year from 1981 to 1998, and for 1999 to date; [84803]

  (7) how many people with AIDS died in (a) England and (b) each region of England in each year from 1981 to 1998, and in 1999 to date. [84798]

  Ms Jowell
  The information has now been placed in the Library.

  Biomedical Scientist
  Mr. Sawford
  To ask the Secretary of State for Health what steps he plans to take to return salary levels for biomedical scientists within the NHS in comparison to doctors to the level which obtained in 1984; and if he will make a statement. [86470]

  Mr. Denham
  The pay of biomedical scientists, who are also called Medical Laboratory Scientific Officers, is negotiated in the Professional and Technical Staffs Whitley Council. The Management Side has made a pay offer for 1999–2000 based on issues specific to these staff, including recruitment and retention, affordability, National Health Service output targets and the economic context. We are also discussing with all NHS unions the proposals to modernise the NHS pay system published in "Agenda for Change" on 15 February 1999.

  Standing Conference of Women's Organisations
  Sir Richard Body
  To ask the Secretary of State for Health how many meetings he has had with the Standing Conference of Women's Organisations in the last 12 months; and how many he had in the previous 12 months. [87646]

  Ms Jowell
  On 16 September 1997, I presented Mimi Johnson, representing the Standing Conference of Women's Organisations, with the Commonwealth Award for Excellence in Women's Health. There have been no
  47
  other meetings between Ministers and the Standing Conference of Women's Organisations (SCWO) in the past 24 months.

  As a member of the Women's National Commission, the Government's official advisory body for women, SCWO has the opportunity to participate in consultation on specific issues requested by Government Departments, and to input their concerns on any other matters.

  The Government are particularly grateful to SCWO for their help in publicising and promoting the Listening to Women campaign.

  Representatives from the SCWO participated in regional events in Manchester (22 February 1999), Birmingham (26 March 1999), Reading (21 May 1999), and the International Women's Day Meeting in London on 8 March 1999, which were held as part of the Listening to Women consultation exercise. These meetings enabled a wide range of women to speak face to face with Government and were attended by either my noble Friend the Baroness Jay or myself, in our role of Ministers for Women.

  Hospital Dispensing
  Dr. Cable
  To ask the Secretary of State for Health if he will introduce measures to ensure the centralised collection of information on medicines dispensed in hospitals. [87857]

  Mr. Denham
  "Information for Health", published in September 1998, provides the strategic direction for the development of information and Information Technology in the National Health Service to 2005. This charges Local Health Communities with developing Local Implementation Strategies for Information that indicate how the national objectives will be achieved. Part of the Local Implementation Strategy will be to show how all acute trusts will be able to achieve adequate Electronic Patient Record Systems by 2005. This includes the electronic ordering and record of supply of medicines. Providing the necessary piloting work is supportive, information about medicines dispensed in hospitals will then be capable of transmission over the NHSnet to support central analyses, as required.

  Nutrition
  Helen Jones
  To ask the Secretary of State for Health (1) what estimate he has made of the number of patients who are malnourished on admission to hospital; [87282]

  (2) what steps he is taking to improve standards of nutritional knowledge among medical and nursing staff; [87283]

  (3) how many hospital trusts have published written nutritional standards; and if he will make a statement. [87284]

  Ms Jowell
  [holding answer 21 June 1999]: Research studies have shown that 40 per cent. of adult patients and 15 per cent. of children are malnourished on admission to hospital. Several important reports about hospital nutrition have been published in the last decade which both educate hospital staff and contribute to development of local nutritional standards. We do not centrally record the various policy documents in many areas of care produced
  48
  by each National Health Service trust but the Commission for Health Improvement would take hospital nutrition into account in its rolling programme of local service reviews.

  Pharmaceutical Products (Parallel Imports)
  Mr, Hammond
  To ask the Secretary of State for Health (1) when he expects to announce proposals with regard to parallel imports of pharmaceutical products; [87969]

  (2) when he intends to reply to the letter of 7 May from the Association of Pharmaceutical Importers. [87968]

  Mr. Denham
  My right hon. Friend the Secretary of State replied to the letter from the Association of Pharmaceutical Importers and we have no current plans to announce proposals with regard to parallel imports of pharmaceutical products.

  NHS Staff (Morbidity Rates)
  Mr. Gordon Prentice
  To ask the Secretary of State for Health how many health service staff(a) died and (b) became ill as a result of contracting a disease or picking up an infection while in hospital for each year since 1990. [88123]

  Mr. Denham
  Under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 there is a statutory obligation on all employers to report illnesses or infections contracted through work to the Health and Safety Executive. The National Health Service Executive does not collect this information separately but seeks to ensure through guidance that employers comply with the legislation, and that all illnesses and infections falling within the categories laid down in the Regulations are reported.

  Mental Health Provision
  Mr. Kidney
  To ask the Secretary of State for Health what information he has collected on the availability of acute service beds for mental health service patients. [88577]

  Mr. Hutton
  The table sets out the data for the latest year available.

  Average daily number of available beds and average daily number

  of occupied beds, mental illness wards open overnight

  (i.e. 24 hours),

  England 1997–98

  Ward classification

  Available beds

  Occupied beds

  Children

  short stay

  403

  285

  long stay

  119

  99

  Elderly

  short stay

  7,382

  6,119

  long stay

  7,410

  6,090

  Other ages

  secure unit

  1,921

  1,566

  short stay

  14,458

  13,188

  long stay

  4,908

  4,300

  Residential care

  1,282

  1,159

  49

  A and E Provisions (South Shropshire)
  Mr. Gill
  To ask the Secretary of State for Health if he will visit South Shropshire to examine the accident and emergency provisions in that area. [88847]

  Mr. Hutton
  My right hon. Friend the Secretary of State has no plans to visit South Shropshire. I visited Kidderminster Hospital accident and emergency department, which serves South Shropshire, on 28 May, and I met a local councillor from South Shropshire to discuss accident and emergency provision.

  National Donor Register
  Mrs. Gillan
  To ask the Secretary of State for Health (1) what mechanism is in place for updating the National Donor Register to include those people who have changed their name to ensure that they remain on the register; [88712]

  (2) how many kidneys have been donated, in the last year, as a direct result of the National Donor Register being contacted; [88710]

  (3) how many times in the last year the National Donor Register has been contacted by the donor co-ordinators in order to find out if the potential donor is registered; [88709]

  (4) if all the donors listed on the National Donor Register are still alive; and what mechanism is used to delete from the National Donor Register those potential donors who have died without donating; [88711]

  (5) how many hon. Members are listed on the National Donor Register. [88714]

  Mr. Hutton
  It is not possible to say how many kidneys have been donated as a direct result of the National Health Service Organ Donor Register being contacted. During 1998, the last full calendar year for which figures are available, 78 kidneys were retrieved from donors whose names were included on the register.

  The NHS Organ Donor Register is confidential and it is therefore not possible to say how many hon. Members are registered.

  The NHS Organ Donor Register is reliant on registrants providing information when they change name or address. The mechanisms for doing so are the same as those for registering in the first place. These are accessible through vehicle driving licence applications and changes, through the UK Passport Agency on the issue of a new passport, when registering with a general practitioner or by using the leaflets available in libraries, GP surgeries and other public places.

  Every effort is made to ensure that the NHS Organ Donor Register is accurate. In order to improve accuracy, links are being established with the Office for National Statistics to cross reference information about deaths. The NHS Organ Donor Register is held alongside the National Transplant Database. The Database cross references with the Register with the aim of ensuring that any donor whose name is recorded on the Register is removed on donation.

  It is not possible to say how many times local transplant co-ordinators contact the United Kingdom Transplant Support Service Authority in order to access the Register
  50
  as this information is not available centrally. There are currently 7.5 million names on the Register with 58,000 applications to be processed. In the vast majority of cases, families of potential donors are content that the donation should go ahead knowing that their relative wished to be an organ donor or had registered with the NHS Organ Donor Register.

  NHS Prescriptions (Transparency Directive)
  Mr. Lock
  To ask the Secretary of State for Health if he will set out the criteria to exclude products from NHS prescription which he has notified to the European Commission to comply with Article 7 of Council Directive 89/105 EEC (the Transparency Directive). [88504]

  Mr. Dobson
  Since 1989 six criteria have been separately notified to the Commission. I have advised the Commission of the full set which currently apply, which are: first, under the Selected List Scheme, medicinal products in seventeen therapeutic categories which are excluded from prescription on the grounds that, on expert advice, they had no clinical or therapeutic advantage over other, cheaper, drugs in the following categories:

  mild to moderate painkillers

  indigestion remedies

  laxatives

  cough and cold remedies

  vitamins

  tonics

  benzodiazepine sedatives and tranquillisers

  antidiarrhoeal drugs

  drugs for allergic disorders

  hypnotics and anxiolytics

  appetite suppressants

  drugs for vaginal and vulval conditions

  contraceptives

  drugs used in anaemia

  topical anti-rheumatics

  drugs acting on the ear and nose

  drugs acting on the skin

  Secondly, products may be considered as "borderline substances" which are not truly medicinal products with clinical or therapeutic value and are excluded from National Health Service prescription on that ground.

  Thirdly, as well as being freely available on sale over the counter to the general public, the cost to the NHS if the product(s) were to be supplied on prescription could not be justified at any price likely to be economic to the manufacturer and that the supply of the product is not considered a priority for the use of the limited resources available to the NHS.

  Fourthly, that products which none the less may meet a legitimate clinical or therapeutic need when properly prescribed, are subject to misuse by drug misusers, and such misuse, or the manner in which the product is administered by drug misusers, gives rise to the risk of physical or mental morbidity and alternative products are available to meet all legitimate clinical or therapeutic needs.

  Fifthly, a medicinal product or a category of medicinal products may be excluded entirely from supply on NHS prescription. It may alternatively be excluded except in specified circumstances, or except in relation to specified conditions or categories of condition, or specified categories of patient. A medicinal product or a category of

  51
  them may be so excluded where the forecast aggregate cost to the NHS of allowing the product (or category of products) to be supplied on NHS prescription, or to be supplied more widely than the permitted exceptions, could not be justified having regard to all the relevant circumstances including in particular: the Secretary of State's duties pursuant to the NHS Act 1977 and the priorities for the expenditure of NHS resources.

  Sixthly, products which comprise an injection device prefilled with a drug may be excluded from supply on NHS prescription if the same drug is available and can be used more economically in a container which may be used in conjunction with a refillable injection device.

  London Chest Hospital
  Mr. Mackinlay
  To ask the Secretary of State for Health what are the terms of South Essex Health Authority's contract with London Chest Hospital in relation to heart by-pass operations; and if he will set out the annual number of operations (i) covered by the contract and (ii) performed, for the health authority over the past five years; and if he will make a statement. [88175]

  Mr. Denham
  The information available is given in the table.

  Coronary artery by-pass grafts performed on South Essex Health

  Authority residents by the Royal Hospitals Trust

  Operations

  Year

  Actual number performed

  Planned within service level agreement

  1994–95

  219

  1n/a

  1995–96

  165

  150

  1996–97

  120

  124

  1997–98

  189

  120

  1998–99

  212

  126

  1999–2000

  —

  233

  1Prior to the establishment of the Royal Hospitals Trust

  Sources:

  South Essex Health Authority—actual number performed Royal Hospitals NHS Trust—planned

  Speech and Language Therapists
  Mr. Streeter
  To ask the Secretary of State for Health if he will set out the reasons for the disparity in remuneration between speech and language therapists and other health care professionals of similar qualification. [88625]

  Mr. Denham
  Basic pay rates for speech and language therapists have increased by between 158 per cent. (minimum) and 170 per cent. (maximum) since 1984, more than those for any other professional staff group in the National Health Service. Qualification is one of many factors influencing decisions on pay. We published proposals to modernise the National Health Service pay system on 15 February 1999. Our aim is a pay system which gives employers effective ways of rewarding people for taking on more responsibility and developing new skills.

  Correspondence
  Mr. Winnick
  To ask the Secretary of State for Health when the hon. Member for Walsall, North 52
  will receive replies to his letters of 6 May (ref. POH(2)5608/22) and 18 May (ref. POH(2)5608/22) regarding constituents. [88618]

  Mr. Denham
  I replied to both of my hon. Friend's letters on 24 June.

EDUCATION AND EMPLOYMENT

  Active Schools Co-ordinators
  Ms Stuart
  To ask the Secretary of State for Education and Employment what role there will be for the New Deal in the recruitment by Sport England of the new Active Schools co-ordinators. [87221]

  Mr. Andrew Smith
  Sport England can employ people through the New Deal programme in the same way as any other employer, providing they satisfy the requirements of the programme. We hope that they will do so.

  School Visits (Insurance Cover)
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what advice he has circulated to schools in connection with the desirability of insurance cover for(a) residential courses involving at least one night away from home, (b) day visits starting and concluding within school hours and (c) day visits extending beyond normal school hours; and what assessment he has made of difficulties for schools in meeting insurance liabilities in connection with such courses. [88235]

  Mr. Charles Clarke
  The Department's 1998 publication, "Health and Safety of Pupils on Education Visits: A Good Practice Guide", strongly advises group leaders to ensure that adequate insurance is in place for all kinds of school visit, no matter when or where the visit is made. It recommends them to clarify with their LEA what insurance already exists and what additional or special cover may be needed, and gives examples. The booklet was produced after an extensive consultation, which did not suggest that schools found it hard to insure visits or meet the costs.

  Bett Report
  Mr. Boswell
  To ask the Secretary of State for Education and Employment when he plans to respond to the Bett report on higher education remuneration. [88624]

  Mr. Mudie
  The independent review of higher education pay and conditions was established by the higher education employers: it is for them and the relevant trades unions to respond to the recommendations.

  Further Education Funding Council
  Mr. Boswell
  To ask the Secretary of State for Education and Employment when the Further Education Funding Council expects to announce firm allocations of finance to further education colleges to promote proposed curriculum changes. [88234]

  Mr. Mudie
  The Further Education Funding Council intends to consult shortly on its proposals for ensuring that the funding methodology reflects the proposed curriculum changes arising from the Qualifying for Success policies. Decisions on this will be taken by the Council at its
  53
  December meeting this year, which will then be reflected in the provisional allocations for the 2000–01 academic year, to be issued to colleges in March 2000.

  Computer Systems
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what representations he has received from local educational authorities about difficulties in modifying computer systems to reflect changes in the system of student support. [88623]

  Mr. Mudie
  We have received no representation from local education authorities about difficulties in modifying computer systems.

  The upgrades to the computer systems are needed to enable the local education authorities to administer the new Student Support arrangements. The majority of the system upgrades are being handled by three IT suppliers, while 40 local education authorities have in house IT teams.

  The new arrangements represent a very big change for all those concerned—LEAs, the Student Loans Company, Higher Education Institutions and students and their families. As with any new system it will take time to bed in. Officials in the Department have engaged all these parties in designing the new system, setting the deadlines and agreeing all other features of the new student loan arrangements. All of us are concerned to ensure that students receive their loans at the start of the term.

  We have been informed by the IT suppliers that by mid July the local education authorities would have received all the upgrade required to administer the new Student Support arrangements.

  FE Lecturers (Pay and Conditions)
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what recent representations he has received from the National Association of Teachers in Further and Higher Education concerning pay and conditions for further education lecturers; and what reply he has sent. [88236]

  Mr. Mudie
  My right hon. Friend the Secretary of State met recently with representatives of NATFHE to discuss issues they wished to raise about pay and conditions for further education lecturers. We have received a number of letters from hon. Members enclosing copies of a letter which NATFHE members had been encouraged to send. We have replied to those representations, noting that we are providing very substantial extra funds for further education—£725 million over the next two years. Colleges are responsible for the pay and conditions of their staff. Nevertheless, we take every opportunity to encourage unions and employers to work together to determine a sensible way forward under the improved circumstances we have created.

  FE Teaching Staff
  Mr. Swayne
  To ask the Secretary of State for Education and Employment what recent representations he has received regarding the pay and conditions of teaching staff in the further education sector; and if he will make a statement. [88063]
  54
  Mr. Mudie
  Ministers have recently met representatives of the National Association of Teachers in Further and Higher Education, the Sixth Form Colleges Employers Forum, the National Joint Council for Sixth Form Colleges and the Association of Colleges and have discussed issues about the pay and conditions of further education lecturers. We have received a number of letters from hon. Members, enclosing copies of a letter which NATFHE members had been encouraged to send. We have replied to those representations, noting that we are providing very substantial extra funds for further education—£725 million over the next two years. Colleges are responsible for the pay and conditions of their staff. Nevertheless, we take every opportunity to encourage unions and employers to work together to determine a sensible way forward under the improved circumstances we have created.

  FE Colleges
  Mr. Swayne
  To ask the Secretary of State for Education and Employment when he plans to publish a White Paper on the future of further education colleges and TECs; and if he will make a statement. [88005]

  Mr. Mudie
  We will be announcing our proposals for post-16 education and training shortly and will make a statement at that time.

  Ministerial Meetings (Ireland)
  Mr. Matthew Taylor
  To ask the Secretary of State for Education and Employment on how many occasions Ministers in his Department have held meetings with Ministers and officials of the Irish Government since 1 January 1998 indicating the dates and locations, the Ministers involved and the names of the Irish Ministers and officials in each case. [87427]

  Mr. Mudie
  There have been two meetings with Ministers and officials of the Irish Government since 1 January 1998.

  My right hon. Friend the Secretary of State met Michael Martin, the Irish Minister for Education and Science, at a bilateral on education issues in Dublin in October 1998. On the same day he also met Mary Harney, Tanaiste and Minister for Enterprise, Trade and Employment to discuss employment issues. Three DfEE officials accompanied the Secretary of State.

  In addition my hon. Friend the Minister for School Standards spoke at an Anglo-Irish International Conference on Information and Communication Technology in Dublin in May 1999. Tom Kit, the Irish Minister for Labour and Trade Consumer Affairs, also spoke at the conference.

  Ministers have also met their counterparts at meetings on European Union business.

  Booster Classes
  Charlotte Atkins
  To ask the Secretary of State for Education and Employment what funding is made available to schools to fund year 6 booster classes.v [87678]

  Ms Estelle Morris
  Currently, El 8 million has been made available for schools to run additional literacy and numeracy classes. We will make an announcement shortly about funding for 1999–2000 and beyond.
  55

  Post-16 Education
  Mr. Paul Marsden
  To ask the Secretary of State for Education and Employment, pursuant to his answer of 25 May 1999,Official Report, columns 99–100, on post-16 education, when he plans to announce his proposals for post-16 education. [87866]

  Mr. Mudie
  We plan to announce our proposals for post-16 education and training shortly.

  Mobile Cranes
  Ms Walley
  To ask the Secretary of State for Education and Employment what public funding is available towards the costs of training drivers of mobile cranes with particular reference to requirements to meet LGV licence conditions; and if he will make a statement. [87900]

  Mr. Mudie
  Training courses for drivers of mobile cranes are included in Schedule 2(a) of the Further and Higher Education Act 1992 and are therefore eligible for funding from the Further Education Funding Council.

  Devon Youth Music Service
  Sir Peter Emery
  To ask the Secretary of State for Education and Employment what steps his Department will take to resolve the outstanding issues concerning Devon County Council's funding for the Devon Youth Music Service. [88009]

  Ms Estelle Morris
  The Government provided, through the Music Standards Fund, funding to Devon Local Education Authority for centrally provided music services. Subsequent arrangements between the LEA and Devon Youth Music are not a matter for the Department

  Specific grants supporting Department of Education and Employment (DfEE) initiatives launched since May 1997

  £ million

  DfEE specific grant

  1997–98

  1998–99

  1999–100

  Standards Fund

  School Effectiveness/Improvement

  —

  71.5

  126.5

  Induction for Newly-qualified Teachers

  —

  2.4

  1—

  Baseline Assessment

  —

  4.7

  1—

  National Curriculum Assessment

  —

  11.4

  1—

  Effective use of National Curriculum Results

  —

  5.6

  1—

  School Leadership

  —

  9.6

  15

  Advanced Skills Teachers

  —

  1.2

  9.4

  Local Recruitment Measures

  —

  —

  2.9

  Early Years Training and Development 4 year olds

  —

  4.5

  4.5

  Early Years Training and Development 3 year olds

  —

  —

  1.5

  Early Excellence Centres

  —

  9

  9

  National Literacy Strategy—Primary

  —

  24.6

  24.4

  Summer Literacy Schools and Key Stage 3 Literacy

  —

  3.7

  6.5

  National Numeracy Strategy—Primary

  —

  —

  24.8

  National Numeracy Strategy—Key Stage 3

  —

  —

  0.5

  Summer Numeracy Schools

  —

  0.3

  1.5

  Playing for Success

  —

  1.5

  1.5

  Family Literacy

  —

  2

  2.5

  Family Numeracy

  —

  —

  0.5

  Local Authority Lifelong Learning Development Plans

  —

  —

  4.5

  Qualifications

  —

  9.5

  9.5

  Work Related Learning

  —

  2

  2

  Special Educational Needs

  —

  9

  17.5

  Social Inclusion: Pupil Support

  —

  11.3

  28.7

  Drug Prevention

  —

  3.5

  3.7

  56
  for Education and Employment. None the less, officials have been in contact with both the County Council and Devon Youth Music to offer advice.

  European Social Funds (Wales)
  Mr. Wigley
  To ask the Secretary of State for Education and Employment when he plans to transfer responsibility for payments and financial management of European social funds to the National Assembly for Wales as part of the regionalisation programme for the European Social Fund; and if he will make a statement. [87995]

  Mr. Andrew Smith
  My right hon. Friend, the Secretary of State for Wales wrote to me on 23 February 1999 accepting in principle responsibility for these payments and the financial management of the Welsh European Social Fund Programmes from the start of the new period in January 2000.

  Education Initiatives (Funding)
  Mr. Don Foster
  To ask the Secretary of State for Education and Employment if he will list the education initiatives launched since May 1997 under which specific grants are allocated(a) through the Standards Fund and (b) by other means, stating in each case and for each financial year the funding provided by central Government. [88170]

  Ms Estelle Morris
  The following table lists the education initiatives launched since May 1997 for which funding is allocated to schools and local education authorities through the Standards Fund and other specific grants showing for each initiative the amount of funding provided by the Government in each financial year. The figures for the Standards Fund do not include Local Education Authorities' contributions. For 1999–2000, the 5.7 per cent. increase in Education Standard Spending Assessment included provision for Authorities' contributions to the Standards Fund.
  57

  Specific grants supporting Department of Education and Employment (DfEE) initiatives launched since May 1997

  £ million

  DfEE specific grant

  1997–98

  1998–99

  1999–100

  Youth Service

  —

  1.0

  1.0

  National Grid for Learning

  —

  51.0

  52.2

  School Security

  —

  15.0

  16.4

  Beacon Schools

  —

  1.3

  4.5

  Specialist Schools

  —

  19.3

  43.9

  Education of Traveller and Displaced Persons

  —

  —

  8.9

  Expanding central music services

  —

  —

  6.2

  Protecting central music services

  —

  —

  28.9

  Ethnic Minority Pupil Achievement

  —

  —

  81.6

  Access Fund for pupils aged 16–19 in schools

  —

  0.0

  6.0

  Year 6 Booster Classes

  —

  13.5

  4.0

  Asset Management Plans

  —

  —

  7.0

  Health Education Partnerships: Pilot projects

  —

  0.6

  2.0

  Numeracy Consultants and Leading Maths Teachers

  —

  0.6

  —

  Portable CD Rom Systems for SEN Coordinators

  —

  4.0

  —

  Books for Schools

  23.5

  73.5

  —

  Childrens Parliament

  —

  0.04

  —

  Reduction of Infant Class Sizes (Revenue)

  —

  22.0

  72.0

  Total Standards Fund

  23.5

  367.1

  630.5

  Capital grants paid through the Standards Fund

  Removal of Outside Toilets

  —

  16.5

  —

  Energy Management

  —

  13.2

  —

  New Deal for Schools

  83.0

  165.0

  225.0

  Reduction of Infant Class Sizes (Capital)

  —

  45.4

  80.0

  Total Capital

  83.0

  240.1

  305.0

  Other specific grants

  Education Action Zones

  —

  11.9

  30.0

  Nursery Education Grant

  637.0

  130.0

  —

  Total other specific grants

  637.0

  141.9

  30

  Total All Grants

  743.5

  749.1

  965.5

  1Part of School Improvement Grant

  Notes:

  1. Grant for the Education of Traveller and Displaced Persons was in existence prior to May 1997 but became a Standards Fund grant in 1999–2000.

  2. Ethnic Minority Pupil Achievement replaced the schools' education element of the Home Office Section 11 grant.

  3. Both grants for the reduction of class sizes will be paid through the Standards Fund mechanism in 1999–2000 but are covered by their own Regulations.

  4. The Books for Schools grant includes provision for grant maintained schools paid via the Funding Agency for Schools.

  5. In 1998–99 a large proportion of nursery education funding was channelled through the Revenue Support Grant.

  Class Sizes
  Dan Norris
  To ask the Secretary of State for Education and Employment how many children aged five to seven years in(a) Bath and North-East Somerset and (b) South Gloucestershire were in classes of more than 30 pupils in each year from 1992 to date. [88217]

  Ms Estelle Morris
  The available information is shown in the following table.

  The Government have pledged to reduce infant class sizes so that no 5, 6 or 7-year-old is in an infant class of more than 30 pupils. The number of infants in classes larger than 30 has already been reduced by some 130,000 between January 1998 and January 1999.

  Number of pupils in key stage 1 classes with 31 or more pupils

  taught by one teacher in maintained primary schools

  Bath and North East Somerset

  South Gloucestershire

  January 1996

  1,100

  3,361

  January 1997

  952

  3,752

  58

  Number of pupils in key stage 1 classes with 31 or more pupils

  taught by one teacher in maintained primary schools

  Bath and North East Somerset

  South Gloucestershire

  January 1998

  1,211

  3,391

  January 1999(provisional)

  1,019

  1,402

  Dan Norris
  To ask the Secretary of State for Education and Employment how many classes for pupils aged five to seven years in(a) Bath and North-East Somerset and (b) South Gloucestershire had more than 30 pupils in each year from 1992 to date. [88218]

  Ms Estelle Morris
  The available information is shown in the table.

  The Government have pledged to reduce infant class sizes so that no 5, 6 or 7-year-old is in an infant class of more than 30 pupils. The number of infants in classes larger than 30 has already been reduced by some 130,000 between January 1998 and January 1999.
  59

  Number of key stage 1 classes with 31 or more pupils taught by

  one teacher in maintained primary schools

  Bath and North East Somerset

  South Gloucestershire

  January 1996

  34

  103

  January 1997

  29

  114

  January 1998

  37

  103

  January 1999(provisional)

  31

  43

  Dan Norris
  To ask the Secretary of State for Education and Employment how many classes for pupils aged five to seven years in(a) South Gloucestershire and (b) Bath and North-East Somerset had 30 or fewer pupils in each year from 1992 to date. [88213]

  Ms Estelle Morris
  The available information is shown in the following table.

  The Government have pledged to reduce infant class sizes so that no five, six or seven-year-old is in an infant class of more than 30 pupils. The number of infants in classes larger than 30 has already been reduced by some 130,000 between January 1998 and January 1999.

  Number of key stage 1 classes with 30 or fewer pupils taught by

  one teacher in maintained primary schools

  Bath and North East Somerset

  South Gloucestershire

  January 1996

  146

  211

  January 1997

  161

  205

  January 1998

  166

  226

  January 1999(provisional)

  165

  308

  Teaching Consultation
  Mr. Sawford
  To ask the Secretary of State for Education and Employment when he expects to announce the results of his consultation on teaching. [88165]

  Ms Estelle Morris
  An announcement following the consultation exercise on the Green Paper, "Teachers: meeting the challenge of change" will be made shortly.

  Correspondence
  Mr. Rowe
  To ask the Secretary of State for Education and Employment when he will reply to the letter from the hon. Member for Faversham and Mid-Kent dated 24 April about the definition of a parent in a ballot on grammar schools. [88196]

  Mr. Mudie
  A reply has been issued today, Monday 28 June 1999.

TREASURY

  Brazil
  Mr. Kidney
  To ask the Chancellor of the Exchequer what assessment he has made of the effectiveness of the United Kingdom's contribution to Brazil's financial rescue package, with particular reference to the impact of the adjustment policies required of the Brazilian Government on Brazilian citizens. [87882]
  60
  Ms Hewitt
  Financial tensions in Brazil have eased significantly following the IMF-led international financial support package agreed last year, and this has allowed Brazilian interest rates to fall. The UK Government directly contributed $11 billion to the financial support package. The UK will continue to play an active role in monitoring Brazil's performance under its IMF programme. Continued adherence under the IMF programme is essential if the recovery in investor confidence is to be maintained.

  The IMF programme requires Brazil to narrow its large fiscal deficit. This fiscal adjustment will have a negative impact on growth in the short term but it is necessary if stability is to be restored. Macroeconomic stability is an important precondition for a sustainable economic recovery which will raise living standards and should benefit all sections of society. The Brazilian Government, the IMF and the World Bank have worked together closely to ensure that the impact of the adjustment programme on the poor and vulnerable is minimised. The World Bank have undertaken a number of projects in Brazil with a social dimension.

  Women's Organisations (Consultation)
  Jackie Ballard
  To ask the Chancellor of the Exchequer if he will list the women's organisations which have been consulted over proposed legislation by his Department during this session; and if their responses have been published. [86990]

  Ms Hewitt
  The Government are committed to making sure that policies are inclusive and take full account of the needs and experience of all those affected by them. Guidelines on Policy Appraisal for Equal Treatment published in November 1998 commit policy makers to assessing how proposals affect different groups of people.

  The Treasury encourages a wide-ranging consultation, in particular through the Pre-Budget consultation process. The Pre-Budget Report sets out the direction of economic policy and outlines measures under consideration in the run-up to the Budget. A range of organisations have submitted responses to the Pre-Budget and other consultations. Some individual groups have published responses to the Pre-Budget Report and Budget 99, including the Women's Budget Group. Treasury Ministers and officials also consult regularly with the Women's Budget Group on a range of issues, through a series of meetings and seminars.

  Withholding Tax
  Mr. Cohen
  To ask the Chancellor of the Exchequer if he will assess the impact of (i) a 20 per cent. withholding tax(a) with and (b) without, an exemption on interest earnings abroad and (ii) a requirement for the provision of information on capital income to the tax authority of a relevant country, on (A) levels of fraud, (B) money-

  61
  laundering, (C) reduced bank transparency and (D) the movement of funds to overseas tax havens; and if he will make a statement. [88399]

  Dawn Primarolo
  We are doing a great deal of detailed work on an assessment of the impact of the draft European Commission Directive on the taxation of interest from savings—in close co-operation with the City of London. We have made it clear that we will not agree to any 62
  Directive which damages our financial markets or which would require the United Kingdom to introduce a withholding tax.

  The government strongly support international initiatives, through the EU, OECD, the G7 and the Financial Action Task Force on money laundering, to improve the international sharing of information relevant to inquiries into financial crime, tax evasion and avoidance.
  63

HOME DEPARTMENT

  Personal Data Transfers
  Mrs. Anne Campbell
  To ask the Secretary of State for the Home Department in what respect the Safe Harbour proposal on personal data transfers differs from the rules that will apply under the 1995 EC Data Protection Directive. [88107]

  Mr. George Howarth
  Consistent with the Directive's requirement for "adequate" rather than "equivalent" protection in third countries, the draft "safe harbour" proposals do not reproduce all the Directive's detailed provision. However, they contain the key components of the data protection regime created by the Directive: provision for individuals to be informed; restrictions on the use and disclosure of individuals' data without consent; requirements for data security and data quality; individuals' rights of access and rectification and enforcement arrangements. The proposals are still under discussion.

  Trespassers
  Mr. Key
  To ask the Secretary of State for the Home Department on how many occasions since 1994 and in which police authority areas, section 61 of the Criminal Justice and Public Order Act 1994 has been used; and if he will make a statement. [88093]

  Mr. Boateng
  The use of powers to direct trespassers to leave land under section 61 of the Criminal Justice and Public Order Act 1994 is an operational matter for the senior officer present at the scene. Records are not maintained centrally on the numbers of occasions on which such powers are used.

  Stonehenge
  Mr. Key
  To ask the Secretary of State for the Home Department if he will make it his policy to reimburse from central Government the cost to Wiltshire local taxpayers of policing and protecting the Stonehenge World Heritage Area; and if he will make a statement. [88092]

  Mr. Boateng
  Following the Comprehensive Spending Review, the budget of Wiltshire Police Authority will increase this year by 3.4 per cent. to £68.9 million, which is above the national average increase of 3.1 per cent. Around 80 per cent. of the police authority's spending comes from central Government.

  The Government congratulate Wiltshire Constabulary on their handling of the disorder at Stonehenge on 21 June. Police forces can from time to time face particular demands on their resources. We would normally expect forces to meet any additional costs from within their existing budgets, or from contingency reserves.

  Passports
  Mr. Bob Russell
  To ask the Secretary of State for the Home Department what is the time-scale for processing 64
  passport applications at the Peterborough Passport Office received (a) by post and (b) by special arrangement with Post Office Counters. [88166]

  Mr. Mike O'Brien
  The processing time for passport applications received by the Peterborough Passport Office by post is 33 days and for applications received via Post Office Counters is seven days.

  The Passport Agency is currently prioritising applications by customers' declared travel dates, and the processing time for postal work at the Peterborough Passport is for non-urgent applications.

  Applications received via Post Office Counters are easier to process, and generally have more urgent travel dates. Non-urgent applications received by partners would not be given priority over urgent postal applications.

  Mr. Bob Russell
  To ask the Secretary of State for the Home Department what arrangements the UK Passport Agency has made with Post Office Counters for fast-tracking the processing of passport applications. [88164]

  Mr. Mike O'Brien
  In view of its current operational problems, the Agency has changed the arrangement with Post Office Counters Ltd., and the Liverpool Office is now dealing with applications from them in 20 working days, and from its five other passport offices in 15 working days.

  Due to its current backlog of work, the Agency is prioritising all applications by travel dates and there are delays in some offices in processing non-urgent work received from the Post Office.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what estimate he has made of the number of telephone calls from members of the public to each of the Passport Agency's offices which were left unanswered in each of the last 12 months. [88506]

  Mr. Mike O'Brien
  The information on the number of calls receiving a courtesy message during the last 12 months is shown in the table. This record represents the nearest equivalent to the number of calls left unanswered. These figures include repeat calls. The Passport Agency cannot at present determine the proportion of repeat calls. These figures are collated centrally and cannot be broken down to an estimate for each office in any accurate way.

  Month

  Total

  1998

  June

  288,000

  July

  308,000

  August

  131,000

  September

  100,000

  October

  90,,000

  November

  80,000

  December

  95,0000

  1999

  January

  118,000

  February

  210,000

  65

  Month

  Total

  March

  452,000

  April

  460,000

  May

  1,110,000

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many members of the public the Passport Agency has agreed to pay(a) compensation and (b) ex-gratia payments to during the last 12 months; and what is the total sum of money involved. [88513]

  Mr. Mike O'Brien
  The Passport Agency's compensation policy is to reimburse the reasonable out-of-pocket expenses incurred by customers as a direct consequence of clear operational errors, or failure to provide an acceptable level of service by means of an ex-gratia payment.

  Each case is considered carefully on its merits. It is not the Agency's normal policy to make compensation payments for distress and inconvenience arising from such errors and failures. Records of compensation payments are not split into compensation and ex-gratia categories.

  The information requested on compensation payments made by the Agency in the last 12 months is shown in the table.

  Month

  Number of complaints where compensation paid

  Total compensation paid (£)

  1998

  June

  160

  5,256

  July

  266

  7,460

  August

  244

  6,079

  September

  188

  7,234

  October

  194

  7,453

  November

  180

  8,127

  December

  179

  7,166

  1999

  January

  181

  5,785

  February

  196

  7,955

  March

  245

  5,453

  April

  256

  7,748

  May

  219

  7,551

  Month

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  January 1996

  5,574

  34,400

  22,888

  26,576

  16,878

  4,572

  111,488

  February 1996

  5,053

  40,450

  16,583

  20,444

  20,457

  5,570

  108,557

  March 1996

  3,031

  39,272

  17,230

  27,627

  18,689

  6,670

  112,519

  April 1996

  3,790

  45,565

  30,442

  33,885

  31,145

  9,064

  153,891

  May 1996

  6,554

  53,689

  36,175

  36,409

  36,181

  7,674

  176,682

  June 1996

  5,244

  52,807

  37,277

  39,236

  41,368

  8,230

  184,162

  July 1996

  3,916

  48,820

  38,450

  41,798

  46,739

  5,645

  185,368

  August 1996

  2,615

  32,717

  15,019

  25,708

  22,982

  3,349

  102,390

  September 1996

  2,641

  36,859

  23,636

  25,402

  23,855

  1,682

  114,055

  October 1996

  4,072

  29,323

  21,206

  18,945

  16,225

  3,593

  93,394

  November 1996

  2,294

  15,079

  10,384

  12,905

  13,321

  2,391

  56,374

  December 1996

  2,279

  12,399

  6,435

  6,654

  7,821

  289

  35,877

  66
  Mr. Lidington
  To ask the Secretary of State for the Home Department how many applications for(a) new passports and (b) renewed passports the Passport Agency has received in each month since January 1996. [88783]

  Mr. Mike O'Brien
  The information requested on the numbers of applications for new and renewal passports is set out as follows:

  (a) Applications for new passports

  Month

  1996

  1997

  1998

  1999

  January

  251,416

  188,230

  190,490

  152,392

  February

  248,914

  207,815

  250,487

  217,924

  March

  277,060

  233,848

  238,029

  326,094

  April

  256,504

  216,327

  192,314

  304,653

  May

  382,388

  283,733

  268,357

  306,083

  June

  330,684

  267,757

  244,900

  —

  July

  307,225

  248,624

  233,388

  —

  August

  276,812

  234,103

  230,835

  —

  September

  162,861

  140,485

  198,630

  —

  October

  141,095

  126,325

  124,095

  —

  November

  149,160

  126,034

  162,103

  —

  December

  72,121

  67,947

  95,493

  —

  Total

  2,856,240

  2,341,128

  2,429,121

  111,307,146

  (b) Applications for renewed passports

  Month

  1996

  1997

  1998

  1999

  January

  200,740

  182,316

  167,118

  133,694

  February

  167,357

  176,278

  202,910

  176,531

  March

  178,702

  180,609

  176,988

  225,903

  April

  166,004

  157,767

  167,118

  198,302

  May

  211,634

  189,558

  202,910

  201,010

  June

  172,632

  166,749

  176,988

  —

  July

  164,136

  156,418

  168,073

  —

  August

  163,782

  165,872

  179,665

  —

  September

  167,538

  111,095

  109,214

  —

  October

  102,799

  108,695

  96,898

  —

  November

  124,729

  116,654

  131,618

  —

  December

  58,565

  61,819

  67,570

  —

  Total

  1,878,609

  1,773,830

  1,847,070

  935,440

  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will list in respect of each office of the Passport Agency the number of unprocessed passport applications which were outstanding at the end of each month from January 1996 to date. [88511]

  Mr. Mike O'Brien
  The information requested on the numbers of unprocessed passport applications outstanding at the end of each month from January 1996 is set out in the table.
  67

  Month

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  January 1997

  3,512

  39,153

  14,526

  22,296

  18,499

  2,791

  100,777

  February 1997

  3,250

  41,716

  25,554

  29,847

  28,774

  5,400

  134,543

  March 1997

  1,620

  52,395

  29,042

  33,435

  24,798

  4,265

  145,555

  April 1997

  2,723

  59,353

  35,593

  45,757

  36,037

  4,798

  184,261

  May 1997

  3,133

  67,690

  51,279

  40,438

  39,413

  6,302

  208,255

  June 1997

  4,796

  69,589

  52,393

  60,078

  46,914

  3,353

  237,123

  July 1997

  4,014

  67,217

  53,356

  57,029

  49,989

  1,860

  233,467

  August 1997

  3,389

  51,004

  31,074

  31,789

  32,942

  5,372

  155,525

  September 1997

  3,166

  31,489

  20,059

  28,760

  18,026

  2,784

  105,284

  October 1997

  2,300

  28,842

  18,277

  21,997

  22,368

  3,415

  97,199

  November 1997

  2,766

  20,990

  13,536

  19,682

  21,376

  5,059

  83,409

  December 1997

  1,944

  23,648

  13,924

  16,613

  19,556

  2,612

  78,297

  January 1998

  2,382

  31,808

  32,012

  34,906

  31,169

  6,290

  139,017

  February 1998

  2,742

  59,798

  41,843

  37,735

  36,090

  7,309

  185,517

  March 1998

  3,724

  70,242

  57,172

  47,046

  58,959

  6,713

  243,856

  April 1998

  3,640

  49,089

  38,577

  43,214

  46,810

  7,896

  189,226

  May 1998

  4,205

  48,124

  7,636

  27,452

  25,846

  7,733

  120,996

  June 1998

  5,456

  74,155

  58,238

  68,422

  48,836

  8,018

  263,125

  July 1998

  4,179

  70,527

  48,272

  56,388

  49,012

  11,373

  239,751

  August 1998

  2,439

  26,348

  23,744

  26,597

  34,144

  11,440

  124,712

  September 1998

  3,775

  2,907

  41,606

  20,827

  47,376

  3,314

  119,805

  October 1998

  7,268

  1,867

  38,250

  3,125

  42,435

  4,903

  97,848

  November 1998

  7,048

  27,419

  13,986

  3,494

  55,470

  9,165

  116,582

  December 1998

  4,205

  48,124

  7,636

  27,452

  25,846

  7,733

  120,996

  January 1999

  5,249

  31,173

  39,966

  31,380

  40,532

  18,610

  166,910

  February 1999

  8,095

  81,396

  60,206

  57,540

  58,605

  14,351

  280,193

  March 1999

  9,809

  71,387

  68,784

  53,817

  72,810

  24,417

  301,024

  April 1999

  9,530

  97,030

  90,403

  61,992

  102,102

  36,016

  397,073

  May 1999

  11,684

  143,093

  934,411

  383,751

  127,416

  25,049

  487,658

  Mr. Lidington
  To ask the Secretary of State for the Home Department what, in each month from January 1994 to date and in respect of each of the Passport Agency's six offices, was the time taken to process(a) new applications and (b) renewal applications; and if he will make a statement. [88627]

  Average maximum processing times in working days

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  1994

  January

  2

  5

  3

  4

  3

  3

  February

  3

  8

  5

  7

  4

  4

  March

  3

  8

  5

  6

  6

  6

  April

  2

  7

  5

  5

  7

  7

  May

  3

  13

  7

  9

  11

  8

  June

  4

  15

  9

  11

  15

  8

  July

  5

  13

  10

  10

  13

  7

  August

  4

  11

  7

  7

  7

  4

  September

  1

  8

  4

  8

  4

  6

  October

  1

  4

  5

  3

  5

  6

  November

  3

  3

  3

  1

  5

  2

  December

  5

  2

  1

  1

  2

  1

  1995

  January

  2

  4

  3

  4

  4

  4

  February

  1

  6

  4

  6

  6

  6

  March

  2

  5

  5

  5

  6

  4

  April

  2

  6

  5

  6

  7

  6

  May

  3

  7

  6

  6

  10

  7

  June

  2

  11

  8

  7

  13

  6

  July

  3

  10

  8

  8

  14

  10

  August

  5

  9

  7

  6

  9

  8

  September

  5

  9

  6

  7

  7

  5

  October

  4

  7

  6

  8

  8

  8

  November

  4

  3

  4

  4

  3

  4

  December

  5

  4

  2

  3

  5

  2

  68
  Mr. Mike O'Brien
  The table shows the average maximum times taken at each of the Passport Agency's offices to process all straightforward, properly completed applications in each month from January 1994. The Passport Agency does not collate this information separately for new and renewal applications and the figures represent the maximum turnaround times for all applications:
  69

  Average maximum processing times in working days

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  1996

  January

  4

  5

  5

  5

  5

  4

  February

  3

  5

  3

  4

  4

  3

  March

  2

  5

  3

  5

  5

  4

  April

  4

  5

  5

  5

  6

  5

  May

  2

  6

  6

  6

  7

  6

  June

  2

  7

  8

  9

  10

  7

  July

  2

  8

  8

  10

  12

  8

  August

  1

  7

  6

  7

  10

  5

  September

  1

  7

  6

  6

  7

  5

  October

  5

  8

  7

  7

  9

  6

  November

  3

  5

  5

  6

  5

  4

  December

  2

  3

  3

  4

  1

  4

  1997

  January

  2

  5

  3

  3

  5

  3

  February

  2

  7

  4

  5

  8

  6

  March

  2

  8

  6

  7

  7

  8

  April

  3

  8

  7

  7

  8

  7

  May

  2

  10

  8

  8

  10

  6

  June

  3

  10

  10

  9

  10

  7

  July

  5

  14

  12

  13

  14

  7

  August

  6

  14

  11

  12

  16

  7

  September

  3

  11

  8

  10

  11

  5

  October

  3

  8

  7

  12

  9

  5

  November

  2

  7

  6

  7

  7

  6

  December

  3

  8

  8

  10

  10

  6

  1998

  January

  4

  6

  7

  7

  8

  7

  February

  5

  7

  8

  7

  9

  8

  March

  5

  9

  10

  9

  11

  7

  April

  5

  9

  7

  8

  12

  7

  May

  5

  10

  10

  12

  14

  8

  June

  5

  14

  14

  21

  23

  10

  July

  5

  22

  15

  20

  20

  10

  August

  4

  19

  11

  13

  12

  13

  September

  2

  6

  8

  6

  13

  9

  October

  4

  9

  14

  5

  15

  6

  November

  3

  17

  7

  2

  16

  9

  December

  2

  17

  4

  15

  23

  9

  1999

  January

  2

  16

  5

  12

  11

  8

  February

  4

  20

  11

  20

  10

  14

  March

  6

  25

  12

  28

  16

  16

  April

  6

  33

  15

  36

  18

  21

  May

  5

  46

  27

  33

  26

  31

  The Passport Agency has, for a number of years, had a very good record of delivering services. The average annual maximum processing time on straightforward properly completed applications has been under 10 working days in each of the financial years from 1994–95 to 1997–98.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what estimate he has made of the revenue which the Passport Agency will forgo in the current financial year as a result of the extension of the period of passport validity free of charge. [88510]

  Mr. Mike O'Brien
  The Passport Agency's estimate of the income forgone as a result of the use of two year exceptional extensions to clear quickly, straightforward
  70
  renewal applications is £1.08 million, based on an average fee of £18. The income will be recouped in two years.

  The cost of processing an exceptional extension is much less than a full 10-year passport. Hence, in terms of matching income and expenditure the loss is much less than £18.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what has been the average period of time for determining passport applications in each of the Passport Agency's six offices in each month from January 1996 to date. [88515]

  Mr. Mike O'Brien
  The information requested is shown in the table.
  71

  Average processing time in working days

  Month

  Belfast

  London

  Newport

  Liverpool

  Peterborough

  Glasgow

  1996

  January

  4

  4

  5

  5

  5

  4

  February

  3

  3

  4

  5

  3

  4

  March

  4

  2

  5

  5

  3

  5

  April

  5

  4

  5

  5

  5

  6

  May

  6

  2

  6

  6

  6

  7

  June

  7

  2

  9

  7

  7

  10

  July

  8

  3

  10

  8

  8

  12

  August

  5

  1

  7

  7

  6

  10

  September

  5

  1

  7

  7

  5

  7

  October

  6

  5

  7

  8

  7

  9

  November

  4

  3

  6

  5

  4

  5

  December

  4

  2

  4

  3

  3

  1

  1997

  January

  3

  2

  3

  5

  3

  5

  February

  6

  2

  5

  7

  4

  8

  March

  8

  2

  7

  8

  6

  7

  April

  7

  3

  7

  8

  7

  8

  May

  6

  3

  8

  9

  8

  9

  June

  7

  3

  9

  10

  10

  11

  July

  7

  5

  13

  14

  12

  14

  August

  7

  6

  12

  14

  11

  16

  September

  5

  3

  10

  11

  8

  11

  October

  4

  3

  12

  8

  7

  9

  November

  6

  2

  7

  7

  6

  7

  December

  6

  3

  10

  8

  8

  10

  1998

  January

  7

  4

  7

  6

  7

  8

  February

  8

  5

  7

  7

  8

  9

  March

  8

  5

  9

  9

  10

  11

  April

  7

  5

  8

  9

  7

  12

  May

  9

  5

  12

  10

  10

  14

  June

  9

  5

  21

  14

  14

  23

  July

  10

  5

  21

  22

  15

  20

  August

  13

  4

  13

  19

  11

  13

  September

  9

  2

  6

  6

  8

  13

  October

  6

  4

  6

  9

  13

  15

  November

  8

  4

  3

  17

  9

  16

  December

  9

  2

  15

  14

  4

  22

  1999

  January

  8

  2

  12

  16

  5

  11

  February

  14

  4

  20

  20

  11

  10

  March

  16

  6

  28

  25

  12

  16

  April

  21

  6

  36

  33

  15

  18

  May

  31

  5

  33

  46

  27

  26

  June1

  36

  6

  40

  38

  34

  36

  1 Up to week ending 20 June 1999

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many staff are employed currently(a) in total and (b) broken down by grade at each of the Passport Agency's offices. [88802]

  Mr. Milke O'Brien
  The total number of staff currently employed in the Passport Agency is 1,828. The breakdown by grade is shown in the table:

  Grade

  Number

  Grade 5

  2

  Grade 6

  2

  Grade 7

  11

  72

  Grade

  Number

  Senior Executive Officer

  18

  Higher Executive Officer

  65

  Executive Officer

  194

  Administrative Officer

  870

  Administrative Assistant

  666

  Total

  1,828

  The Agency has transferred 197 staff to Siemens Business Services, but they are still working on producing Passports in Partnership with United Kingdom Passport Agency.
  73

  Grade

  HQ

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  Permanent staff in post

  Senior Civil Servant

  2

  0

  0

  0

  0

  0

  0

  2

  Grade 6

  2

  0

  0

  0

  0

  0

  0

  2

  Grade 7

  5

  1

  1

  1

  1

  1

  0

  10

  Senior Executive Officer

  12

  1

  1

  1

  1

  1

  1

  18

  Higher Executive Officer

  26

  6

  8.67

  7

  6

  8

  3

  64.67

  Executive Officer

  10

  33

  42

  31.56

  28

  34.59

  13.2

  192.35

  P03

  11.4

  118.5

  163.31

  106.7

  116.5

  97.88

  53.4

  667.69

  P02

  0

  0

  27.98

  1

  0

  11

  1

  40.98

  PO1

  4

  43.5

  15.23

  31.4

  9

  22.59

  11.5

  137.22

  Typing Manager (RO)/SPS (HQ)

  0

  1

  0.95

  0

  0

  0

  0

  1.95

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  72.4

  204

  260.14

  179.66

  161.5

  176.06

  83.1

  1,136.86

  Permanent staff in substantive grades

  Senior Civil Servant

  2

  0

  0

  0

  0

  0

  0

  2

  Grade 6

  1

  0

  0

  0

  0

  0

  0

  1

  Grade 7

  6

  1

  0

  0

  1

  1

  0

  9

  Senior Executive Officer

  7

  1

  1

  1

  1

  1

  1

  13

  Higher Executive Officer

  21

  6

  4

  5

  5

  5

  3

  49

  Executive Officer

  14

  31

  26.43

  25.56

  20

  23.59

  12.2

  152.78

  P03

  15.4

  120.5

  175.23

  103.2

  124.5

  106.9

  44.6

  690.33

  P02

  0

  0

  0

  0

  0

  2

  0

  2

  P01

  6

  43.5

  53.48

  44.88

  10

  36.57

  22.3

  216.73

  Typing Manager (RO)/SPS (HQ)

  0

  1

  0

  0

  0

  0

  0

  1

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  72.4

  204

  260.14

  179.64

  161.5

  176.06

  83.1

  1136.8

  Number of part-year appointments

  Senior Civil Servant

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  P03

  0

  0

  6

  67.27

  30

  0

  2

  105.27

  P02

  0

  0

  2

  2

  0

  0

  12

  16

  PO1

  0

  0

  40.61

  24.18

  15

  33

  22

  134.79

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  0

  0

  48.61

  93.45

  45

  33

  36

  256.06

  Number of daytime casual staff

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  P03

  0

  0

  0

  0

  0

  0

  0

  0

  P02

  0

  0

  0

  0

  0

  0

  0

  0

  PO1

  1

  0

  35

  87.43

  35

  109.59

  13

  281.02

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  1

  0

  35

  87.43

  35

  109.59

  13

  281.02

  Number of evening casual staff

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  P03

  0

  0

  0

  0

  0

  0

  0

  0

  P02

  0

  0

  0

  0

  0

  0

  0

  0

  P01

  0

  0

  0.54

  28.08

  3.5

  31.86

  0

  63.98

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  0

  0

  0.54

  28.08

  3.5

  31.86

  0

  63.98

  74 75

  Grade

  HQ

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  Number of daytime fixed term appointments

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  1

  1

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  0

  0

  0

  0

  PO3

  0

  3

  3.76

  12.64

  0

  0

  0

  19.4

  PO2

  0

  0

  0

  0

  0

  0

  0

  0

  P01

  0

  0

  0

  6.24

  6

  2.08

  0

  14.32

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  1

  3

  3.76

  18.88

  6

  2.08

  0

  34.72

  Number of evening fixed term appointments

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  PO3

  0

  0

  0.54

  11.88

  0

  0

  0

  12.42

  PO2

  0

  0

  0

  8.64

  0

  0

  0

  8.64

  PO1

  0

  0

  0.54

  0.54

  26.5

  6.48

  0

  34.06

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  0

  0

  1.08

  21.06

  26.5

  6.48

  0

  55.12

  Number of recurring temporary appointments

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  PO3

  0

  0

  0

  0

  0

  0

  0

  0

  PO2

  0

  0

  0

  0

  0

  0

  0

  0

  P01

  0

  0

  0

  0

  0

  0

  0

  0

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  0

  0

  0

  0

  0

  0

  0

  0

  Number of seasonal days

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  0

  720.97

  0

  0

  0

  0

  Executive Officer

  0

  0

  0

  977.11

  0

  0

  0

  24

  PO3

  0

  0

  192.58

  998.36

  463.5

  0

  29.5

  6,676.1

  PO2

  0

  0

  587.58

  1,008.7

  465.5

  0

  203

  911.42

  P01

  31

  0

  1365.2

  0

  1,179.5

  3,477.2

  538

  9,285.3

  Typing Manager (RO)/SPS (HQ)

  0

  0

  0

  0

  0

  0

  0

  0

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  31

  0

  2145.3

  3,705.2

  2,108.5

  3,477.2

  770.5

  16897

  Number of days overtime

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  4.03

  0

  0

  10.35

  0

  0

  0

  14.38

  Higher Executive Officer

  33.87

  22.26

  16.35

  30.33

  52.5

  35.5

  4.52

  195.33

  Executive Officer

  27.78

  37.5

  226.68

  96.98

  135

  220

  58.83

  802.77

  PO3

  8.06

  182.78

  769.51

  450.12

  758

  533.5

  310.31

  2,701.97

  PO2

  0

  0

  229.83

  12.1

  174

  65.5

  29

  510.43

  P01

  0

  11.46

  261.58

  555.09

  255

  566.5

  175.75

  1,825.38

  Typing Manager (RO)/SPS (HQ)

  0

  4.37

  0

  0

  0

  0

  4.37

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  73.74

  258.37

  1,504

  1,155

  1,374.5

  1,421

  268.1

  6,054.63

  76 77

  Grade

  HQ

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  Number of days deputising

  Grade 5

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 6

  0

  0

  0

  0

  0

  0

  0

  0

  Grade 7

  0

  0

  0

  0

  0

  0

  0

  0

  Senior Executive Officer

  0

  0

  0

  0

  0

  0

  0

  0

  Higher Executive Officer

  0

  0

  12

  0

  0

  25

  0

  37

  Executive Officer

  0

  0

  104

  0

  14

  153

  0

  271

  PO3

  0

  0

  4.5

  0

  23

  90

  13.5

  131

  PO2

  0

  0

  0

  0

  0

  0

  0

  0

  PO1

  0

  0

  0

  0

  0

  0

  8.5

  8.5

  Typing Manager (RO)/SPS (HQ)

  0

  0

  3

  0

  0

  0

  0

  3

  Support Manager 3

  0

  0

  0

  0

  0

  0

  0

  0

  Total

  0

  0

  123.5

  0

  37

  268

  22

  450.5

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many(a) telephone and (b) written inquiries have been received in each of the Passport Agency's six offices in each of the last 12 months. [88621]

  Mr. Mike O'Brien
  The Passport Agency's published telephone inquiry number is a single non-geographical number (0870 5210410). The inquiry service is fronted by an automated menu system which, depending on the option selected, then routes calls to either an appropriate

  Telephone inquiries

  Month

  Recorded/ courtesy messages

  Belfast

  Glasgow

  London

  Liverpool

  Newport

  Peterborough

  June 1998

  516,045

  13,521

  25,918

  22,512

  37,624

  46,013

  21,596

  July 1998

  563,559

  11,196

  24,457

  15,305

  36,151

  41,376

  25,153

  August 1998

  279,214

  9,047

  26,776

  15,168

  1—

  34,086

  23,936

  September 1998

  202,702

  8,744

  26,724

  26,805

  1—

  1—

  25,592

  October 1998

  291,458

  10,764

  23,576

  30,123

  13,569

  1—

  1—

  November 1998

  131,726

  7,366

  23,348

  31,195

  20,129

  26,481

  15,103

  December 1998

  192,176

  1,412

  17,292

  20,712

  17,969

  22,465

  16,796

  January 1999

  332,296

  875

  21,984

  26,725

  21,445

  32,911

  25,566

  February 1999

  370,537

  4,152

  20,878

  23,691

  17,421

  35,479

  27,982

  March 1999

  668,287

  4,876

  25,914

  38,020

  15,060

  30,148

  29,470

  April 1999

  669,048

  9,249

  19,822

  15,324

  10,914

  25,695

  20,036

  May 1999

  1,388,522

  9,175

  16,706

  17,053

  6,893

  26,240

  12,988

  Management information not available due to refurbishment work.

  Written inquiries

  Month

  Belfast

  Glasgow

  London

  Liverpool

  Newport

  Peterborough

  June 1998

  182

  538

  111

  1,866

  1,874

  602

  July 1998

  197

  591

  120

  2,430

  1,712

  813

  August 1998

  293

  679

  88

  1,494

  2,238

  473

  September 1998

  243

  574

  110

  1,589

  1,802

  502

  October 1998

  91

  539

  87

  1,304

  1,631

  496

  November 1998

  157

  353

  111

  1,736

  913

  813

  December 1988

  262

  588

  159

  1,399

  600

  118

  January 1999

  193

  423

  144

  2,200

  3,058

  464

  February 1999

  208

  528

  194

  1,566

  2,600

  2,171

  March 1999

  262

  800

  241

  2,025

  2,856

  2,376

  April 1999

  428

  839

  231

  2,016

  2,808

  2,162

  May 1999

  156

  2,468

  358

  2,152

  2,014

  1,944

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many passport applications in each month since January 1996 have been endorsed with a two year extension; and if he will make a statement. [88505]

  Mr. Mike O'Brien
  The Passport Agency currently has backlogs and in order to clear quickly straightforward renewal applications, certain existing passports are being extended provided certain criteria are fulfilled.
  78
  recorded message (for general inquiries) or an operator (for specific inquiries).

  An element of the calls are, therefore, answered centrally by recorded messages, whilst the remainder are transferred to the local office to be answered by an operator. If all lines to the local office are busy, customers receive a courtesy message for that office. To provide the full picture, the number of calls answered centrally by recorded and courtesy messages has also been included.

  The number of extensions that have been made are as follows:

  Number

  May 1999

  -18,918

  June 1999 (to date)

  -19,178

  Total

  38,096

  79
  The only other extensions that have been made by the Passport Agency since January 1996 have been a total of 183 made by the out-of-hours duty officer in the London office to facilitate travel for those requiring an emergency service.

  The temporary extension of passports is a sensible easement to reduce queues and assist people to travel. Arrears of passport applications are double the amount last year and have been caused by an exceptional rise in applications since April, additional applications arising from the requirements for children to have separate passports and arrears which accrued following the introduction of a new issuing system which is being piloted in Liverpool and Newport. The criteria to be met before extensions are given are that the holders details remain unchanged, the passport has not expired more than five years previously, the passport is not damaged or altered, the passport is not subject to restrictions, and the applicant's appearance is clearly identifiable.

  These extended passports are properly issued passports valid for travel and immigration authorities abroad have been made aware of the position. There is no relaxation in security and proper checks are made before the passports are extended. The measures are temporary and expected to cease by September when current backlogs are expected to be cleared.

  Mr. Lidington
  To ask the Secretary of State for the Home Department when he expects to receive the Passport Agency's business plan for 1999–2000. [88512]

  Children's applications for passports

  Months

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  1999

  January

  3,272

  19,240

  24,887

  24,310

  14,634

  6,181

  92,524

  February

  3,749

  24,465

  28,779

  25,054

  27,193

  8,141

  117,381

  March

  5,458

  27,483

  45,336

  19,614

  39,312

  14,337

  151,540

  April

  3,496

  38,812

  34,131

  31,548

  32,971

  11,370

  152,328

  May

  6,333

  33,888

  53,502

  39,498

  39,824

  18,487

  191,532

  June'

  3,453

  15,723

  23,487

  21,573

  19,296

  7,706

  91,238

  July

  —

  —

  —

  —

  —

  —

  —

  August

  —

  —

  —

  —

  —

  —

  —

  September

  —

  —

  —

  —

  —

  —

  —

  October

  —

  —

  —

  —

  —

  —

  —

  November

  —

  —

  —

  —

  —

  —

  —

  December

  —

  —

  —

  —

  —

  —

  —

  Total

  25,761

  159,611

  210,122

  161,597

  173,230

  66,222

  796,543

  1998

  January

  2,337

  7,877

  10,154

  9,348

  6,372

  1,640

  37,728

  February

  2,355

  9,427

  10,426

  9,833

  5,446

  2,011

  39,498

  March

  2,769

  10,865

  11,383

  11,844

  7,877

  2,549

  47,287

  April

  2,138

  9,728

  9,924

  9,646

  5,715

  2,401

  39,552

  May

  2,693

  13,834

  13,920

  13,392

  9,894

  3,635

  57,368

  June

  2,682

  14,316

  12,819

  12,610

  8,687

  3,044

  54,158

  July

  3,738

  12,127

  14,220

  10,473

  8,559

  2,724

  51,841

  August

  3,890

  7,518

  12,544

  9,639

  8,956

  2,348

  44,895

  September

  1,592

  1,067

  9,473

  7,639

  7,301

  2,160

  29,232

  October

  3,170

  4,384

  10,934

  5,545

  9,662

  4,029

  37,724

  November

  4,751

  11,635

  15,081

  7,607

  20,202

  6,330

  65,606

  December

  3,276

  9,175

  11,439

  6,871

  6,432

  4,417

  41,610

  Total

  35,391

  111,953

  142,317

  114,447

  105,103

  37,288

  546,499

  1997

  January

  2,385

  8,610

  9,732

  8,822

  5,795

  1,022

  36,366

  February

  2,474

  8,247

  9,835

  9,566

  6,224

  1,471

  37,817

  March

  2,805

  9,295

  10,788

  9,943

  6,917

  1,588

  41,336

  80
  Mr. Mike O'Brien
  The Agency is working to a three year Corporate Plan. 1 expect to receive the Agency's Business Plan for 1999–2000 in the next few weeks, to take account of decisions on the full implementation of the new computerised issuing arrangements.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what progress he has made in providing telephone answering facilities at each of the Passport Agency's offices. [88507]

  Mr. Mike O'Brien
  The Agency is currently recruiting additional staff, some of whom could be allocated to the telephone inquiry bureau (TEB) at each local office. In the short term, this could help to improve the service by extending the use of existing telephone equipment.

  The Agency has appointed consultants to review all technical and business options and make recommendations for improving the telephone inquiry service. This initiative takes forward an Agency's commitment to improve communications for members of the public. It will include modernising government initiatives and investigate the opportunity to automate progress inquiries using the new computer system.

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many children's applications for passports have been received at each of the Passport Agency's six offices in each month from January 1996 to date. [88514]

  Mr. Mike O'Brien
  Information on the numbers of applications for passports for children under the age of 16 years is set out in the table:
  81

  Children's applications for passports

  Months

  London

  Liverpool

  Peterborough

  Newport

  Glasgow

  Belfast

  Total

  April

  2,058

  8,257

  8,918

  9,453

  6,100

  1,314

  36,100

  May

  3,204

  11,899

  12,901

  11,746

  9,057

  1,074

  49,881

  June

  3,369

  11,052

  11,336

  10,016

  8,430

  8,430

  52,633

  July

  4,305

  10,132

  10,368

  9,057

  6,320

  1,121

  41,303

  August

  3,946

  7,646

  9,075

  6,499

  4,862

  1,275

  33,303

  September

  1,893

  5,282

  6,101

  4,893

  4,165

  464

  22,798

  October

  2,275

  5,245

  5,441

  4,593

  3,717

  1,326

  22,597

  November

  2,434

  4,354

  6,461

  5,214

  3,655

  1,678

  23,796

  December

  1,813

  3,026

  3,695

  2,756

  1,987

  1,146

  14,423

  Total

  32,961

  93,045

  104,651

  92,558

  67,229

  21,909

  412,353

  1996

  January

  2,714

  8,548

  1,214

  9,580

  6,457

  1,699

  30,212

  February

  2,560

  7,391

  17,377

  9,096

  6,066

  2,060

  44,550

  March

  3,204

  9,331

  11,442

  10,638

  6,809

  1,920

  43,344

  April

  2,273

  8,366

  9,382

  9,485

  5,591

  2,075

  37,172

  May

  3,848

  12,034

  14,568

  13,440

  10,118

  3,194

  57,202

  June

  3,554

  10,555

  12,676

  11,313

  8,671

  2,730

  49,499

  July

  4,676

  10,162

  10,418

  9,809

  6,809

  1,784

  43,658

  August

  3,554

  7,637

  8,974

  6,444

  4,560

  1,474

  32,643

  September

  1,711

  5,157

  5,451

  5,479

  4,136

  1,025

  22,959

  October

  2,415

  4,683

  5,803

  4,457

  2,907

  792

  21,057

  November

  2,531

  4,764

  7,108

  4,506

  4,164

  1,358

  24,431

  December

  1,708

  2,829

  4,021

  2,589

  1,764

  654

  13,565

  Total

  34,748

  91,457

  108,434

  96,836

  68,052

  20,765

  420,292

  1 Includes up to 20 June 1999

  Note:

  These figures do not take account of applications for children to be included in an adult passport, a facility that was available until 5 October 1998.

  Risk Assessment
  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will make a statement on the progress and conclusions of his Department's Study on assessing dangerous offender risk in practice. [88520]

  Mr. Boateng
  A project commenced in November 1998 to examine issues associated with the risk assessment and risk management process with dangerous and sex offenders. The research is assessing consistency of practice between the police and other agencies, as well as identifying good practice. The fieldwork is being undertaken in six police force areas in England and Wales and is due to be completed towards the end of 1999.

  A review of the literature in the area of risk assessment and risk management has also been undertaken and is likely to be published by the end of 1999.

  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will make a statement on the progress and conclusions of his Department's comparative study of risk assessment scales in use by the Prison Service and Probation Service. [88519]

  Mr. George Howarth
  The Research, Development and Statistics Directorate of the Home Office has received an interim report of a study conducted by the University of Wales and the Probation Studies Unit, Oxford, on behalf of the Home Office, entitled "Evaluating Risk and Need Assessment in Probation Services". The study examined how the risk scores obtained from the two risk assessment instruments commonly used by probation services compared with actual reconvictions over a 12 month period. The findings so far are provisional but indicate that both tools are able to produce risk measures
  82
  which are significantly related to subsequent reconviction. We expect to receive the final report at the end of October and to publish it in December.

  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will make a statement on the progress and conclusions of his Department's survey of prison and probation officers' experience of risk assessment scales. [88518]

  Mr. George Howarth
  The Research, Development and Statistics Directorate of the Home Office is working on a draft report entitled, "Risk of Re-offending and Needs Assessments: the user's perspective" which is expected to be published in December alongside other research on risk assessment. It will look at the practical experiences and attitudes of probation officers using risk and needs assessment tools and make recommendations about the structure and use of any new system.

  Prisons (Drugs)
  Mr. Stinchcombe
  To ask the Secretary of State for the Home Department how many prisoners have had(a) visits curtailed and (b) closed visits enforced because of drugs being smuggled during prison visits in the latest period for which figures are available. [88302]

  Mr. George Howarth
  Information on closed visits enforced because of drug smuggling is not yet available centrally. Information on curtailed visits is not collated centrally.

  Mr. Stinchcombe
  To ask the Secretary of State for the Home Department what research he has(a) commissioned and (b) evaluated into a correlation between drug abuse and the level of opportunity for work, training or recreation in prison. [88305]
  83
  Mr. George Howarth
  No research has been commissioned specifically into the correlation between drug misuse and the level of opportunity for work, training or recreation in prison. However, we have set targets for purposeful activity within prison regimes based on the belief that constructive and structured regimes can contribute towards a reduction in offending of all kinds.

  Mr. Stinchcombe
  To ask the Secretary of State for the Home Department what quantities of what unauthorised drugs were found in HM prisons and young offenders' institutions in each of the last five calendar years. [88301]

  Mr. George Howarth
  Information on the number of seizures of different drugs found in prison establishments is outlined in the table. However, data on quantities of drugs found are not available.

  Drug finds in prisons in England and Wales 1994–98

  Type of drug found

  1994

  1995

  1996

  1997

  1998

  Amphetamines

  120

  242

  197

  161

  152

  Barbiturates

  70

  82

  56

  41

  23

  Cannabis Resin

  4,859

  6,442

  4,897

  4,093

  3,054

  Cannabis Herbal

  252

  288

  223

  240

  188

  Cocaine

  108

  143

  97

  98

  86

  Crack

  0

  12

  21

  32

  39

  Heroin

  350

  678

  1,034

  992

  1,079

  LSD

  49

  28

  18

  11

  11

  Other (Miscellaneous)

  406

  643

  673

  548

  454

  Total

  6,214

  8,561

  7,216

  6,216

  5,086

  Mr. Malins
  To ask the Secretary of State for the Home Department how many mandatory drug tests on prisoners proved(a) positive and (b) negative in the last 12 months for which figures are available; and in what proportion of positive tests disciplinary action was taken. [88708]

  Mr. George Howarth
  In 1998, 88,304 mandatory drug tests were undertaken, and some 20,152 of those tests were positive for drugs. This figure includes results from both random and targeted tests. During 1998, a total of 15,672 offences of "unauthorised use of a controlled drug" were punished under the Prison Rules. Not all positive tests lead to disciplinary action for a number of reasons including:
  If a prisoner were imprisoned for less than the retention period of the drug that tested positive, no charge could be laid because the misuse could have taken place whilst in the community. The maximum retention time for benzodiazepines and cannabis is 30 days.Similarly, if a prisoner tested positive twice within a short space of time, they might not be charged on the second occasion because both positive results could have arisen from the same incident of misuse.A prisoner might be released after being tested but before any charge could be laid.A few prisons operate a policy of cautioning a prisoner outside an adjudication for a first offence of cannabis misuse.
  There will always be a small number of cases where a procedural error, for example failure to charge within 48 hours of the discovery of an offence, means that the case cannot proceed to adjudication.
  84

  Prevention of Terrorism (Temporary Provisions) Act
  Mr. Lidington
  To ask the Secretary of State for the Home Department (1) on what dates(a) he first sought legal advice about the status of Parts IVA and IVB of the Prevention of Terrorism (Emergency Provisions) Act 1989, (b) he received that legal advice and (c) he advised the police not to rely on those Parts of the Act; [88732]

  (2) on what date instructions were given to draft the Prevention of Terrorism (Temporary Provisions) Act 1989 (Revisal of Parts IVA and IVB) Order 1999; and if he will make a statement. [88801]

  Mr. Straw
  Instructions were given on 21 June 1999 to draft the Prevention of Terrorism (Temporary Provisions) Act 1989 (Revival of Parts IVA and IVB) Order 1999.

  The Law Officers received a written request from my Department for legal advice about the status of Parts IVA and IVB of the Act, and other related matters, on 1 June. They received Counsel's opinion on 17 June and gave their written advice to my Department on the same day. My officials provided me with detailed advice on 18 June.

  Chief Officers were advised on 23 June 1999 that Parts IVA and IVB of the Prevention of Terrorism Act 1989 had not been in force since 22 March 1998 and that they should not, therefore, rely on these provisions. Prior to this, on 28 May, informal advice had been given to the Secretary of the relevant Committee of the Association of Chief Police Officers to the effect that a question mark had arisen about the status of the provisions and that urgent advice was being sought.

  Prisoners
  Mr. Stinchcombe
  To ask the Secretary of State for the Home Department what proportion of inmates were locked in their cells for(a) less than 10 hours a day, (b) between 10 and 15 hours a day, (c) between 15 and 20 hours a day and (d) in excess of 20 hours a day in each prison and young offenders' institutions in the most recent period for which figures are available. [88304]

  Mr. George Howarth
  The Prison Service collects, for each establishment, only the average time that all prisoners spend locked in their cells. The table shows the proportion of the prison population held in prisons where the average time locked in cell in May 1999 was as stated. Data are provisional and subject to validation by prisons. This excludes performance at Portland prison where reliable information for May is not yet available.

  Percentage of population held in prisons where average time

  locked in cell in May 1999 was as stated

  Weekdays

  Weekends

  Hours

  Average prisoner population within each band

  Percentage

  Average prisoner population within each band

  Percentage

  More than 20

  0

  0

  1,196

  2

  Between 15 and 20

  17,369

  27

  33,809

  53

  Between 10 and 15

  41,678

  65

  23,774

  37

  Less than 10

  5,106

  8

  5,374

  8

  64,153

  64,153

  Dangerous Personality Disorders
  Mr. Lidington
  To ask the Secretary of State for the Home Department what representations he has received about his plans for new legal powers to detain people with dangerous personality disorders; and if he will make a statement. [88516]

  Mr. Straw
  The Government have received a number of informal comments following my statement to the House of Commons on 15 February,Official Report, columns 601–03. We expect to receive more formal comments when the consultation paper setting out our proposals in more detail is issued.

  Mr. Lidington
  To ask the Secretary of State for the Home Department, pursuant to his oral statement of 15 February 1999,Official Report, columns 601–03, when he plans to publish a consultation document on powers for the detention of people with dangerous personality disorders. [88500]

  Mr. Straw
  My right hon. Friend the Secretary of State for Health and I plan to publish a detailed consultation paper on the management of dangerous people with severe personality disorder shortly.

  Sex Offenders Register
  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will make a statement on the progress and conclusions of his Department's evaluation of the Sex Offenders Register. [88517]

  Mr. Boateng
  The evaluation of the Sex Offender Register began in August 1998. This is examining how the police are in practice administering the registration requirement, and how effective the Act is considered to be. The evaluation will be available towards the end of this year, at which point we will consider its implications for the effective operation of the Act in the future.

  Emergency Planning
  Mr. Maclean
  To ask the Secretary of State for the Home Department what recent assessment he has made of emergency planning requirements in Cumbria. [88352]

  Mr. George Howarth
  None. The assessment of what is required in Cumbria is the responsibility of the local agencies.

  For 1999–2000, Cumbria County Council was allocated a £204,288 grant. The Chief Executive was informed on
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  26 May that, as a result of the new scheme, this would be reduced to £183,859 for 2000–01 and again to £136,486 for 2001–02.

  Civil defence grant has never been provided on the basis of an assessed need for each specific area and is only a contribution towards the total requirement. The new scheme is based on the following rationale:
  All 178 grant eligible authorities will receive a basic allocation of £45,000 to ensure a minimum level of service, and the delivery of basic standards of preparedness.
  County Councils will receive an allocation of £;10,000 for each of the District Councils within the County boundary in recognition of the service that a County must provide to constituent Districts.
  Remaining grant after the first two elements have been addressed will be allocated according to Bellwin thresholds. The Bellwin Scheme, operated by the Department for the Environment, Transport and the Regions, sets a level of expenditure above which central Government may contribute to costs incurred by local authorities in responding to a major incident. The use of Bellwin acknowledges the relationship between population size and the work load of emergency planning teams in large areas.

  Some work done by local authorities can be charged to outside industry and in Cumbria, for example, the cost of work done with the nuclear industry under specific legislation, can be reclaimed from them.

  Mr. Maclean
  To ask the Secretary of State for the Home Department what proposals he has for the future funding for emergency planning services in(a) England and Wales and (b) Cumbria. [88353]

  Mr. George Howarth
  The Home Office provides civil defence grant to eligible local authorities in England and Wales to offset some of the expenditure incurred by them in meeting their civil defence duties. The grant is not intended to meet the full cost of emergency planning services.

  The total amount of grant for England and Wales has been set at £14.038 million for this year and the next two years. Cumbria have been allocated £204,288 for 1999–2000, £183,859 for 2000-01 and £136,486 for 2001–02. The reduction is the result of a new mechanism for allocating civil defence grant.

  Gas Lighter Refills
  Mr. McNulty
  To ask the Secretary of State for the Home Department when he will make an announcement about the outcome of the consultation exercise seeking views on the proposal to ban the sale of gas lighter refills to people below a certain age. [89020]

  Mr. George Howarth
  I intend to make an announcement tomorrow morning.

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

Press Complaints Commission
Lord Harris of Greenwich Lord Harris of Greenwich asked Her Majesty's Government:
Whether Ministers have had any discussions with the chairman of the Press Complaints Commission following recent intrusions into personal privacy by tabloid newspapers.
Lord McIntosh of Haringey: My Lords, Ministers meet the noble Lord, Lord Wakeham, from time to time to discuss press regulation matters. My noble friend Lord Williams of Mostyn, for example, met the noble Lord, Lord Wakeham, on 27th April to discuss the Government's criminal memoirs review. There have, however, been no formal discussions in direct response to the events to which I believe the noble Lord, Lord Harris of Greenwich, is referring.
Lord Harris of Greenwich: My Lords, is the noble Lord aware of repeated intrusions into privacy by one or two tabloid newspapers, including the particularly obnoxious example that occurred only a few weeks ago? Does he agree that one of the most unattractive features of that particular example was the newspaper benefiting commercially, followed by an entirely hypocritical apology to those who were involved in that very unhappy episode? Finally, is the noble Lord further aware that one of the most disagreeable aspects of the whole matter is that a number of people who suffer from
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the activities of tabloid newspapers decide not to pursue their complaints for fear that, if they do, there will be still further intrusions into their privacy?
Lord McIntosh of Haringey: My Lords, we do not normally comment on individual cases. I imagine that the noble Lord is referring to the Countess of Wessex and the Sun. We were pleased that the matter was resolved without recourse to adjudication. On the noble Lord's final point, yes, I agree with him entirely.
Lord Wakeham: My Lords, I have a great deal of sympathy with some of the remarks made by the noble Lord who asked the Question. Yet, when one examines the alternative of a statutorily based system, one finds that it would cost an enormous amount of money for people to pursue such matters; it would take a great deal of time; and it is very unlikely that the courts would award anything like the kind of damages that would make it worth while. The fact is that people would not use a legally based system—and that is without taking into account even the effect of the Internet. Self-regulation is by no means perfect, but I suggest to the Minister that it is a great deal better than the alternatives.
Lord McIntosh of Haringey: My Lords, the Government's view has consistently been that strong and effective self-regulation is better than a statutory regime. But, for that to work, it requires either that people are much more willing to come forward with complaints, which was the point made by the noble Lord, Lord Harris of Greenwich, or that the commission extends the use of the power that it already has to investigate complaints of its own volition.
Baroness Sharples: My Lords, does the noble Lord agree that this practice is even more unacceptable than cheque-book journalism?
Lord McIntosh of Haringey: My Lords, these are both problems that the press and the media generally have to face. I do not know that I would put a value on

3
either of them. Cheque-book journalism, if it results in distortion and invasion of privacy, is very bad; intrusion on privacy in itself, even if there is no money involved, is very bad. That is true, whether or not those involved are in the public eye.
Lord Chalfont: My Lords, although self-regulation may be preferable to a statutory regime, as the noble Lord, Lord Wakeham, has said and as I gather the Minister agrees, would it not be a good thing to warn the press in the strongest possible terms that, unless self-regulation is made to work, a statutory regime may have to be considered?
Lord McIntosh of Haringey: My Lords, I said that strong self-regulation is preferable to a statutory regime. Despite some recent very bad examples, I believe that matters have very mildly improved, because the Press Complaints Commission has had greater self-confidence in recent years than perhaps it had in the past. I am not sure that making threats from the Government Dispatch Box is the right way to proceed.
Lord Luke: My Lords, does the Minister agree that the most important person in any instance like this is the victim? If that is the case, does he further agree that proactive moves by the PCC, which have been mooted in certain quarters, would inevitably cause distress to victims who, in most cases, would far rather not have any publicity at all?
Lord McIntosh of Haringey: My Lords, discussion about the investigation of complaints on the volition of the PCC must always take that point into account. Clearly, if the victim positively does not want an investigation to be carried out, any inquiry will have to be abandoned very rapidly. That is the difficult kind of balance with which the Press Complaints Commission must deal.
Lord Annan: My Lords, does the Minister agree that the public would have greater confidence in the Press Complaints Commission if it had power to fine summarily newspapers that abused the privacy of members of the public?
Lord McIntosh of Haringey: My Lords, if that happened the PCC would become, almost by osmosis, a public body and begin to have the powers and sanctions that would arise under a statutory regime. One does not create a statutory regime necessarily by legislation; one creates it if one has the powers to fine of the kind that the noble Lord advocates.
Lord Monkswell: My Lords, bearing in mind that the proprietor of many of the tabloids is Mr Rupert
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Murdoch, who has recently married, do the Government have any indication whether his new wife will have a positive influence upon him?
Lord McIntosh of Haringey: My Lords, I have no idea—and I do not think I care.
Lord Molyneaux of Killead: My Lords, can the noble Lord explain the difference in terms of impact between a complaint upheld and a complaint dismissed?
Lord McIntosh of Haringey: My Lords, if a complaint is upheld by the PCC, the newspaper concerned has a duty to apologise in a form prescribed by the commission.
Lord McNally: My Lords, I rise to assist the Minister. What is the result of increasing circulation by a quarter of a million and defying the Press Complaints Commission? The answer is a slap on the wrist from the noble Lord, Lord Wakeham. Unless the PCC has real teeth, it will continue to be ignored, and everybody knows it.
Lord McIntosh of Haringey: My Lords, I suspect that the noble Lord is edging towards the view of the noble Lord, Lord Annan, that there should be a fine to reflect the advantage that the newspaper gains through an invasion of privacy. We do not agree. If we did that, we would de facto have a statutory complaints procedure.

Eastern Europe: UK Enterprise Policy
2.45 p.m.
The Earl of Carlisle The Earl of Carlisle asked Her Majesty's Government
Why they are terminating the joint industrial and commercial attachments programme for British businesses in Russia and central and eastern Europe, and what they intend to put in its place.
Baroness AmosMy Lords, the programme is no longer appropriate to the department's priorities for helping the transition process in the region. We are supporting bilateral programmes tailored to country needs. Details are set out in published country strategy papers.
The Earl of Carlisle: My Lords, I thank the noble Baroness for her reply, which I find rather disappointing. Does the Minister agree that for a mere £5 million a year since 1990 over 900 United Kingdom companies have been active in 25 nations of the former Soviet empire and that their principal objective has been to provide managers with knowledge of British free market systems and business ethics, no doubt with a view to winning contracts in the short, medium and long term? Does the Minister also agree that the Department for International Development is taking an unusually short-sighted view of this matter? Will the noble

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Baroness arrange for JICAP to be transferred to the Foreign and Commonwealth Office so that it can continue under the aegis of the British Council?
Baroness Amos: My Lords, I cannot agree with the noble Earl that the Government are taking a short-sighted view. Before the decision to stop the programme way taken there was an extremely wide-ranging ark comprehensive evaluation of it. That evaluation looked at the core objectives and also the contribution of the programme to the wider transition process in the region and its relationship with our priorities under the White Paper on international development. The result of the evaluation showed that the programme was not contributing much to the goal of enterprise restructuring. There was only patchy evidence of an improvement in enterprise performance, including the building of commercial links with UK companies. The estimate of the trade generated as a result of the programme was modest. Therefore, the decision was taken to look at bilateral programmes that would improve the performance and the relationship. It is not a short-sighted decision. Aid and support will continue but in a different form.
Baroness Rawlings: My Lords, I do not know when the programme to examine JICAP was carried out. However, does the Minister agree that this is definitely not the moment to stop the funding of JICAP which has been so successful, especially to countries like Bulgaria which have suffered so much since the Kosovo war? Does she also agree that this is exactly the kind of organisation that can be of tremendous help in the reconstruction of the Balkans after the war?
Baroness Amos: My Lords, as I said in my reply to the supplementary Question of the noble Earl, we are looking at alternative ways to support and build the enterprise culture in those countries. The evaluation showed clearly that the core objectives that had been set and their relationship with the priorities of the department were not being met through this particular kind of funding mechanism. We shall continue with management training and look at such matters as mentoring, networking and building relationships between companies and partnerships across countries. That work will continue, but this particular programme is not meeting the objectives we set.
Lord Campbell of Alloway: My Lords, has the British Council been consulted on this matter? If not, might it be?
Baroness Amos: My Lords, as part of the evaluation of the programme, British Councils in the United Kingdom and overseas were consulted. A number of participants on the programme and their employer organisations were also consulted. A number of questionnaires were sent to companies within the United Kingdom which acted as hosts to those participants. So the evaluation was wide ranging. We spoke to a range of stakeholders, including the CBI and the DTI.
The Earl of Carlisle: My Lords, the Minister informed us that her department was looking at
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alternative ways to proceed. Would it not be wiser to avoid cutting this admirable scheme at the end of the month until alternative ways have been put in place? Otherwise it will send the wrong signals to the Russian Federation and the other 24 countries that we have been supporting.
Baroness Amos: My Lords, I say again that I cannot agree with the noble Earl. We have developed country strategy papers with individual countries such as Bulgaria where we set out clearly the kind of support we expect to give. We have developed a Russian president's management initiative which will involve over 500 management trainees and a budget of £5 million over three years as an example of what can be done. It is a more complex programme involving business school training. It has company attachments and a teacher capacity building element as well as coaching and mentoring. So we are finding alternative ways of ensuring that management training takes place and that the relationship between British business and those countries continues but in a different way.
The Earl of Lauderdale: My Lords, can the Minister tell us when those countries which are members of NATO will start to prepare a plan to repair the wicked damage which has been done in the bombing?
Baroness Amos: My Lords, the noble Earl may be referring to the next Question. However, there is a great deal of ongoing discussion among the international financial institutions as well as the other countries about the long-term reconstruction of the region.

Kosovo: NATO Costs
2.52 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
When they expect to be in a position to estimate the total cost of the NATO operation against Serbia, how it will be shared out between the member states, and by whom the matter will be decided.
The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, individual nations are expected to bear the costs associated with their own military activity in support of Kosovo-related operations apart from those relating to running costs of NATO headquarters in-theatre and common-user infrastructure projects in support of operations, both of which will be eligible for NATO common funding. The Government are not therefore in a position to estimate what the total costs of NATO operations in response to the Kosovo crisis might be. It is also likely to be some time before the level of the United Kingdom's reimbursement from NATO common funding is known.
Lord Peyton of Yeovil: My Lords, I understand the Minister's difficulties. But, first, perhaps he will agree with me that that kind of venture cannot possibly be too frequently repeated. Secondly, this one all but came to

7
grief with a flood of advice from people who had much to say but were willing to do nothing. Lastly, perhaps I may take the Minister to an issue which he might find a little more difficult. What was his reaction to the unfortunate statement attributed to President Clinton that America having taken part in the destruction side it had little to offer when it came to reconstruction? If true, that would be a shameful affair and an indication of just how difficult it will be to achieve a fair settlement.
Lord Gilbert: My Lords, I can certainly agree with the noble Lord that we do not want to see any more Kosovo crises in Europe or anywhere else on the face of this planet. It would be extremely difficult to reconstitute such an operation, and we hope that it will never come to pass. As to the views of people who did not involve themselves too greatly in the operation but had things to say about it, I think that a very great price was paid for keeping unanimity within the North Atlantic Council. The price, unfortunately, was paid by the citizens of Kosovo and also those of Serbia who suffered damage through NATO operations. It is certainly my view that had NATO been allowed to attack in the first few weeks the targets it was allowed to attack in the last few weeks the operation would have been over in a fraction of the time that it took.
I have not seen President Clinton's remarks in detail. However, I point out to your Lordships that the United States bore the overwhelming proportion of the cost of the military operations involved in Kosovo. In my view it is only right that Europe should pay more than its share of the reconstruction costs.
Lord Bruce of Donington: My Lords, in view of the fact that the costs to the United Kingdom of its significant part in the operation are likely to run into billions of pounds, will the noble Lord ask his right honourable friend the Chancellor of the Exchequer whether it would be possible to incorporate in the next Budget Statement, by a separate appendix, some indication, including the method of resource accounting or otherwise, of estimated cost?
Lord Gilbert: My Lords, I am not sure that I recognise the figures when my friend talks about the cost of the operation to the United Kingdom being of the order of billions of pounds. We have published a figure to the end of May. Expenditure on our military contribution was of the order of £43 million, but that did not include the cost of replenishing stocks of ordnance expended during the operations.
Lord Waddington: My Lords, did the Minister see the extraordinary report that the Secretary of State for Trade and Industry said in China that the bombing of the Chinese Embassy in Belgrade was nothing whatever to do with Britain and entirely a matter for the United States? Was that not a most extraordinary statement, not least because No. 10 was throughout the action putting it about that Mr Blair was in the lead, putting some guts into the President of the United States?
Lord Gilbert: My Lords, as I have been out of the country for the past week, I am not familiar with the
8
report the noble Lord adduces in support of his remarks. It seems to me that he is involved in a most complex non sequitur. Whatever the attitude of the Prime Minister in encouraging operations, it had nothing whatever to do with events at the Chinese Embassy.
Lord Burnham: My Lords, the House will have heard with pleasure the statement of the Secretary of State that the costs of up to £43 million will be carried from central reserve. Can the Government give any view on their future policy on the sharing of future and continuing costs among participants to NATO's partnership for peace, bearing in mind that that includes Russia and many neutral countries?
Lord Gilbert: My Lords, I listened carefully to what the noble Lord said. Nothing in his question leads me to depart from the formula of the Answer I gave to the noble Lord, Lord Peyton. I shall check Hansard to see whether I have overlooked anything the noble Lord said. I should be precise. The agreement at the moment—discussions are taking place between the Ministry of Defence and the Treasury—is that the net additional costs of MoD operations will be subject to discussion and access to the reserves where the MoD is unable to accommodate those costs without prejudice to other commitments.
Lord Stoddart of Swindon: My Lords, reverting to the question of the involvement of the United States in the reconstruction of the area, I heard the American President state that America had played its part in the solving of the crisis and that it felt that the Europeans should bear the reconstruction costs. Is my noble friend aware that some estimates put those costs at over £100 billion? Is the United States serious in believing that it should not bear some of the costs of repairing the destruction which, in the main, it brought about?
Lord Gilbert: My Lords, I am not familiar with the estimate that my noble friend uses, but I put it to him that the United States bore 80 to 85 per cent of the costs of military operations on its own shoulders. As the whole of Europe has a gross domestic product not far short of that of the United States, it has, by subtraction, accepted only 15 per cent of the total costs. I do not know that the United States has ever said that it will walk away from all reconstruction costs and knowing the generosity of the American people it is unthinkable that it would. Equally, it is clear that this is a European problem and Europe has to make its full contribution.
Lord Cledwyn of Penrhos: My Lords, can my noble friend confirm that the 19 members of NATO are making a contribution?
Lord Gilbert: My Lords, the 19 members of NATO will have been making a contribution to the operational costs according to the formula I gave in my original Answer. Questions of contributions to the reconstruction costs will be for every country to determine for itself in the fullness of time.

Manufacturing Industry: Energy Taxation
3 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they intend to temper the impact on manufacturing industry of increases in taxation of energy, or to offer compensation.
Lord McIntosh of Haringey: My Lords, the climate change levy will entail no increase in the overall burden of tax on business since the revenues will be fully recycled via a 0.5 percentage point cut in the main rate of employer national insurance contributions and additional support for schemes aimed at promoting energy efficiency. The Government recognise the need for special consideration to be given to the position of energy-intensive industries under the climate change levy proposals, given their high energy usage and exposure to international competition. The Government intend to set significantly lower rates of the levy for those energy-intensive sectors which agree targets for improving their energy efficiency.
Lord Campbell of Croy: My Lords, I thank the noble Lord for that Answer. As he would expect, I recognise the need to make the reductions in gas emissions which were agreed at Kyoto. However, will the Government carefully consider adjustments to their proposal for a climate change levy, because it would discriminate against firms already hard-pressed by other factors? The starting date is nearly two years ahead. Furthermore, is the noble Lord aware that the proposal to offset the levy by a general reduction in national insurance would penalise firms having small workforces but large energy requirements?
Lord McIntosh of Haringey: My Lords, I am pleased that the noble Lord recognises the urgency and size of the problem which we face if we are to adhere to the Kyoto targets. For exactly the reasons he mentions, we are giving special consideration to the position of energy-intensive industries. We are negotiating with the steel, chemical and aluminium industries, among others, to ascertain what we can achieve in the period available, which is deliberately long, by means of energy reduction targets rather than the full force of a climate change levy.
Lord Brookman: My Lords, I welcome the Minister's remarks, but is he fully aware of the position of some of the major energy users; for example, the steel industry? I am told that it is currently making substantial losses and that if the carbon tax is not satisfactorily modified, it will have additional costs in excess of £300 million. Does he agree that against the backdrop of its current difficulties, that is unacceptable?
Lord McIntosh of Haringey: My Lords, my noble friend knows far more about the steel industry than I will ever know This is not a carbon tax. If it were, we should have considerable difficulties in calculating the
10
figures. The figure that my noble friend quotes assumes a rate of levy which has not yet been decided and will not be announced until next year's Budget. It does not assume any results from the negotiations we are now carrying out with the steel industry on emission reduction, which I believe will be successful.
Lord Saatchi: My Lords, why are the Government opposed on these proposals by distinguished environmentalists such as my noble friend Lord Campbell and by representatives of manufacturing industry? Is it not because this is a textbook case of a government mixing their social objective of more "greenness" with their tax objective of more revenue, and ending up satisfying neither?
Lord McIntosh of Haringey: My Lords, I welcome the noble Lord, Lord Saatchi, to his position at the Dispatch Box. I believe that he is wrong. He should recognise that our proposals are precisely those put forward by the noble Lord, Lord Marshall of Knightsbridge, the former president of the CBI, who specifically said that we must have a combination of taxation and traded permits in order to achieve the objectives. This series of proposals has been worked out closely with industry, particularly manufacturing industry.
Lord Dormand of Easington: My Lords, can my noble friend say what effect the increase in energy taxation is having on the British coal industry? I have recently received two letters from the chairman of the country's biggest coal company expressing concern about the issue. Is my noble friend aware—I am sure that he is—that the British coal industry has greatly reduced in size and that some of us believe that it ought to continue?
Lord McIntosh of Haringey: My Lords, again, my noble friend knows far more about the coal industry than I do or ever shall. However, he is making assumptions about the rate of the levy and about our success or otherwise in achieving reductions by agreement. It would be unwise to anticipate either of those points. That is exactly why we set a two-year period for negotiations.
Viscount Eccles: My Lords, I have been employed in the foundry industry—another energy-intensive industry—for many years and I do not recognise the balance to which the Minister referred. Crudely, his proposals appear to raise energy costs by 15 per cent. The national insurance rebate represents 1 to 2 per cent of that. Does the noble Lord agree that a rebate system will provide little comfort to managements which daily seek greater energy efficiency and often achieve it? Does he also agree that a scheme of this kind is bound to lead to job losses and a worsening of the balance of trade?
Lord McIntosh of Haringey: My Lords, the targets which we were set at Kyoto, and which we have set for ourselves, are most demanding. We must reduce carbon

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emissions by 1.5 million tonnes a year by 2010. It has been calculated that that involves expenditure of £1.75 billion a year. It is true that the reduction in national insurance contributions will not cover all of that extra expenditure for most energy-intensive industries, but that reduction is intended to cover industry as a whole. It is exactly the point of employment which is the basis of the negotiations we are carrying out in particular with the steel, chemicals and aluminium industries.

Business
3.8 p.m.
Lord Carter: My Lords, at a convenient moment after 4.30 p.m., my noble friend Lord Williams of Mostyn will, with the leave of the House, repeat a Statement being made in another place on Wormwood Scrubs.

Academic and Academic-Related Staff Pay and Conditions Bill [H.L.]
Lord McCarthy: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord McCarthy.)
On Question, Motion agreed to.

Road Traffic (Vehicle Testing) Bill
Lord Lucas of Chilworth: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Lucas of Chilworth.)
On Question, Motion agreed to.

Greater London Authority Bill
3.10 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Whitty.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTLES in the Chair.]
Lord Whitty Lord Whitty moved Amendment No. 212A:
Before Clause 67, insert the following new clause—
AMOUNTS FOR DIFFERENT CATEGORIES OF DWELLINGS
(" .In section 30 of the Local Government Finance Act 1992 (amounts for different categories of dwellings) there shall be added at the end—
"(10) Where the major precepting authority in question is the Greater London Authority, subsections (2)(b) and (4) above shall have effect as if the references to sections 43 to 47 below were references to the appropriate Greater London provisions.
(11) In this section, "the appropriate Greater London provisions" means—

(a) sections 70 to 75 of the Greater London Authority Act 1999 and section 47 below; or

(b) in the case of calculations by way of substitute, sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and section 47 below."").

The noble Lord said: I hope that I can set a good example by speaking to the amendment with some dispatch. The new clause simply corrects an oversight; it makes no substantive change or change of principle. Section 30 of the Local Government Finance Act 1992 sets out how a billing authority should calculate the council tax for different categories of dwellings. It has to calculate the aggregate of its own tax and that of its major preceptors. The new clause amends Section 30 of the 1992 Act to ensure that where the Greater London Authority is one of the preceptors it refers to the budget requirements and tax setting provisions in the Greater London Authority Act. It will therefore ensure that the amount of tax calculated by the GLA under the provisions of the Bill will be added to council tax bills in London. I beg to move.
On Question, amendment agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 212B:
Before Clause 67, insert the following new clause—
TAX-VARYING PROPOSALS: REFERENDUM
(" .—(1) The Greater London Authority shall be empowered to adopt proposals for tax-varying powers by a two-thirds majority vote of the members of the Assembly voting.
(2) Before implementing proposals for tax-varying powers, a referendum of those entitled to vote in ordinary elections shall be held in which a simple majority of those voting shall be required to allow the tax-varying proposals to be implemented.").
The noble Baroness said: The new clause is to provide for the authority to be able to exercise tax-varying powers, but subject both to the agreement of two-thirds of the members of the assembly and, importantly, a referendum by Londoners.
Although the amendment is in the part of the Bill dealing with financial matters, we regard it as a question of general principle relating to the different spheres of government. In our view, the devolution of power should include financial matters. I have spoken previously in the Committee about the need for trust between central government and the new authority, not just as some sort of isolated principle, but with a view to the authority's working effectively because we believe that a relationship based on trust will produce

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the best results. The amendment is also about maximising the authority's financial freedom and about clear accountability in financial matters.
The amendment does not require immediate tax varying powers on the part of the authority. What it seeks to do is to allow for that possibility, subject, as I said, to the agreement of two-thirds of the members of the assembly, which is a substantial target to meet, and also to a majority vote in a referendum. Both are important.
I believe that the assembly will have very clear views, particularly as time goes on, as to how the authority will best operate. It will, after all, be in a prime position to assess the effectiveness of the authority in its role of scrutinising the mayor's actions, as a matter of common sense, because of where the assembly members come from, not just geographically, but with their background of representing constituencies and the whole of London.
The majority vote in a referendum is important as well. We believe that Londoners should have the opportunity to contribute to the style, powers and range of their authority. If they agree with a proposition seeking to permit the authority to vary taxes, that is a matter on which their views should be heard very clearly. But, as I said, it is not a matter for immediate implementation. The detail will have to be worked up. We accept that. We appreciate that the amendment is a matter of principle and does not set out the detail. It is the principle to which I ask the Committee to have regard.
There could nit be a debate within the authority, or with the people of London, about how tax-varying powers would operate without attention being paid to the tax base which is used. We on these Benches would prefer the authority to collect revenue through devolved income tax powers in the same way as is to happen in Scotland.
In financial matters, as in others, the authority should not be totally controlled by central government. The Bill provides for the sort of constraints which are applied to local government by way of constraints on capital spending, borrowing, the capping of revenue and so on. We believe that the authority should be able to set its overall budget and establish priorities—strategic priorities—within the budget. That, after all, is what the authority is being established for, not to act as a kind of counting house to pull together the aggregate of the functional bodies.
We believe that there will be a problem of accountability, or at any rate of transparency. It is difficult enough now with council tax bills where people tend to look at the amount charged and have a debate about the complexities of the impact of central government revenue grant, gearing and so on. It is not something that lends itself to easy conversation on the doorstep, in a queue at the supermarket or wherever. The need for transparency for the authority's success is important. The clearer the link between spending, tax and the input of Londoners themselves, the better.
There is a cynical argument that without considerable autonomy on the part of the authority it will not achieve very much. We prefer, at this stage certainly, not to be
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cynical but to put down a marker that the matter is important, a marker for the Treasury and for Londoners. I beg to move.
3.15 p.m.
Lord Dixon-Smith: My noble friend Lady Carnegy of Lour must have read the amendment with a feeling of considerable astonishment in view of the long time that was spent discussing financial matters in relation to Scotland. There was then a serious question as to whether the Scottish Parliament should have tax-varying powers, but the tax-varying power under discussion was certainly not on the basis of the general wording we see in the amendment. It was simply the power to amend the basic rate of income tax by 3p up or down.
The noble Baroness, Lady Hamwee, has many beliefs with which I can sympathise. If I am out of order in what I am about to say, or if it is unparliamentary, I hope the Committee will accept my apology in advance. The problem with all matters fiscal is that the devil is in the detail. It is the detail we need to be concerned about. The great problem with the amendment is that there is no detail. I accept that the noble Baroness said that the detail was to come. But if we put the clause in the Bill without the detail we shall be technically putting on the face of the Bill the power for the Greater London Authority to amend any tax that it chose. In my view, that would be quite extraordinary. On these Benches we could not support such an open-ended commitment.
It may well be that there is a case for reviewing the whole question of local government finance and the general tax basis on which local government is presently funded. But that is an entirely separate issue. The Bill is sufficiently large and complex already. If such a matter were introduced, I believe that the Bill would be talked out and would not be passed in this Session. I cannot support the amendment.
Baroness Carnegy of Lour: My noble friend is right. I was surprised by the amendment. The tax-raising powers in Scotland are defined in statute. They may not be adequately defined but they are defined and as time goes on we shall see how they work.
The noble Baroness, Lady Hamwee, made an interesting speech on Second Reading. She knows a great deal about London and has much experience of administration in London. I imagine that in tabling the amendment she is merely enunciating a dream which she and her colleagues on the Liberal Democrat Benches have; namely, that this authority in London will be able to do all sorts of amazing things and use public money to do them. The point about the Scottish Parliament is that it is a legislative Parliament and is to legislate on a wide scale in Scotland. It is possible that legislation may diverge considerably from that brought about in Westminster and that a little more money will be needed, or a little less money. That will be made possible by its tax-varying power.
This is a different sort of assembly. It is to be a strategic authority. Before the noble Baroness decides what she is to do with the amendment, she owes it to us to say what kind of taxation she has in mind for the

15
assembly. For example, does she believe it would be acceptable for the London assembly to double income tax for people in London in order that its dreams could be fulfilled? London people already have to pay large sums to the councils. Does she envisage that they will have to pay more to the assembly? What is the scale of what she suggests?
It is a strange amendment. I do not suppose that the noble Baroness wants us to spend too long on it. I hope that in her reply she will tell us about the sort of thing she has in mind for those of us in London who would have to pay the tax.
Lord Whitty: I am not surprised by the amendment. I know where the Liberal Democrats are coming from. Far be it for me to stop people enunciating dreams in any event. However, the amendment covers old ground which we discussed during the referendum legislation. The result of that referendum was for a Greater London Authority which did not have the kind of tax-raising powers which the amendment suggests. Certainly as the noble Lord and the noble Baroness, Lady Carnegy, said, these are sweeping powers which are not appropriate in this context.
The referendum provided the mandate for the authority. We do not intend to depart from the result of that referendum by introducing tax-raising powers for the GLA. Council tax payers contribute to the costs of London-wide services now and will continue to do so when responsibility for those services transfers to the GLA. There will be a contribution towards the costs of the mayor and assembly. But it is not intended that the GLA should become a tax-raising authority, even to the extent of the Scottish Parliament.
The Bill sets out a responsible financial framework for the GLA, creating a single finance system which will give the mayor substantial scope to decide on the allocation of priorities between the GLA and the functional bodies. The mayor will set the GLA's consolidated budget, subject to the assembly's role in approving it, and will be able to allocate resources.
That framework will provide Londoners with the responsible, accountable authority for which they voted. The amendment would move it into an entirely different sphere. I am sure that the noble Baroness will recognise that she is attempting to create a body which is very different from that which we put to the people of London. Indeed, she will realise, even within her own philosophy towards tax-raising powers, that the amendment is extremely wide and would raise substantial anxieties were it to be pursued. I ask her to withdraw the amendment.
Lord Tope: My noble friend Lady Hamwee did not actually use the words, "I have a dream", as the noble Baroness, Lady Carnegy, suggested, but she might well have done. I too have a dream. I have a dream that one day we shall have a central government who trust local government. That goes to the heart of the matter.
My noble friend made clear that she was moving the amendment to raise the twin principles of financial freedom and accountability. Quite deliberately, we have
16
not tabled amendments which tie that up in great detail. My noble friend referred to our preferred method of devolved income tax and so on. Those are important details which should be debated but those debates should take place once we have agreed the principle. Today, we wish to raise the principle of the matter.
The first principle is that of financial freedom. We are talking about electing a mayor and assembly for our capital city and an electorate of a little over 5 million. It is to be an authority which the Government keep telling us is not the same as local government but is not regional government either. Whatever it is, it is a substantial body which should be trusted by central government to have the financial freedom it needs to be able to implement the wishes of the people of London.
That takes me to the next principle; namely, accountability. We do not suggest for one moment, nor should we, that the authority and mayor should have an unfettered freedom either to raise or reduce taxation on a whim. We are talking about tax-varying, not tax-raising, powers. The accountability is considerable. First, the mayor is accountable to the electorate of London. It will be a foolish mayor indeed who seeks dramatic changes in taxation. Even should that happen, it must be authorised by an elected assembly which is also accountable to the people of London. We say that that should require the assent of a two-thirds majority of that assembly, which is no mean task, as my noble friend said. Therefore, there is a considerable degree of accountability.
Most important is the question of to whom, ultimately, the authority is accountable. The Government say that it is accountable to the Secretary of State. We say that the authority should be accountable to the electors of London, the people who put them there. That is why we say that any tax-varying powers should be subject to a referendum and only if a majority is obtained in that referendum may a proposal ahead. The Government say that the Secretary of State knows better than the people of London. We disagree with that very strongly.
The noble Lord, Lord Dixon-Smith, is right to say that the devil is in the detail. Certainly, were that principle to be agreed now we should be the first to accept that there needs to be much more detail and we should be delighted to have an opportunity to come back and propose some of that detail. But we raise this matter on the principle that the major authority in the country, in our capital city with its first elected mayor, should be given the financial freedom to do what the people of London wish to be done. The people of London should be asked, and be able, to give that authority through a referendum. If we can agree that important principle today, which is at the heart of these proposals, or at least indicate a willingness to agree it, we can then go into the detail which the noble Lord, Lord Dixon-Smith, is so keen to address.
3.30 p.m.
Baroness Hamwee: When we were discussing the scope that we might suggest is available to the authority my noble friend Lord Phillips of Sudbury whispered to

17
me that the mayor could propose free ice-creams for the people of London. I suppose that if the people of London feel it correct to spend their tax on that, they can have the opportunity to say so. I am sad to say to my noble friend that I do not believe it is within the powers of the mayor to provide ice-creams or other types of physical sustenance of that sort.
My noble friend is absolutely right. We tabled this amendment in order to raise the principles inherent in it. I am disappointed that the responses have not addressed the principles. We agree with the noble Lord, Lord Dixon-Smith, that the Bill is already too complex. We made it perfectly clear why we think it is unnecessarily complex. I refer to the very detailed prescriptions of how the authority is to exercise its powers.
As my noble friend said, we believe in the twin principles of financial freedom and proper accountability. The type of tax, the scale, and so on, would be matters to be dealt with at the time, were such a proposal to be on the table. Indeed, the detail of any proposal might well lead to its being rejected by a careful assembly or the London electorate. As to whether or not it is appropriate for a body such as the GLA, the authority would and should have very clear views. The GLA will not be a legislative assembly in the same way as the Scottish Parliament; nevertheless, through its strategic and functional responsibilities, it may well have views either that more money needs to be raised or that less money should be spent.
The Minister said that this is not within the terms of the referendum which agreed that the Government should proceed with their proposals. I very much doubt whether anybody voting in the referendum anticipated a Bill of such length, complexity and detail. The points cannot be dismissed simply by saying that Londoners have already voted on the issue. If they have, what is to prevent them having the opportunity, once the authority is up and running, to reconsider the points we raise? That is all we raise.
These are important principles and I am sorry that they, at any rate, have not attracted a greater faith in Londoners; I put it no wider than that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 67 agreed to.
Lord Tope Lord Tope moved Amendment No. 212C:
After Clause 67, insert the following new clause—
ADMINISTRATION
(" .—(1) Section 14 of the Local Government Finance Act 1992 (administration, penalties and enforcement) shall be amended as follows.
(2) After subsection (1) there shall be inserted—

"(1A) A billing authority in Greater London shall, in respect of council tax for each financial year, indicate on any notice served on a liable person, the amount chargeable as a result of any precept set by the Greater London Authority.

(1B) Any reference, in this section to a liable person is a reference to a person who is solely liable to pay to the Authority, in respect of a particular dwelling, an amount in respect of council tax for a financial year, and includes a reference to a person who in the opinion of the Authority will be so liable.".").

The noble Lord said: I beg to move Amendment No. 212C standing in my name and that of my noble friends. I believe this may be a less contentious amendment. If the Minister is to reply shortly that it is unnecessary. I hope that he or she will explain why.
The amendment proposes that a billing authority—in most cases, the London borough councils—when sending out council tax bills each year, will state clearly on such bills the amount of the precept from the Greater London Authority. That is currently the case with the fire authority and the police. Their precepts are shown separately, as are the other precepts. Clearly, that should be the case with the Greater London Authority, but we cannot see provision for that in this long and complex Bill.
The reason for the amendment is simply to be sure and clear that that will happen. Were it not to happen, that would be nothing much short of deceit. It is already the case that whatever we say in the detail of council tax bills, the public (who sometimes feel that the increase or even the amount is too great) understandably blame the billing authority which sent them the hill. In this case, we need to be clear that the responsibility lies where it belongs, with the Greater London Authority which set the precept. That should be clear on council tax hills when they are sent out.
Lord Whitty: The noble Lord anticipates me correctly. This amendment is unnecessary. Under existing legislation right across local government all council tax payers are sent a demand which is required, among other matters, to show details of any precept that forms part of the total amount. As a major precepting authority, therefore, the GLA precept will be identified separately on demand notices.
To ensure that that is done in an intelligible way, we intend to amend the Council Tax and Non-Domestic Rating (Demand Notices) (England) Regulations 1993, with which the noble Lord will be familiar, to accompany any demand notice. That w ill mean a need to show the total expenditure for the GLA and its functional bodies; total expenditure by class of service; total amount of specific earmarked grant, and the GLA's consolidated budget requirement, the budget requirement for the GLA and each functional body compared to the previous year.
I believe, therefore, that there will be plenty of information under existing regulations, clarified by that amendment to the regulations, to ensure that council tax payers throughout Greater London will know the amount of the precept and on what it is being spent.
Lord Tope: I am grateful to the Minister for that explanation. I suspected that that might be the case. I am relieved, as I am sure we all are, to know that the 1993 regulations are to be amended. This has been a useful, if brief, debate to clarify the position. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 212D:
After Clause 67, insert the following new clause—
GLA: EXEMPTION FROM COUNCIL TAX LIMITATION
(" .Chapter IVA of the Local Government Finance Act 1992 (limitation of council tax and precepts), as inserted by Schedule I to the Local Government Act 1999, shall not apply to the Greater London Authority.").
The noble Baroness said: I beg to move Amendment No. 212D standing in my name. This amendment inserts a new clause to provide that the chapter on capping, which will be brought into effect by the Local Government Bill, as it now is—it will no doubt become an Act—shall not apply to Greater London or to the Greater London Authority.
We have been told that the authority will not be regional government, nor local government; it is sui generis. The Secretary of State has considerable powers under the Bill. Much of the income depends on both the general grant and the transport grant under Clauses 85 and 86. There are provisions for credit approval and for redistributing the receipts of functional bodies.
During the passage of the current Local Government Bill, to which I referred, and on other occasions, for the reasons which we gave in the debate on the amendment concerning tax-varying powers and a referendum, we made it clear that we believe that in order to operate well, local government or, indeed, any sphere of government, should not be subject to the rigid, heavy control of the Secretary of State. For this purpose, I accept that the GLA is not local government, although local government financial provisions are, by and large, being applied to it.
I am well aware that the provisions in the Local Government Bill are intended to be reserve provisions. I am also only too well aware that there is no legislative assurance as to the circumstances in which those provisions will be applied.
We believe that if capping powers are to apply to the new authority, the Government must justify why they should do so. That is why we tabled the amendment.
Lord Dixon-Smith: It is interesting to discuss an amendment which seeks to remove the impact on the Greater London Authority of another Bill which is still proceeding through the House. But removing the impact of the Local Government Bill—it has been accepted for other purposes that the Greater London Authority should be included in that Bill as a best value authority—does nothing about Clause 26(8). That clause gives the Secretary of State power to,
"impose limits on the expenditure which may be incurred by the Authority by virtue of section 25(1)",
and establishes the authority's powers. Nor does it do anything about Clause 71(5) which gives the Secretary of State power to alter the constituents of a budget.
I entirely agree with the principle that capping is obnoxious and I support the noble Baroness, Lady Hamwee, in her comments on this so-called "reserve" power. All those involved in local government have always been concerned about the potential for abuse in reserve powers. In my experience, for governments they are a bit like drug addiction; they are
20
habit-forming. I therefore share the noble Baroness's concern about this general matter. But unless we are able to take fairly dramatic action on the content of this Bill, which so far we have failed to do though there are further stages when we may yet do so, simply accepting Amendment No. 212D would not alter the state of affairs very much. Therefore, at this stage I do not support the amendment.
Lord Whitty: The noble Lord, Lord Dixon-Smith, is right that we are still in discussion on the general issue on the Local Government Bill, and Amendment No. 212D is either an indirect way of getting back to those arguments to which we will no doubt return in any case, or it is a means of exempting the GLA from a financial regime which applies to the rest of local government.
We made it clear throughout our discussions on the GLA that it will be subject to the same arrangements for limiting council tax increases as local authorities generally. As we explained in the other context, the Government have a duty to protect local taxpayers and therefore must have those reserve powers. At the same time, we made it clear that we hope never to have to use those powers for the GLA or for any other local authority. But the GLA in this context is a local authority. A financial regime applies to it and this move to exempt it would not be appropriate. It would be contrary to what we put to the electorate in the referendum. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: I am interested that the noble Lord, Lord Dixon-Smith, seems to feel that the clause is not wide enough. We can certainly attempt to extend it.
We were addressing the provisions which will almost certainly be included in the current Local Government Bill because we are realistic. Whatever this Chamber decides to do with those capping powers, we have seen well enough that such provisions would go back to the other place and no doubt be ping-ponged back here. It seems inappropriate not to make the argument which must be made; that is, that we believe—and I accept because I have a dream on this as well—that the Greater London Authority should not be controlled in the same way that often proved inappropriately restrictive in relation to local government. It is the nature of the powers, and the fact that they are described as reserve powers but parliamentary counsel appears not to have been instructed to articulate the reserved nature of the powers, that we find particularly distasteful. We will return to the matter, certainly on the Local Government Bill and quite possibly also on this Bill at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.45 p.m.
Clause 68 [Issue of precepts]:
Lord Whitty Lord Whitty moved Amendment No. 212E:
Page 36, line 23, leave out from ("for") to end of line 25 and insert ("the reference to sections 43 to 47 below there shall be substituted a reference to the appropriate Greater London provisions:").
The noble Lord said: In moving Amendment No. 212E, I shall speak also to Amendments Nos. 212F and 212G. They are all technical amendments correcting aspects of the Bill.
At various points in the Bill the respective roles of the mayor and the assembly are set out so that their responsibilities are clear. Schedules 5 and 6 are two examples of that. Schedule 5 sets out the timetable and roles of the mayor and assembly for deciding the original component and consolidated budget requirements, and is given effect by Clause 72. Schedule 6 sets out the timetable and roles for substitute calculations of the budget and has effect whenever substitute calculations are to take place; for example, under Clause 80 if the Secretary of State sets a minimum budget requirement for the Metropolitan Police Authority.
Wherever there is a reference to "budget requirement calculations", Clause 72 should only be cited in the case of the original calculations. In the case of substitute calculations, there should be no reference to Clause 72; instead Schedule 6 should be cited.
These amendments will ensure that Section 40 of the Local Government Finance Act 1992, which concerns the issue of precepts, contains references to the correct provisions. I beg to move.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 212F and 212G:
Page 36, line 26, leave out from ("for") to end of line 28 and insert ("the reference to sections 43 to 47 below there shall be substituted a reference to the appropriate Greater London provisions:").
Page 36, line 34, a. end insert—.
("(10) In this section, "the appropriate Greater London provisions" means—

(a) sections 70 to 75 of the Greater London Authority Act 1999 and section 47 below; or

(b) in the case of calculations by way of substitute. sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and section 47 below."").

On Question, amendments agreed to.
Clause 68, as amended, agreed to.
Clause 69 agreed to.
Clause 70 [Calculation of component and consolidated budget requirements]:
The Chairman of Committees (Lord Boston of Faversham): In calling Amendment No. 212H I must tell the Committee that if this amendment is agreed to, I cannot call Amendment No. 212J.
Baroness Hamwee Baroness Hamwee moved Amendment No. 212H:
Page 38, line 3, leave out subsection (7).
The noble Baroness said: We have just heard from the Chairman of Committees about the pre-emption point. I should be delighted if Amendment No. 212H were agreed to, but I shall speak also to Amendment No. 212J.
Clause 70 deals with the calculation of component and consolidated budget requirements. For each of the functional bodies, and for the authority itself, the amount is calculated taking account of estimated expenditure, reserves and so forth. Those amounts are totted up. Account is taken of income and if the aggregate expenditure will be less than the aggregate income then for the purposes of these provisions the budget for that body will be nil. Our amendments seek to ask why.
Is it intended as an efficiency incentive? That does not seem to be the case because the savings would go to accumulated reserves and so be counted the following year. Under subsections (4) and (5) of Clause 70, efficiency gains can be anticipated. Is it a matter of control on the functional bodies planning ahead? I hope not. I do not think so. Is it a control mechanism, the ring-fencing of budgets for each functional body? That is probably the case.
We on these Benches would prefer the authority to see the budget as a whole and not simply as a set of constituent parts. Amendment No. 212J provides that the excess will be repayable from the functional body to the authority. In our perhaps ambitious eyes, the GLA should be a body which looks at a number of strategic matters affecting London. It cannot provide certain services direct; its powers are limited and the matters to which it is to have regard are set out in detail. That does not mean the body should not be ambitious for the success of London and consider issues affecting London—I hope your Lordships will forgive the jargon in a holistic fashion. I prefer the word "holistic" to the term "joined up". I certainly prefer it to a joined-up London for the next millennium, which we are told to hope for in a number of policy areas.
For the authority to look at London's needs and Londoners' aspirations, it will wish to consider its budget as a whole, not as a set of component parts—and our amendments would allow it to do that. In another place, the Government objected to the proposed arrangements because they do not apply to local government finance. Although the authority is to be treated for some purposes as though it were a local authority, this is not local government. Still less are the individual functional bodies local government.
The Minister in another place said that local authorities whose income exceeds expenditure should not have to give away income to other bodies. Instead, they should consider how best it should be used to improve the services. Precisely. We see that as a matter for the authority, rather than having individual bodies squirreling away cash and protecting their budgets in a way that suggests they may be competitive with one another. We hope the various bodies that will undertake the plans for London of the mayor and the authority will be co-operative, not competitive.
The Minister in another place also pointed to clauses that allow each functional body, with the mayor's consent, to make payments to another body. That is the wrong way around: that would be a number of tails wagging the dog. We ought to be looking at the powers

23
and effectiveness of the authority as a whole, not forgetting the whole and looking only at the functional bodies.
Lord Dixon-Smith: We have some sympathy with the principles enunciated in the amendments, even though we might not support them today. If one of the functional bodies happened to come up with a surplus—I presume that it is likely to be a small one—the fact would be well known and suitable adjustments would follow subsequently.
In the light of what happened when budgets were devolved to schools, I have some hesitation about manoeuvring. The noble Baroness, Lady Farrington of Ribbleton, will be all too familiar with the consequences of schools holding balances on their budgets, which could theoretically leave large sums of money prudently squirreled away by school governing bodies in the interests of some flexibility in future in the management of their schools. If local authorities had those locked-up funds available to them, perhaps they would be able to put them to better use than having them sit in a bank.
This is not a straightforward matter and I agree that we need to consider London's funding as a whole in the way that the amendment suggests. I am not sure, however, that the personnel structures that are established under the Bill would make that practicable and achievable. As the noble Baroness said, we need to consider the matter in the round and it is certainly a subject to which we will all be returning. At this stage, I note what has been said and look forward to hearing the Minister.
Baroness Farrington of Ribbleton: The amendments seek to allow for bodies to have negative budget requirements. Secondly, they would require functional bodies to pay any amounts calculated as negative budget requirements to the GLA.
Our main difficulty is that the amendments seek to change some key aspects of the local government finance regime for the GLA. While we have always been clear that there would need to be modifications to the standard system, we have been clear also that those would need to reflect its unique role.
The local government finance system does not provide for negative budget requirements for local authorities generally. It is not the intention to change that for the budget requirements of the functional bodies—as Amendments Nos. 212H and 212J seek to do. Local authorities whose income exceeds their expenditure do not have to give away their income to other bodies. Instead, they consider how best it can be used to improve the services they provide. The exception is legislation that has money being delegated to other bodies—as with schools, as the noble Lord, Lord Dixon-Smith, said. The same principle applies to the GLA and the functional bodies.
The noble Baroness and the noble Lord raised the point of why the budget requirement of a local authority would in theory take account of a negative budget generated by one or more of its service departments but
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the consolidated GLA budget would not. They are not comparing like with like. I have explained that the constituent bodies of the GLA are separate bodies with separate budget requirements. The GLA, following consultation with the functional bodies, would calculate a budget requirement for each functional body as the difference between that body's expenditure and income. The GLA then calculates the consolidated budget by adding together the budget requirements of each of the constituent bodies.
A London borough council, for example, has only one budget requirement. The education department and social services department do not calculate separate budget requirements under the applicable statutory provisions. A London borough council's budget is like a constituent body's component budget under the Bill.
I cannot envisage the circumstances in which the mayor would set a negative budget requirement for any of the functional bodies. That could theoretically happen only if the income of those bodies exceeded their expenditure. Ruling out negative budgets does not mean ruling out flexibility. The Bill provides a mechanism for any spare resources to be redistributed from one body to another. Clause 106 allows any of the bodies, with the mayor's consent, to pay revenue grant to another functional body. The mayor is firmly in the driving seat in setting the GLA budget. The budgetary practices that he or she establishes will be expressed in five component budgets. He or she will certainly take an overall view.
Clause 105 makes similar provision for grants for capital spending. That mechanism for ensuring that resources are used efficiently across the GLA and the functional bodies is much more appropriate than a rigid system of negative budget requirements.
For those reasons, the amendments are not acceptable. I ask the noble Baroness to withdraw them.
4 p.m.
Baroness Hamwee: The Minister referred to certain clauses, but the problem with them is that they require the mayor's consent which suggests that the mayor is not in a position to take control. However, before I respond any further, perhaps the noble Baroness can clarify one point for me. She explained that the financial provisions are to reflect the financial arrangements which apply to local authorities. The Minister's reply seemed to indicate—and perhaps she will confirm whether or not I am correct—that each of the functional bodies is the equivalent of a local authority. Looking at it as a whole, the model which the Bill sets out seems to me to read as if each functional body is an "arm" of the mayor, if I may stretch the physical analogy a little. In other words, it is the authority, comprising the mayor and the assembly, which is the equivalent of a local authority. However, the Minister seemed to be telling us that each functional body is a separate local authority for this purpose.
Perhaps I may expand on my argument—that is, if it needs expansion. The Minister talked about borough budgets. In a London borough, I accept that it is the council as a whole which would take a view as to

25
the comparative priorities, to use her examples, of education and social services. That is precisely the sort of model we would like to see here, with the authority in the position of the council. The Minister said that boroughs have to act under their statutory provisions. We are at present discussing what statutory provisions will apply to the authority, so I think that that may be begging the question.
Baroness Farrington of Ribbleton: The noble Baroness has identified the difference. The difference between us is the fact that she would prefer a different model from that proposed in the Bill.
Baroness Hamwee: Yes, I would; I have made no secret of that fact. But that was not my question. I do not think we shall progress a great deal further on the matter today. Nevertheless, it is a matter of some importance. Perhaps the Minister has something further to say before I withdraw my amendment.
Baroness Farrington of Ribbleton: It may help the noble Baroness to know that, as I said earlier, the mayor decides the budget requirements but each functional body has its own budget. They are added together to form a consolidated budget requirement. I do not know whether that assists the noble Baroness.
Baroness Hamwee: I am grateful to the Minister but, sadly, I do not think it does. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 212J not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 213:
Page 38, line 11. at end insert—
("(10) Notwithstanding any other provisions of this Act, the precept issued by the Authority for any financial year ("the relevant financial year") subsequent to the first financial year for which the Authority issued a precept shall not exceed the precept issued in the financial year preceding the relevant financial year by a percentage greater than the percentage by which the Retail Price Index increased in the year to the 31st December preceding the relevant financial year, except where this can be shown to be the consequence of a reduction in funding from central government.").
The noble Lord said: The Government have said that the GLA should not represent an oppressive financial burden on Londoners. Paragraph 6.7 of the White Paper on London promised that the finances of the GLA would,
"meet the Government's objectives of efficiency and value for money in public spending".
However, on the face of the Bill, the fulfilment of those pledges appears to be left to chance.
Experience elsewhere of powerful precepting authorities shows that, all too easily, they can escape the electoral consequences of their decisions because council tax payers fail to understand that their increased tax bill very often results from a decision by a precepting authority rather than a decision by a billing authority. This happens despite all the information that is sent out with tax bills. Indeed, experience in London
26
during the time of the GLC also bore out that fact. I cannot believe that people in London would wish to return to such a situation.
There is another factor involved, which is mentioned in the amendment; namely, government finance. All too often, for a local authority setting its budget the greatest variable that it faces in its financial resources is the variation in the funding it receives from central government. At present, we are in a period of relative stability because the Government have said—I am grateful to them—they will not amend the relevant distribution formula for a period of three years. But that period of peace, quiet and correctness is, I suspect, likely to be followed by a more violent period of change as the formula is altered to catch up with the demographic shift that has taken place over a longer period of time. The blame for local tax increases must rest where the responsibility for it lies. Among other things this amendment seeks to help to bring that situation into being.
As far as I can see, there is no financial discipline in terms of Part III of the Bill as it stands, except the Secretary of State's powers of direction. This is a new type of authority and the dangers of irresponsible financial planning should be diminished, if not eliminated, in the drafting of the Bill. The Government's stated intention is that the authority should be financially responsible. If that is to be more than a pious hope, limiting the increase in its precept for each financial year to the percentage increase in the RPI to the previous December is not only desirable but perhaps also an indispensable protection for the people of London.
The proposal is a moderate one; but it also has to be said that it is not novel. We are suggesting that the precept should not outstrip inflation; that is to say, it should not rise more quickly than the RPI. We see many examples of this in practice. The Government expect the privatised utilities to abide by much more stringent price cuts. They operate in the private sector but because they provide a public service and are all too often in a monopoly situation it is deemed that these requirements are reasonable. They are often required to operate on RPI minus—in other words, their prices can increase at below the rate of inflation—and they are expected to maintain their profitability through increases in efficiency, and so on.
When we had a Conservative government and the idea of RPI minus as a formula was produced for the regulation of these utilities, the Labour Party said that it was not a sufficiently stringent discipline. I find myself asking this question: how, in reality, is the GL. A different from the privatised utilities? Of course, the same could be said of all government services indeed, we are to some degree involved in a philosophical debate at this point. However, the GLA is certainly a monopoly provider for many of its services. It is certainly in a monopoly situation.
The Government claim that the RPI minus formula is needed to encourage privatised utilities. So why should not the same argument be applied to the GLA.? Limiting its price rises to the retail prices index would

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encourage efficiency in London's public spending, which is exactly what the White Paper set out to do. Some people may say that local government is different; it provides services. But the privatised utilities are services. There is a parallel, if not a complete congruence, between the two.
The situation in London is exacerbated by a trend which is apparent at the moment of the Government tending to move resources from London and the south-east of the country into the west, the Midlands, the north-east and the north-west. We see that through the changes in the revenue support grant and the temptation for even wider changes than we have had so far. It must be borne in mind that London is already a huge net contributor to the nation's finances. If we are in the business of removing resources from the south-east, and from London in particular, we need to bear in mind that many parts of London are as disadvantaged as disadvantaged areas anywhere else in the country. Simply to use this resource shift to justify a different political need is not appropriate.
In a sense this amendment is exploratory. It explores the Government's attitude and philosophy on matters financial. I look forward to the Minister explaining how he sees the future of government services and government costs. Are they to be related to the normal cost increases which we have seen? If we had a period of deflation, would they still maintain that kind of relationship; or are we to expect that they might rise and expand—perhaps gently—in a way which absorbs an ever-increasing part of the community's total finances and resources? If that were to happen, I believe that it would be damaging.
This amendment seeks to impose a proper discipline on the Greater London Authority. It would, of course, render totally redundant the possibility of capping under the Local Government Bill because, were the Greater London Authority to be subject to this kind of a discipline, it seems to me that it would not fall foul of the Secretary of State at any time. I beg to move.
Lord Tope: I listened to the noble Lord, Lord Dixon-Smith, with considerable interest and some sympathy because I felt that his heart was not really in this amendment. Therefore I was not surprised to hear him say that the amendment was exploratory. However. I was astonished to hear him say that if the amendment were accepted it would do away with the need for capping. I thought that the noble Lord did not—
Lord Dixon-Smith: I said that it would do away with the need to cap the Greater London Authority.
Lord Tope: I stand corrected. As I say, I thought that the noble Lord moved the amendment with something less than enthusiasm because earlier today he told us that he opposed capping. I know from his days in local government that he opposed capping when it was first introduced by the previous government. He has always been clear and honest about that. Therefore I felt some
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sympathy for him in having to move this amendment which is similar to an even sillier one that was moved by his colleagues in another place.
This amendment seeks to impose on the Greater London Authority a limit which is tied to the retail prices index. Later the noble Lord can explain to me how that is not capping. It seems to me to be the crudest—and most universal in terms of the Greater London Authority—form of capping yet devised. The noble Lord—or probably his friends in another place—has chosen the retail prices index as a most inappropriate method of imposing a crude cap on an authority. I believe that that is entirely inappropriate. From all his years in local government the noble Lord knows as well as I—probably better than I do—that cost increases within local government do not relate that closely to the retail prices index. I am surprised that the noble Lord proposes the imposition of an arbitrary cap tied to the retail prices index by law for ever. At times the noble Lord appeared to confuse the increase in precept with, for example, fare increases under Transport for London. That is a different issue. Here we are discussing precepts.
The noble Lord also said that the amendment sought to place the blame where it lies—presumably with the Greater London Authority. However, it does nothing of the sort. It removes any possibility of blame from the Greater London authority because it has no power to decide that it wishes to impose a much higher. or for that matter a much lower, precept increase. We cannot support this amendment. I think that it is particularly silly. I return to the point I made earlier this afternoon; namely, the proper means of accountability for the mayor and the assembly of the Greater London Authority as regards whatever increase or decrease they want in a precept is to be properly accountable to the electors of London. Such a provision should not be imposed on them by law by means of some rather artificial index that does not relate to local government at all.
4.15 p.m.
Lord Whitty: I am glad that this amendment is both exploratory and philosophical. I think that we have swung from the total freedom of the Liberal Democrats to total constraint on the part of the Conservative Front Bench. The amendment seeks to restrict annual increases in the GLA's precept to annual increases in the RPI. The amendment refers to the GLA precept in the singular, although the GLA will, of course, issue a number of precepts, one to each billing authority. But leaving that aside, the noble Lord. Lord Tope, has made the case absolutely clear; namely, that local authorities have to take into account their responsibilities to their electorate, the resources available, changing circumstances and the priorities that they establish. We do not restrict any other local authorities to fixed increases or to increases which are related to a single RPI figure. We recognise that some flexibility is needed to decide how much local authorities need to raise from the council tax. We consider that there is a limit to that and therefore we have retained the reserve powers.

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However, as the noble Lord, Lord Tope, has reminded us, in a different context the noble Lord, Lord Dixon-Smith, is opposed to those reserve powers. But his proposal would place a far greater constraint on the GLA. The GLA is covered by our "third way"; that is, a course between the total freedom of the Liberal Democrats and the total constraints of the Conservatives. Broadly speaking that brings the GLA within the local government regime. Not only will it be subject to that legislative provision; it will also have a common law fiduciary duty. Under the new legislation that we shall introduce, it will also be subject to best value. It is subject to auditors and the intervention of the Audit Commission. There are all kinds of pressures on the GLA to spend its money wisely within the freedoms that we shall give it under the local authority finance system. If an utterly outrageous increase is proposed, the reserve powers would come into play, but not until that point.
The noble Lord referred to changes in the allocation of revenue support grant and so forth. There are certain changes both within and between authorities, but the intention is to have a fairer distribution, not to take money away from London, as the noble Lord suggested. Some degree of stability is needed. We are looking at changes in the methodology of allocating grants. In the meantime the three-year stability that we have announced has been welcomed by local authorities generally, although it will be subject to some changes such as demographic changes which would need to be reflected in the distribution.
I do not think that this is a sensible amendment. It places far greater constraints on the GLA than are sensible. Our own approach, which has been attacked in the House as having reserved powers, has a far lighter touch than that proposed by the noble Lord. I hope that, on reflection. he will not press the amendment.
Lord Tope: Before the noble Lord, Lord Dixon-Smith. responds, the Minister referred a couple of times to "the total freedom proposed by the Liberal Democrats". I hope he will accept that winning a two-thirds majority from the assembly and then winning a simple majority at a referendum of 5 million London electors does not quite equate to "total freedom".
Lord Whitty: I was speaking in financial terms. Clearly there are political constraints—as always—and the noble Baroness's previous amendment would have put in place a severe political constraint. I accept that. The philosophy is that one should somehow maximise the financial freedom subject to those political constraints, whereas the noble Lord's amendment would minimise the financial freedom and not allow any political judgments to take place.
Baroness Hamwee: That is exactly right. We stand by that. We would add that the political constraints in the various proposals we have made should be with the authority concerned—in this case the Greater London Authority, but it is a point we make for local government generally. Each individual authority with any modicum of instinct for its own self-preservation
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will understand the needs of the political constraints, quite apart from the propriety of applying them. So, yes, political constraints—but at the right level and in the right sphere.
Lord Dixon-Smith: When one has dug oneself into a hole it is always good advice to stop digging. However, we should be quite clear that the reserve powers mentioned by the Minister would be irrelevant if the amendment were to be included in the Bill.
We should recognise that part of the purpose of debate at this stage of a Bill in this House is to test the intellectual strength of the Government's proposals. Although not everyone may agree, it seems to me that sometimes one has to reverse the argument that one would normally produce in order to do just that. At the end of the day, the proof is in what passes through the House. I do not apologise to the Committee for moving the amendment, with which, I admit, I have some philosophical difficulty.
However, the point behind it is serious. There will be problems with the Greater London Authority precept. I accept that political constraints ought to operate effectively on it. The lesson learnt over the years by those of us who have been involved in local government is that the assignment of responsibility for financial actions is extremely difficult to pin on the people who took the decisions that had an effect on the precept. It was with that in mind that the amendment was moved.
We have had a useful discussion. However, I do not think that I am a lot clearer about the Government's attitude to public financing generally as a result. That is probably my fault because I did not argue sufficiently clearly the point that I wished to make. For that I am sorry. If I have taken the time of the Committee ineffectively, I apologise, but that was the purpose behind the amendment. I shall study the Minister's reply to deduce what I can from it. If I can deduce sufficiently useful material, we shall not bring forward the amendment again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 70 agreed to.
Clause 71 [Provisions supplemental to section 70]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 213A:
Page 38, line 44, at beginning insert ("With the agreement of the majority of the members of the Assembly voting").
The noble Baroness said: In moving Amendment No. 213A I shall speak also to Amendment No. 220E.
Clause 71(5) provides for the Secretary of Stale to alter the constituent parts of the calculation under Clause 70(4) and (5); Clause 73 provides for the Secretary of State to alter the constituents of the calculation under Clause 73(2), which deals with the calculation of council tax. We propose that the agreement of the assembly should be required to such alterations. If the Secretary of State is making sensible proposals, the assembly will no doubt agree. I have faith in the likely common sense of the assembly, particularly when one has to look to the majority of its members. These amendments are protections in case the Secretary

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of State is not sensible or goes against the will of the authority in a manner which the assembly calculates would not find favour with Londoners.
The amendments are consistent with the role of the assembly. The assembly will have an overview of various budgetary matters and, in particular, the detailed matters to which Clause 70, which deals with the component and consolidated budgets, will apply. We have spent some time this afternoon talking about the need for an overview. Even were I to accept—which I do not—the Government's view of how the budget will be put together, nevertheless the assembly's view, gathered from experience of working in the authority and the background of the individual assembly members, will be relevant. It should have a role in these decisions. I beg to move.
Baroness Farrington of Ribbleton: Amendment No. 213A is intended to ensure that the Secretary of State could exercise his powers under Clause 71 to make regulations to amend the rules governing the calculation of the GLA's component and consolidated budget requirements only with the consent of a majority of assembly members voting. Similarly, Amendment No. 220E would mean that the Secretary of State could exercise his powers under Clause 73 to make regulations to alter the rules for calculating the GLA's basic amount of tax only with the consent of a majority of assembly members voting.
The noble Baroness is clearly continuing the Liberal Democrat campaign to curtail and prune the powers of the Secretary of State and to confer what are usually executive powers on the assembly. Perhaps it would help the Committee if I explain why the Secretary of State's powers in Clauses 71 and 73 are needed. The Clause 71 power is needed so that the Secretary of State can include or exclude certain items from the budget requirement. The budget requirement is used in the tax-setting equation to determine the amount of revenue the GLA will need to raise from council tax after deducting revenue support grant, non-domestic rates, and so on. The Clause 73 power is needed so that the Secretary of State can alter the rules governing the calculations for the basic amount of council tax to accommodate the introduction of new grants or changes to the powers under which grants specified in Clause 73 may be paid.
Both of these powers are similar to the Secretary of State's powers in respect of local authorities generally in the Local Government Finance Act 1992. Any changes to the rules governing calculations would probably need to apply to local authorities generally and to the GLA. Those changes are made only following consultation with local government, and although we would certainly expect to consult the mayor and the assembly about changes, surely the noble Baroness does not seriously expect us to agree that the assembly, uniquely, should have the power to veto them. It is Parliament and not assembly members which rightly has
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this role in relation to regulations made by the Secretary of State. For these reasons, we invite the noble Baroness to withdraw her amendments.
Baroness Hamwee: All our amendments are serious, and I am sure that the noble Baroness understands that. Indeed, our campaign to prune the powers of the Secretary of State will continue. The fact that the powers are similar to those which the Secretary of State has in relation to local government does not seem an argument for applying the powers to the GLA, but rather to reducing the powers in connection with local authorities. I am sure the noble Baroness is not surprised by that reaction. We shall consider this matter further, but for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 71 agreed to.
Clause 72 agreed to.
Baroness Farrington of Ribbleton: I beg to move that the House do now resume.
Moved accordingly, and, on Question. Motion agreed to.
House resumed.

Wormwood Scrubs
4.31 p.m
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, with your Lordships' leave, I should like to repeat a Statement made in another place by my right honourable friend the Home Secretary earlier this afternoon. The Statement is as follows:
"With permission, Madam Speaker. I should like to make a Statement on the report of an inspection of HMP Wormwood Scrubs which the Chief Inspector of Prisons, Sir David Ramsbotham, is publishing today. Copies have been made available in the Library and the Vote Office. Given the nature of the report, I thought that I should report to the House the failings exposed at the prison and the urgent remedial action I expect to see taken.
"Prosecutions: before coming on to the report, let me, however, first deal with the question of the prosecution of certain prison officers. On 15th June, after a detailed police investigation, the Crown Prosecution Service announced that 25 prison officers from Wormwood Scrubs were to be charged with offences of assault on prisoners. The House will understand that I am therefore unable to comment on them today. But there can be no place in the Prison Service for abuse of prisoners of any kind. This is a fundamental principle. The Government and the new director general, Martin Narey, will take whatever steps are required to maintain it.
"Findings: let me now come on to the report itself. The Chief Inspector of Prisons undertook an unannounced full inspection of Wormwood Scrubs from 8th to 12th March 1999. This report published

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today makes deeply disturbing reading. In his preface, Sir David recalls that he had already been highly critical of what he had found when he last visited the prison in 1996. In that earlier report he made a large number of recommendations and called for a determined Prison Service response to reform the prison. However, on his return Sir David found that this reform had not occurred. While individual staff were carrying out excellent work, in what he said were extremely difficult circumstances, he considered that overall the treatment of prisoners remained `profoundly unsatisfactory'.
"Sir David sets out a number of specific failings: the needs of prisoners appeared inadequately understood; there were examples of the statutory rights of prisoners being denied; induction procedures were poor; prisoners spent too long in their cells; regimes were inconsistent and impoverished; healthcare had been cut back; there were allegations of abuse, including racial abuse; and arrangements for discharge of prisoners were not systematic.
"Sir David also found a destructive, unco-operative and self-seeking attitude among a minority of staff which was very difficult for managers to combat.
"Response: these are serious criticisms and Sir David makes a large number of recommendations for improvement. I have asked the new director general, Martin Narey, to put in place a robust action plan to respond to them. He is to report to me within 30 days. I expect the overwhelming majority of the recommendations to be accepted and implemented.
"There is one significant exception. Sir David recommends that Wormwood Scrubs should be market tested. I am keeping this option open but there are new managers in place at almost every level of the Prison Service responsible for Wormwood Scrubs and in my view they should be allowed an opportunity to put the prison back on an even keel. Should, however, rapid progress not be made in reforming Wormwood Scrubs all options—including market testing or closure—are open.
"Change already under way: let me now tell the House of the changes already under way. These include: a thorough overhaul of the procedures of the segregation unit; improved prisoner complaint procedures; more efficient deployment of staff; expansion of the regime, including additional offending behaviour programmes, increased constructive activities and a new education contract; a restructuring of healthcare management; and finalising and implementing an effective drugs strategy.
"The report points out that at the time of the inspection, 46 her cent of prisoners at Wormwood Scrubs came from the ethnic minorities compared to 11 per cent of staff. The chief inspector makes six recommendations relating to race relations and I expect them all to be accepted. As the House knows, the Government are setting the Prison Service challenging targets for the retention and promotion of ethnic minority staff. This reflects our commitment to eradicating racial discrimination in the criminal justice system.
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"POA: these remain small beginnings and much remains at a planning stage. What I require is a radical overhaul of Wormwood Scrubs, its culture and its working practices. I firmly believe that the overwhelming majority of prison officers will welcome the improvements which the Prison Service needs to implement at the prison. I expect the Prison Officers Association, both nationally and locally, to work constructively with the service to secure reform.
"The senior POA official who a few days ago publicly described prisoners at Wormwood Scrubs as `the scum of the earth' has now expressed bitter regret for his gratuitously offensive remarks. Last week the national chairman of the POA gave the director general a categorical assurance that his members would work with the governor and senior Prison Service managers to transform Wormwood Scrubs. I welcome that assurance.
"I have made it absolutely clear to the director general that change must be delivered at Wormwood Scrubs. I hope this will done with the full support and co-operation of the staff at Wormwood Scrubs and of all Prison Service trade unions, including the POA. But there will be change either with or without that co-operation. Wormwood Scrubs has the staff and the resources to meet the challenges laid down by the chief inspector. To ensure progress I have asked Sir David and his team to conduct a further investigation of the prison in six months' time, the results of which, will of course, be reported to the House.
"I am determined to ensure that the Prison Service protects the public and provides a decent secure environment for prisoners".
My Lords, that concludes the Statement.
4.38 p.m.
Lord Cope of Berkeley: My Lords, the House will be grateful, as usual, to the noble Lord the Minister for repeating what the Secretary of State said in his Statement to another place. I am personally grateful for a sight of the report itself, although obviously I have not had time to study it in great detail. I expect the noble Lord the Minister will want to share with your Lordships his own reaction to the report, as the current prisons Minister within the Home Office.
The report made very clear that it believes that responsibility for the failure to make improvements since the last inspection lies with the Prison Board and the area managers and so on, and not solely with the local management. However, some questions can relevantly be asked, particularly as regards what happened during that period. Why was there apparently no governor at the prison for a period of six months or thereabouts? When the prison was in a serious situation, with bad reports both from the inspector and the board of visitors, that seems a very long time for it to be left without proper leadership.
Why was there a 40 per cent cut in health provision when attention had been drawn to the fact that that area required more attention rather than less? The error presumably lay above local management level with the

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higher management of the Prisons Board and Ministers. What was done about the action plan that we believe was put in place following the previous inspection? Generally speaking, when inspections of this kind take place an action plan is drawn up to address the failings that are revealed. In this case the action plan had evidently not been implemented. The inspector describes his previous recommendations as having been virtually ignored.
I support the decision of Ministers not to close the prison at this time or to market test it—although both options remain open and it is correct that they should. Does the Minister agree with the statement of the chief inspector that no private contractor in a private sector prison could get away with what has happened in Wormwood Scrubs?
4.41 p.m.
Lord McNally: My Lords, the Minister must now be considering whether his department is not the "Ministry of One Darned Thing After Another". He should also be aware that over the years the Home Office has proved more often a trap-door than a springboard for ministerial ambition. But, as the noble Lord, Lord Cope, indicated, this Statement is different from the others that the Minister has recently had to make. It covers his direct area of ministerial responsibility and events that have taken place during his watch. I noted a report in one newspaper that the Minister might even consider this a resigning matter. I do not believe that our public life is so rich in talent that that would be a way forward. It would be interesting to know whether the Minister, during his time as prisons Minister, or other Ministers visited Wormwood Scrubs during the period covered by the report.
More broadly, does the Minister agree that this is one of the most damning and disgraceful reports of recent times about any part of our public service? As the report rightly states, Wormwood Scrubs has both the staff and the resources to carry out its responsibility. At any other time, the response to a report of this seriousness and severity would have been to set up a full public judicial inquiry. Was that ever considered?
I understand what the Minister says about market testing. However, the report seems to indicate that market testing in the private sector has proved a success. Are there lessons to be learnt about how those findings might be applied to the public sector?
Almost every prison report over the past 30 years has highlighted the appalling state of industrial relations in our prisons. There is no question that prison officers have a difficult job and that the vast majority of prison officers are decent human beings. But there is overwhelming evidence of rogue branches in the POA and of a canteen culture as bad if not worse than that identified in the police service. The POA has for too long had the reputation of being a cowboy outfit. It should realise just how low is its esteem as an organisation. The POA is as much on test now as Ministers are as regards how to deal with this situation
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Paragraph P6 of the report highlights the fact that Sir David Ramsbotham asked to see an investigation report. He states:
"I was denied access by the then Director General, after he had taken legal advice".
Does the Minister defend that decision? Would other inquiries find similar refusals to co-operate with investigations?
Are there any proposals for improving prison officer training—for example, in restraint techniques, racial awareness and cultural differences, and in the management of drug regimes? In short, are our prison officers sufficiently trained for the conditions they have to face? Will there be any dismissals other than those that are presently under prosecution?
Finally, I ask the usual channels to note that the House will expect a full debate on the Prison Service before we rise for the Summer Recess. I said that ministerial resignations were not in question. But Ministers must realise that, if the matters highlighted in the report are not put right at once, the resignation required will not be of the prisons Minister but of the Home Secretary himself.
4.48 p.m.
Lord Williams of Mostyn: My Lords, in response to the noble Lord's last question about the usual channels, as the noble Lord tactfully and subtly indicates, that is not a matter for him or me. I have always responded on the basis that if there is to be time available for important public matters, I personally welcome the opportunity to explain and, where justification is available, to justify.
I am grateful to both noble Lords for their responses. As to my own reaction, it was anger and fury, and shame. I can get some benefit from the statement of Sir David Ramsbotham in paragraph P29:
"I have therefore discussed the way forward with the Minister of Prisons and the Director General, and know how committed they, personally, are to eliminating the evil that we found at Wormwood Scrubs, and that we have reported on in a number of other prisons".
Every manager of any significant seniority who was present during the relevant time, whether within the prison or at area management level, now no longer works in the mainstream Prison Service. Most have left the service altogether. There were serious problems here and serious deficiencies. There was not a governor for six months. The noble Lord, Lord Cope, is right to say that that was too long a gap. The earlier governor resigned at fairly short notice. The question then was whether to continue with an experienced deputy governor in situ or whether immediately to change over. We have learnt a lesson. The Prison Service is focusing much more closely now on succession issues for prison governors. There needs to be a sensible balance between a governor who stays too long—I do not necessarily say that that was the situation in this case—and a governor who is extremely enthusiastic and stays too short a time. But these succession issues, in management and human terms, are extremely important.
The 40 per cent cut in the healthcare budget was, in my view, a mistake. The 1996 action plan was, as I understand it. provided to Sir David Ramsbotham with

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a progress report which was able to confirm implementation on a number of action points. So the action plan was not "virtually ignored". Some work was done.
The question of market testing has been raised.' Jack Straw has said quite plainly that market testing at this time is not feasible and we must make the prison work. To close the prison is not feasible for the same reason. But the Home Secretary has also said unambiguously that he does not rule out any option including market testing or closure. Some lessons are to be learnt about the quality of service provided by private prisons. Equally, not every private prison I have visited or read inspection reports upon is supreme in every way. It is notoriously well known that a number of private prisons at some stage have had quite significant worrying failures.
I turn to the comments of the noble Lord, Lord McNally. Fortunately, I do not have his previous convictions and therefore do not have to have any political ambitions. I have said many times, and I am happy to repeat, that the job of the prisons and probation Minister is one that should be the honourable ambition of anyone who waits to do something useful. One does not regard it as either a prospective platform or diving board, depending cal whether one goes up or down. It is not a springboard to ambition in my case. We have a genuine duty to the wider public and to those who are incarcerated as a result of state coercion.
The noble Lord fairly asked about prison visits. My immediate predecessor Joyce Quin visited shortly before the hand-over of responsibilities to me in July of last year. In respect of both Feltham and Wormwood Scrubs, I had intended to make unannounced visits but for the same general reason in both cases I was asked not to do so. I knew that there were to be visits to both by Sir David and his team. One can muddy the waters and take away the virtue of an unannounced inspection. According to the figures given by Jack Straw—therefore, they must be right—I have visited 46 prisons. I believe your Lordships are aware that I visit every Friday. It is possible to visit every prison for a quarter of an hour, but I regard that as deeply insulting to both the prisons and those who work there. One must have a sensible period in a day in order to visit a prison.
We considered a public inquiry. I do not believe that that is appropriate for Wormwood Scrubs at this time. Twenty-five officers have already been arrested, charged and suspended. It may well be that the police inquiries are not concluded. Inevitably, with criminal prosecutions under way, to hold a public inquiry is impossible; in any event, it would interfere with our determination to get things right. Your Lordships will note that we want Sir David to return in six months. Much more importantly, we want a positive action plan within 30 days.
The question is: has the private sector proved a success? Undoubtedly, yes. We are applying market testing to Doncaster and Buckley Hall, both privately run institutions that are open to competition by the Prison Service and the private contractor in the immediate future. Have industrial relations been poor at
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the Scrubs? Undoubtedly, yes; no one who reads this report can dispute it. To me, one of the very important aspects was that when the wholly inappropriate comment was made by a senior POA official at national level, virtually immediately he withdrew it in writing. Just as significantly, the chairman and general secretary of the POA, Mark Healey and David Evans respectively, have made it quite plain that their personal support for reform will be guaranteed.
The POA sometimes does wrong—I do not know of any human institution that does not—but a very significant number of its members do extremely well. I give one small illustrative example. I visited Blundeston prison on Friday last and learnt of a very imaginative scheme called Encounter that brings young juveniles into the prison to see what may happen to them if they do not pull themselves together. Those who are about to fall into the abyss of the prison system from their point of view are brought into the prison, spoken to firmly and locked up in the cells. That scheme, which is more extensive than the shorthand summary I have given, is run by David Banks, chairman of the POA at Blundeston. Although certain matters have arisen at Wormwood Scrubs, if the POA wants to work with Jack Straw and myself we have made quite plain that we welcome that co-operation.
My first action on taking over the job was to ask both Mark Healey and David Evans to come and see me. We agreed to meet on a regular "diarised" basis so that we could chart the way ahead. But, as Jack Straw said quite unambiguously—no one should be under any illusion or in any doubt—if matters do not improve, no option is excluded. Therefore, he requires certain amelioration from the director general and the full-hearted co-operation of the POA, which we have been guaranteed.
I defend the decision on the internal report. That was taken entirely on legal advice. It is not always possible to hand over documents at that stage. In many ways I believe that it is an advantage to Sir David to come to his own independent conclusion and not necessarily be governed by internal disciplinary inquiries which are not complete. Is there sufficient training in control and restraint? That is a matter very much in the minds of Martin Narey and Phil Wheatley, the new deputy director. Will there be dismissals? I do not know; nor should I know. There are disciplinary charges and it is for the proper disciplinary mechanism to deal with those matter. It is quite wrong for me to speculate one way or another. As to the debate which was the last matter to which the noble Lord, Lord McNally, referred, I responded to that immediately.
4.55 p.m.
Lord Biffen: My Lords, I am sure that the Minister accepts that only the perverse would seek to take any political advantage out of this unhappy situation. Taking account of his reluctance to hold a public inquiry and having regard to the general interest in this topic, would the Minister welcome a departmental Select Committee investigation?
Lord Williams of Mostyn: My Lords, I am not convinced of the validity of that. We have had the most

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trenchant possible inquiry and vigorously expressed report on Wormwood Scrubs. We must turn that place round on the basis of a tight timetable: 30 days for an action plan and a specific series of recommendations for the Home Secretary, followed by a return in six months. It is not for me to reject the noble Lord's suggestion, particularly bearing in mind my regard for his very long public service and experience. We can certainly bear it in mind. Our immediately priority must be to get this right.
The Earl of Longford: My Lords, I agree with others that this a damaging report. In my 50 or more years' experience of prison visiting this is the most damaging report on any prison that I can remember. In those circumstances, the Government can never absolve themselves of all responsibility. On the other hand, talk of resignations should be set aside as ridiculous. My noble friend, whom I have criticised before and shall criticise again quite often, is one of the ablest Ministers I can remember. I rule out that idea. I also disagree with the comment from the Liberal Democrat Benches about the POA. It is easy to blame the POA for everything. I believe that all governments, including the one to which I belong, have failed to establish the proper relationship with the POA. None of us would want to be a prison officer; it is the most appalling job in the world. One must make special efforts to come to terms with the POA, which all previous governments have failed to do.
I disagree very strongly with the Minister on one particular matter. He said that privatisation had succeeded. I disagree totally with the idea of privatising prisons. It is a step entirely in the wrong direction. Having said that, I disagree entirely with those who want to get rid of one of the best Ministers we are likely to find.
Lord Williams of Mostyn: My Lords, I have never found myself in absolute, total agreement with the noble Earl. I know that he is enormously supportive of what we seek to do. There is no question of resignation. There is a shame that we have found these things. No one has made a party political point. Sir David Ramsbotham's first report related to matters in September 1996. Matters which should have been put into effect following that time were not effectively followed through.
I have said already that I extended the hand to the POA immediately on taking up this work. I hope that its representatives, chairman and general secretary will want to take that hand and give the co-operation which they have said unambiguously that they will. The noble Earl said that no one wants to be a prison officer and that it is the most appalling job in the world. I entirely disagree. One sees the commitment, dedication and quality of young staff coming into the Prison Service. It is not the most appalling job in the world; and it is done by many with great distinction.
Baroness Uddin: My Lords, I thank the Minister for repeating this important Statement. I wish to comment
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on the welfare of Moslem prisoners. I had the privilege of seeing the report but have not had time to study it. Paragraph 5.39 refers to blatantly racist comments made by prison officers. How does the Minister intend to deal with that? If he has already done something, what action has he taken?
The report also acknowledges differential treatment as regards the statutory right of Moslem prisoners to be involved in religious activities. Will the Minister tell the House what is being done to ensure that all prisoners, including vulnerable prisoners, have equal access to religious provisions?
Paragraph 5.99 refers to the special needs of foreign national prisoners. Does my noble friend agree that we are not talking about special needs or special treatment but about equal rights and equal treatment of all prisoners?
Finally, 46 per cent of prisoners are from ethnic minorities. What action will my noble friend consider in six months' time when the review is undertaken, or perhaps in 30 days when the action plan comes before the Home Secretary? Will my noble friend consider taking on board some of the Macpherson recommendations for all institutions as set out in the report on the Stephen Lawrence inquiry?
Lord Williams of Mostyn: My Lords. my noble friend is right. Forty-six per cent of inmates are from ethnic minorities; and 11 per cent of staff. That cannot be acceptable. Earlier this year, the previous director general set up a scheme entirely for the recruitment, training, retention and promotion of those from ethnic minorities in the Prison Service. I have also set in hand a scheme where members of the Prison Service from ethnic minorities will come to my private office on a regular basis for two weeks at a time so that we get a decent interchange of views. That has been enormously well received by those who are from ethnic minorities in prisons. We were overwhelmed by the volume of applications. That is about to start.
I stress that the scheme by Sir Richard Tilt was set up before the report. There is a long way to go. I shall have nothing useful to report in 30 days; and nothing beyond tentative steps within six months because there is a long backlog of wrong behaviour, of blind wilfulness, to get over.
The noble Baroness is right about statutory rights. If they are statutory rights, they should be enforced by law if staff or management fail.
On religious observance, it has been plain to me that the Moslem community was not properly dealt with in the prison context. Therefore I recently authorised a full funding of a Moslem adviser to the chaplaincy. I know that the noble Lord, Lord Dholakia, was interested in that. Those matters are in hand, with the advertisement placed recently.

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It will be a long haul. We are ready, quite rightly, on these occasions to criticise wrongdoings of other organisations. But—I do not say this in mitigation—it is not the only organisation in this country which has similar defects in the racial context.
Lord Dholakia: My Lords, perhaps I may put three questions to the Minister and thank him for the tone of the Home Secretary's Statement which seems positive about what needs to be done.
First, the Chief Inspector of Prisons has never before called for the closure of the prison. This is the first time he has done so. That drastic recommendation shows the depth to which the prison has sunk. What concerns me most is that complaints surfaced as early as 1991 through reports of the chief inspector, the board of visitors and by individual inmates. Yet it has taken all this time for any action to be taken. The noble Lord, Lord Biffen, who mentioned the Select Committee inquiry, is right. How long does it take for a complaint of this nature to be dealt with? It was through the sheer force of the solicitors that the complaints were examined in detail.
Secondly, I refer to the machinery of complaints against prison officers. Those of us who have been members of boards of visitors know clearly how inadequate the machinery is. In many cases the governors are powerless against the might of the prison officers. Rather than simply relying on ombudsmen, is it not time to consider whether similar machinery to the Police Complaints Authority is appropriate so that there is an independent element in examination of complaints?
Thirdly, I wish to echo the point raised by the noble Baroness, Lady Uddin. Forty-six per cent of the inmates in Wormwood Scrubs are from ethnic minorities. Many people—some have rung me—are concerned about what has gone on. If we were to analyse the complaints made against prison officers, a substantial number are from black and Asian prisoners. Will the Minister ensure that the Home Secretary's Statement, which is fairly positive in the action that needs to be taken, is reported widely in the ethnic minority press so that sympathy is given to those families who are worried about their relations in prison?
Lord Williams of Mostyn: My Lords, yes, we have the benefit of the immediate and, I hope, long-term consequences of the Macpherson recommendations in the context of the Stephen Lawrence inquiry. As the noble Baroness said, there are many lessons to be learned from that inquiry which are not limited to one police service; namely, the Metropolitan Police.
I agree that machinery is important. The prison ombudsman, to wham I pay tribute, is just retiring. As his retirement request—not simply the last meal of the condemned man—he asked the Home Secretary and myself whether his terms of reference might be extended. We agreed.
The noble Lord. Lord Dholakia, said that this is a very damning report. It is. It is fair to say that the chief inspector said that there are a number of alternatives
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The first is immediate closure. I do not think that anyone suggests that realistically at this time, but I stress what the Home Secretary said. He is not closing off any options; and he means it. The second was to change managers. But, as Sir David says at P14 of his preface, almost all the governor grades are new, having been brought in recently by the governor. The governor has been there only since March 1998; and we have a new area manager as well. So all those in effective management positions are new. He spoke about market testing, which I have dealt with. He spoke about partial closure and staff retraining. Two wings have been decanted so that the population has gone down from 1,100 or so to 700 or so. He raises the question of changing the role of the prison. That is a more long-term question; I think that he wants immediate issues focused on first. But we must take seriously those five options which he puts forward.
As regards reporting, Sir David and Mr Martin Narey, as the new director general, are having joint press conferences. Had it not been for the fact that I was required to repeat the Statement here, we had agreed that the three of us should be present as an indication of the way in which we all three mean business. I repeat what Sir David has said not in any sense of self-exculpation. During every conversation I and Martin Narey have had with him we have said that we shall support him when he finds wrong-doing and we shall do our utmost to put things right. If we set a 30-day target, we requested him to produce another report in six months which Jack Straw says will be published.
That was not the position in the past. As regards the period going back to 1991, I shall not make any partisan observation. I do not know the full details and I am sure that, as always, there is strength in what the noble Lord says. We have been responsible for what has gone wrong and I repeat what Jack Straw says; he takes responsibility. There is no hiding behind the difference between operations and policy.
Lord Merlyn-Rees: My Lords, I declare an interest in that I am vice-president of the Butler Trust, named in honour of a distinguished predecessor as Home Secretary. The trust gives honours and awards on a considerable scale. They are presented every year at Buckingham Palace to people in the Prison Service who do a good job. A great deal of good work is being done within the service and we must not allow this terrible report to lead people to believe that it is typical of the service. It is not.
There is no such thing as a Prisons Minister; there is only the Home Secretary. Whatever is done in the prisons department of the Home Office to divide up the work, the responsibility lies with the Home Secretary and there is no question of him or my noble friend resigning. It jars with me sometimes when in Northern Ireland reference is made to the "Prisons Minister" and the "Police Minister". There is only one person in charge—and that is the Home Secretary.
The question which I hope is being asked is: why has nothing been done since the last report? We can have all the reports on earth, but is there to be a repeat of the situation? Why was nothing done? It is not a political

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question; this is a different government. Why was nothing done about the last report and what can we expect from another report?
Lord Williams of Mostyn: My Lords, the noble Lord, Lord Merlyn-Rees, is right about the Butler Trust. I attended the presentation of the awards this year when the Princess Royal gave the awards commending people. It was humbling to see the excellent work that was done. I took my hat off to those people—and not for the first time. That is why I slightly chided the noble Earl, Lord Longford, for saying that it is the most appalling job in the world. People of the kind identified by the noble Lord, Lord Merlyn-Rees, make me certain in my belief that it is not the most appalling job in the world. It is difficult and challenging, but good people do it well.
The noble Lord is right about the shorthand that is used. When I watched the Home Secretary's response to questions in another place, he made that very point. He said, "I am Secretary of State at the Home Office. The responsibility is mine." That has not always been the position.
The noble Lord asked why nothing was done about the report. It related to an inspection in the autumn of 1996. I do not know what happened, but it was not published until 21st March 1997. I shall not tease, but I shall allow myself this: it was the last day of the Sitting of the previous Parliament.
Lord Geddes: My Lords, I may have misheard the Minister's reply to my noble friend Lord Cope, but I thought that when rejecting the suggestion of a public inquiry, the Minister, who is normally very careful with his words, said that it may well be that police inquiries are not concluded. I did not understand whether ongoing inquiries have not been concluded or will not be concluded. The answer could be interpreted either way.
Lord Williams of Mostyn: My Lords, I am probably trying to be too careful, conscious of the fact that 25 officers at Wormwood Scrubs have been charged with offences involving assaults on prisoners. More than 25 allegations are being made and others continue to be made by solicitors representing other prisoners. That was all I wanted to say. I must be extremely careful because it would be ashes and dust in the mouth if any trial were prejudiced, or could be prejudiced, by anything incautious I said. I think that I was being too Delphic, but that is the explanation for it.
Lord Mishcon: My Lords, as one who had the privilege of being professionally associated with the Prison Officers Association for many years, perhaps I may comment briefly on what the Minister has said. During that time, I came across a number of real idealists and I was proud to know that they were part of the Prison Service, and they were proud to be members of it. Perhaps I may do something which is sometimes objectionable, but not in this case. I should like to pay a special tribute to a great idealist whose name has been mentioned, Mr David Evans, general secretary of the POA.
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It has been asked why a previous report has not been implemented. From the contents of the report, it seems that major items of complaint—and they are terrible—would have been as obvious as a running sore to anyone who carried out any inspection. I understand why a report may not have been implemented, although it is regrettable, but what about inspections in the mean time after the realisation that a report had stated that many things were very wrong at Wormwood Scrubs? How frequently do ordinary inspections take place? If they have been too meagre in the past, is it part of the Government's plan to put things right and to introduce regular inspections which are not announced beforehand, and not only by the Chief Inspector of Prisons once every so often?
Lord Williams of Mostyn: My Lords, my noble friend Lord Mishcon has had this interest for many years. He was the founding drafter of the charter of the POA a very long time ago. I pay tribute to David Evans, the general secretary. I have been interested in prisons since long before the election and frequently discussed these matters with him. The work done by the race relations committee of the POA is first rate and we have a great deal to learn from it.
There was a running sore in 1996. The noble Lord, Lord Mishcon, is right to ask whether inspections are sufficiently frequent. I suspect, although I shall correct it if I am wrong, that one would be looking for an inspection every two years or so. But that is not the end of the matter because one is speaking of the chief inspector's inspections. It seems to me that inspections by area managers and ultimately by the deputy director general are also of extreme importance. We are focusing on that aspect because the area manager can visit on a more regular basis. Self-evidently, it is part of his job to manage those governors and prisons within his area. That is an issue which we have very much in mind.
Similarly, we have divided up the organisation of prison matters. The new deputy director general, Phil Wheatley, who is certainly extremely vigorous, well informed and active, is to have operational responsibility, which means of course the oversight of area managers' inspections.
My noble friend also raised the question of unannounced inspections. The last one, by Sir David and his team, to whom I pay full credit, was unannounced. I have myself been on unannounced visits. After the first half-hour it is quite plain that somebody's telephone has been ringing. In my case, all it led to was a request to the Private Office for a photograph so that I might be easily recognised at the gate and there would be even more warning of an unannounced inspection. Unannounced inspections have their virtues, but I am not sure that they would solve all our problems.
We must recognise management's duty to manage. One cannot simply rely on the great inspections. In the same way, in the schools context, one cannot simply rely on Her Majesty's Inspectors of Schools to turn up, because all the pupils tend to be on good behaviour, with the teachers quaking. What one needs is something much more focused and involved, which we must get in the Prison Service and which Martin Narey and

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Phil Wheatley are determined to have. They have absolutely the full support of Jack Straw and myself in everything they want to do, not only to put Wormwood Scrubs right but to remedy any other deficiencies that are found in the Prison Service.

Greater London Authority Bill
5.21 p.m.
House again in Committee.
Schedule 5 [Procedure for determining the Authority's consolidated budget requirement]:
5.20 p.m.
Lord Whitty Lord Whitty moved Amendment No. 213B:
Page 197, line 5, leave out from ("of") to end of line 6 and insert ("the Mayor and the Assembly, in accordance with the following provisions of this Schedule, to prepare and approve for each financial year—").
The noble Lord said: This is a straightforward, minor amendment which is consequential to an amendment made to Clause 29 at the Commons Report stage. Clause 29 now provides that any function of the authority is exercised by the mayor unless specified otherwise. The amendment clarifies that the duty of preparing the GLA's budget is shared between the mayor and the assembly, in accordance with the schedule. I beg to move.
On Question, amendment agreed to.
Lord Tope Lord Tope moved Amendment No. 213C:
Page 197, line 48, leave out ("February") and insert ("November").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 217A.
We have now moved to Schedule 5, dealing with the process for the preparation of the budget. The purpose of the amendments is to bring the budget cycle forward. It is our view that budget preparation is not just a financial and administrative exercise in a public body such as the GLA or, indeed, any local authority; budget preparation is very much a political exercise as well. I deliberately say "political" with a small "p", because it is about determining policy priorities and should be part of a much wider public debate.
Recently we suggested that the so-called "state of London debate" should be used as part of the public debate on the budget process to help the mayor to determine her or his priority policies so that they can be properly reflected in the budget. This process needs time. If we are to have proper and effective consultation with the various component parts of London—by which I mean not only London borough councils and the City of London, but also the many voluntary and business organisations which have an interest—that needs time to achieve, and it certainly needs time if it is to have any real influence on the budget preparation, reflecting the priorities.
To do all of that in February, when one has a shotgun against one's head, is much too late, so we suggest in Amendment No. 213C that the mayor should be
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presenting the draft on or before 1st November. Incidentally, it ties in with the time when we think there should have been the state of London debate. Whether or not the debate has that title, I am sure that the assembly will have a similar public debate. In that way, there can be an open and meaningful process with Londoners, both in their representative bodies and more widely, determining priorities so that a budget can be drawn up—that is, as far as it is ever possible to reflect that process.
Amendment No. 217A suggests that the final budget should be approved by the last day of November. On reflection, I think that is probably rather too early, especially if the Government persist in having the RSG settlement as late as they currently do. The announcement is usually at the very beginning of December. I have to say in parenthesis that having that statement as late as it is now is causing enormous difficulties for those of us running authorities that want to undertake full and effective public consultation and are forced to do so over the Christmas period. The purpose of all of this is to bring forward the process to enable a much more open and public debate.
This process affects the London borough councils and their own budget preparations. It may well be argued rightly, that the GLA budget and the GLA precept are not part of the London boroughs' budgets; and they are not. Earlier this afternoon we were discussing the question of pinning the blame—perhaps that is the expression to use, given the nature of some of our debate—or at least clarifying what is a GLA budget and what is a London borough council budget. But the fact remains that London borough councils determining their budgets for the forthcoming year, in particular determining the likely council tax increase for the coming year, will want to have, and certainly should have, account of the overall tax burden which will be put upon their taxpayers.
Therefore, it would be important for the London borough councils also to know the likely—or, preferably, definite—level of the GLA precept at an early enough date to be able to influence their own budget decisions, should they so decide. February is much too late.
So the purpose of the amendment is to test whether the Government seriously share our views about budget-making being an open and transparent process, an involving process, both with the London borough councils and, at least as importantly, with London's communities, and whether they are serious about giving the mayor an opportunity to respond to the views that he or she hears at that time and having time to take them into account before presenting the budget finally to the assembly. I beg to move.
Lord Dixon-Smith: The noble Lord, Lord Tope, makes a plausible case for moving the budgetary process of the Greater London Authority forward to an earlier date, but, as we found earlier this afternoon, the problem lies in the detail. A move from 1st February, the date in the Bill, to 1st November would move the Greater London Authority's budget decisions back to before the end of a normal parliamentary Session, and certainly, as

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the noble Lord himself pointed out, to before the Government have made their support grant announcements. That is not likely to lead to a practical budgetary process for the Greater London Authority, unless the Government are prepared to commit themselves to change their ways.
I think I am right in saying that the noble Lord has experience only of budgets within London. If he had had county experience, as I have had, he would know that one becomes used to the pressures that arise on a precepting authority, as the county council is and as the Greater London Authority will be, and then the precept effect on the boroughs and their equivalent, the district councils, in county areas. That is the reality of this particular amendment.
Nevertheless, we all wish to see the budgetary process going ahead at an earlier stage, if achievable. So while I cannot support the detail of the amendment, I look forward to hearing the Minister's reply. The principle is correct, even though the detail may be in error.
5.30 p.m.
Baroness Farrington of Ribbleton: As the noble Lord said, Amendment No. 213C would require the mayor to present the draft consolidated budget to the assembly by 1st November rather than by 1st February as provided in the Bill. But, as he acknowledged, the amendment would also bring forward the deadline for approving the budget, so the timetable for the budget process would not be extended.
Although I can see that November may have been chosen to coincide with the provisional local government finance settlement, it is difficult to believe that the noble Lord is arguing that the GLA's budget should be fixed before its grant allocation is finalised. That would make no sense at all. As he recognised, the provisional settlement is announced in December rather than November, leaving the mayor and assembly to work without even provisional grant figures.
In response to his comment about the timing and December being too late, I should say that this year we announced overall provisions for local authorities for the next three years, which should help local authorities to plan their expenditure.
Although the mayor and assembly would be required to complete their respective roles in setting the budget before the end of November, the deadline for setting the budget requirement and issuing a precept to billing authorities would remain unchanged—the last day of February.
I cannot agree that the deadline for either the draft or the actual budget should be brought forward. The GLA, like local authorities, must be able to take account of the local government finance settlement in setting its budget. The mayor is required to consult the assembly before finalising his draft budget and we expect that much of the work will take place long in advance of the steps required in Schedule 5. In fact, I should be surprised were the mayor and assembly not to reach a
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fairly firm view of their budgetary priorities in December, when the provisional settlement is announced.
For those reasons, I hope that the noble Lord will feel able to withdraw his amendment.
Baroness Hamwee: I was glad that the noble Lord, Lord Dixon-Smith, ended his series of "buts" with an acknowledgement that the various elements of the cycle may deserve some examination. Whether our proposed dates are right or wrong, I am sorry that the noble Baroness did not acknowledge that it is worth pausing to consider whether what is proposed here is a practical or, one may argue, the best proposal.
I say that in the light of what the noble Lord, Lord Dixon-Smith, said about the pressures under which the counties are accustomed to work. Of course, a few years ago, the London boroughs were accustomed to having to reflect the GLC's demands and there are still precepts with regard to the police and so on. Just because that awkward situation exists in the counties and districts outside London, should those difficulties necessarily be replicated in London? We believe not.
Throughout the passage of the Bill, the Conservatives have argued forcefully that the position of the boroughs—and I paraphrase—should be paramount. This amendment does not seek to suggest that one set of bodies should take precedence over another. But we acknowledge that one of those sets of bodies—that is, the boroughs—is in a position which needs to be recognised, both with regard to the work which must be undertaken at borough level during the heat and hard work of setting the budgets towards the end of the calendar year when the settlement is announced and in what is a fairly frantic period over Christmas and the early part of each new calendar year.
We are very much aware that any borough which wishes to do that job properly cannot do so, sitting in its own town hall, without having a dialogue with the residents. The establishment of the GLA will create the need for an extra element of that dialogue. We are keen to make sure that it is an effective dialogue.
Baroness Farrington of Ribbleton: I am sorry that the noble Baroness feels that I did not respond to the point that was raised. I referred to the fact that we should fully expect a great deal of work to take place in advance of those steps being taken. We are talking about the framework of the Bill as opposed to the establishment of good practice, which will quite clearly allow for earlier discussions.
However, I return to the point regarding the announcement of the RSG settlement. To require the GLA to establish its programme within the law at a much earlier stage may put it at a disadvantage and, I argue, may quite inadvertently create those problems for the boroughs which the noble Baroness fears and which we all seek to avoid. Quite dramatic changes may need to be made in the circumstances. Therefore, the boroughs may be working on a false assumption.
Baroness Carnegy of Lour: Will the noble Baroness remind me whether the Government can announce the

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local government settlement when Parliament is in Recess? This amendment would mean that the Government would have to alter their habits and bring forward the announcement to November. Parliament is often in Recess well into November. Does Parliament have to be sitting when the announcement is made? Is it approved by the House of Commons?
Baroness Farrington of Ribbleton: I speak from recollection, and I shall write to the noble Baroness and correct it if I am wrong, but I believe that the final approval of the settlement takes place in February. The figures announced at the end of November or in December are for consultation. To be fair to the noble Lord, Lord Tope, his amendment does not propose to change the date of the RSG, although I recognise that we are trampling on yet one more of the dreams of the noble Baroness, Lady Hamwee.
Baroness Carnegy of Lour: The noble Baroness need not write to me. I just wanted to be sure that the settlement could be announced when Parliament was in Recess, if that became necessary. It sounds as though that is possible, if is only for consultation. I am sorry if I am confusing matters. I just want to be sure that there is no impossible implication for government in this amendment. It sounds as though there is not. I do wish the noble Baroness to write to me about that.
Baroness Farrington of Ribbleton: I am sorry if I did not make myself clear. The final settlement, which is subject to the affirmative resolution procedure, is not until February. The noble Baroness asked me about November.
Lord Tope: I can only say that the Minister has been too long out of local government. She is right to say that the RSG announcement made at the end of November or early December these days is an announcement for consultation purposes, at least in theory. I imagine, therefore, that it could be made when Parliament is not in Session, although I would not propose that it should be.
The consultation period then lasts through December until either late December or early January. At that point Ministers presumably make up their minds and most authorities find that their final settlement has changed from the original suggestion by £2,000 or £3,000 on a budget of several hundred million pounds. That is the process.
The noble Baroness is also correct in that I do not propose in these amendments to change the date of the announcement of the RSG settlement. It is probably outside the scope of the Bill to do so. Were it within the scope of the Bill, I would certainly propose that we should change the date of the settlement; that is, to have the announcement n late November/early December to be able to carry out proper and effective consultation with voluntary groups, local residents, local businesses, and so on, over the Christmas period. That is something we have attempted every year for the past seven or eight years. Even giving due warning of such meetings, there
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is still insufficient time available and an impossible deadline to meet. None of that is the purpose of the amendment.
Of course, I accept that the mayor cannot propose, and the GLA cannot decide, the budget for the year without knowing what the RSG settlement will be. However, the date of the RSG settlement announcement is not laid down by some immutable law of nature; it is laid down by the Treasury. If an amendment in the Bill was to have the effect of moving in the direction in which I wish, I would propose it even more fervently than I do now.
The dates suggested here—November rather than February—are negotiable. I would not go to the wall if the Minister said, "We cannot accept November but we might accept December or an earlier date than February". I expect that we would be both pleased and surprised. The purpose of the amendment and the theme I was trying to explore is the need to give more time for effective public consultation in the budget preparation. I accept the comments of the noble Baroness that there will be many private and public discussions long before February in the course of budget preparation. Once a deadline is put in an Act of Parliament, that tends to be the deadline, and most of us inevitably work to deadlines. I fear that we shall be stuck with a deadline which, in my view, even with the RSG settlement remaining as it is in terms of timetable, gives a period of time which is much too short and tight for effective work on a budget.
The noble Lord, Lord Dixon-Smith, referred to the fact that I have only London experience and have not enjoyed the delights of county and district government. That is correct, but perhaps I may remind the noble Lord that I served for 12 years on a London borough council when we had the Greater London Council, which also levied a precept upon us. That was at times both exciting and interesting. I believe that process is similar. Therefore, I do have some experience of this and I can assure him that not having a precept levied upon one by a county council, or in this case the Greater London Authority, does not make it any less stressful at budget time. It makes it hard, perhaps, to find someone else to blame, but usually the Government serve for that.
I believe that I have raised the issue. I suspect that we shall return to it, perhaps with a little more of the detail for which the noble Lord, Lord Dixon-Smith, is looking. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Lord Tope Lord Tope moved Amendment No. 213D:
Page 198, line 17, at end insert—
("(1A) The Assembly shall take such measures as it consider, necessary to consult the bodies and persons referred to in subsections (2) and (3) of section 27 on the draft consolidated budget prior to its consideration by the Assembly.
(1B) The consultation arrangements referred to in sub-paragraph (1A) above may include surveys, opinion polls, public hearings, citizens' juries and referendums.").
The noble Lord said: I rise to move Amendment No. 213D which stands in my name and that of my noble friends. This amendment returns to the same issue of trying to encourage and, indeed, to require a more open budget consultation process. In practice, I suspect that much of this will happen. I certainly hope that it will if we have the assembly we should have, and that the mayor, at any rate, would wish to do it.
As I stated when moving the previous amendment, it is enormously important that the political priorities of the mayor are fully and properly debated, discussed and determined so that the mayor, in proposing his or her budget, knows the expectations not only of the London borough councils but also of the other groups listed in Clause 27 of the Bill and, indeed, of Londoners generally.
The purpose of the amendment—perhaps more directed than the previous one—is to draw out from the Government whether or not they share our views about the budget process and the need for that very open and full consultation process and, if they do, what steps they will take to encourage or require the assembly and the mayor to carry out such steps. I beg to move.
Baroness Farrington of Ribbleton: This amendment would place an express duty on the assembly to consult the same list of bodies (as the mayor is required to consider consulting before exercising the general power) about the mayor's draft budget before considering it at a public meeting. This amendment raises the important issue of consultation on the GLA's budget. We have, of course, already considered consultation at great length when debating the consultation provisions in Clauses 27 and 34.
We cannot imagine that the mayor, if he or she thought it appropriate, would not want to test public opinion about the proposals for forthcoming expenditure by the GLA and the functional bodies. The amendment would place an express duty on the assembly rather than the mayor to carry out this consultation. I think it much more likely that the assembly would want to take its own soundings on public feelings on budgetary priorities long before it reaches the mayor's draft budget. As we have discussed, the timetable for the budget process is inevitably tight. Waiting until the mayor's draft budget to carry out consultation is, as the noble Lord acknowledged, unlikely to be feasible.
An express duty to consult a specified list of bodies on the GLA's proposed budget, regardless of whether it is placed on the mayor or the assembly, would appear to be unduly prescriptive. The mayor will, of course, already be under two very important incentives to test Londoners' support for his budget proposals. The first is the ballot box. Secondly, under the provisions of the Local Government Bill, the Government will be able to take account of local people's support for the GLA's budget in deciding whether or not to use its reserve powers to regulate excessive council tax increases. We suspect that those two factors will certainly be in the assembly's mind as it considers the mayor's draft budget and approves the final version
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I am sure that the assembly, too, will want to take account of public views when considering the draft budget. I would expect it to do that in the usual ways: for example, by holding public meetings, or by constituency members consulting electors in their area. Again, we feel that a specific duty is unnecessarily prescriptive. I am aware that one woman's prescription is another person's necessary discipline. We appear, occasionally, to use the same terms in a slightly different context. On this occasion, I hope that the noble Lord will feel able to withdraw the amendment.
Baroness Hamwee: Before my noble friend responds, perhaps I may say that, yes, indeed, in tabling paragraph 1B we were looking forward to hearing our arguments about prescription played back to us. They may come back across the Chamber at another point in the debate.
Paragraph 1A inserts a duty; paragraph 1B sets out the possible methods of consultation. Sadly, we can imagine that the mayor may not want to test public opinion on the draft budget. Can the Minister confirm that the assembly will be entitled to do so?
Baroness Farrington of Ribbleton: Yes.
Lord Tope: I am grateful for that. It is a strange irony that the Minister is now suggesting that I and my friends are being over-prescriptive, given the comments that we have been making and will continue to make throughout this Bill. But that irony was not lost on the Minister in making those comments.
I question whether we are being over-prescriptive. The amendment relates to Clause 27 and asks that,
"The Assembly shall take such measures as it considers necessary to consult",
as stated by that clause, with,
"any London borough council; the Common Council; and …

(a) voluntary bodies some or all of whose activities benefit the whole or part of Greater London;

(b) bodies which represent the interests of different racial, ethnic or national groups in Greater London;

(c) bodies which represent the interests of different religious groups in Greater London;

(d) bodies which represent the interests of persons carrying on business in Greater London".

That is who we require the assembly to consult. To borrow the Minister's words, it is inconceivable to me that an assembly doing its job properly in considering the mayor's budget would not do that. It puzzles me why the Government are not prepared to require the assembly to do just that and, instead, suggest that it is over-prescriptive. That comes from a government who told us the other evening that they require the mayor to have two political advisers and 10 members of staff, whether they happen to be full or part-time. That is not over-prescriptive. But to require the assembly to consult the people as the Government laid down in Clause 27 is over-prescriptive.
The Minister said that what is or is not prescriptive is in the eye of the beholder. We have an excellent example of that now. This is not the time to press this further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 214:
Page 199, line 31, leave out sub-paragraph (3) and insert—
("(3) The final drat t budget, with or without amendment, shall be the Authority's consolidated budget for the year if approved by a majority of the Assembly members voting.").
The noble Lord said: With the leave of the Committee, in moving Amendment No. 214, I shall speak also to Amendments Nos. 215 to 219.
As drafted the Bill creates a situation which makes it possible for the mayor to pass a budget with the support of only one-third of the members of the assembly. That is the implication of the requirement for two-thirds of the assembly to vote for an amendment in the final draft.
Amendment No. 214 seeks to allow the elected assembly to provide proper checks and balances upon the mayor's budgetary powers, restoring accountability and helping to prevent possible financial irresponsibility. The Bill gives virtual dictatorial powers to the mayor and the assembly is almost powerless to intervene in the budget-making process. No assembly of which I am aware has ever had less power in a democratic country.
The Government's White Paper on London said that the assembly,
"must be much more than a talking shop"—
paragraph 1.14. Again, in paragraph 3.6 of that White Paper the Government said that,
"the assembly will provide an essential check and balance to the power of the mayor".
The budgetary procedures in the Bill as currently drafted make a mockery of those promises. The assembly could not be a check or a balance on the executive power of the mayor in this instance; it could only be a puppet.
If the Government do not accept Amendment No. 14—it is fairly moderate, requiring only that the mayor obtain a simple majority to pass a budget—it will prove what many of us fear—that while New Labour may preach democracy, in reality its policies are those of control. These amendments put the GLA's budgetary provision on a normal democratic footing in line with the position in any other authority. The propositions on the face of the Bill are the equivalent of allowing the Chancellor of the Exchequer to bring to the House of Commons a budget which could be passed with a two-to-one vote against it. I cannot imagine the furore that would be created if a legislative proposal was introduced to make that possible. But that is what we are being invited to consider in this Bill as drafted.
Without these amendments, the Government's promises of democratic accountability in the budget-making process of the Greater London Authority will not be fulfilled. I await the Minister's reply with interest, but this may be a matter which will cause some difficulty. I beg to move.
Baroness Hamwee: We have a lot of sympathy with this set of amendments. We, too, find it quite wrong to put the mayor in a position where it will be difficult for the assembly to overturn or alter the budget. We tabled an amendment in the next groups which contains a similar thrust. We, too, would like to see the assembly voting on the basis of a simple majority with regard to the draft budget.
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Perhaps I can ask one or two questions for clarification. The noble Lord, Lord Dixon-Smith, moved Amendment No. 214, which seeks a simple majority in respect of paragraph 8(3), the approval of the final draft budget. I do not believe that his set of amendments proposes a change to paragraph 8(4) which deals with amendments. I am not sure therefore whether or not he is proposing that amendments require a two-thirds majority and the final draft budget a simple majority.
In connection with Amendment No. 217, which proposes the duty contained in paragraph 8(7) to approve the final draft budget, is that to be a duty of the authority rather than the assembly? The authority embraces the assembly and the mayor. I am not entirely clear about the comparative roles of the two entities—if I can call the mayor, masculine or feminine, an entity. But the principle point of the amendments, which is that the Bill should not create a situation which is close to unworkable, should be retained.
Baroness Farrington of Ribbleton: This group of amendments seeks to alter the assembly's role in approving the GLA's budget. The intention appears to be to ensure that there is no prospect of the assembly failing to vote on and approve the GLA's consolidated budget. As drafted, Schedule 5 allows for the possibility that the assembly may fail to approve the mayor's final draft.
The next group of amendments—the noble Baroness, Lady Hamwee, referred to these—give me an opportunity to explain how the procedures in Schedule 5 have been carefully designed to give the lead to the mayor, to provide a proper role for the assembly, to avoid deadlock and to ensure that a budget is set. It would not be acceptable for the assembly to decide the GLA's budget by a simple majority. That would be entirely out of kilter with the respective roles of the mayor and assembly. The details of paragraphs 8 and 9 of Schedule 5, which this group of amendments seeks to alter, are the end of a carefully designed process which needs to be considered as a whole.
While these amendments purport to give the assembly greater power, they could in fact lead to deadlock, with the GLA having no budget at all if the assembly failed to vote or agree on the mayor's final draft by the end of February. The noble Lord, Lord Dixon-Smith, said that was not a normal process and made a direct comparison with local authority structures generally. He wanted to stop the assembly being a puppet. The noble Lord fails to recognise that the entire procedure is based on a different model—one that gives the assembly a strong role in scrutiny, and executive powers to the mayor. Those powers are not dictatorial but are part of a new structure in a new system.
The noble Baroness, Lady Hamwee, referred to one reason that the amendments are defective, when she referred to paragraphs 8(3) and 8(4). For that reason also, the amendment is not acceptable and I urge the noble Lord to withdraw it.
6 p.m.
Lord Phillips of Sudbury: Before the Minister sits down, may I ask—I hope not unfairly—whether she is aware of any precedent for such a majority?
Baroness Farrington of Ribbleton: It would be difficult to draw on a precedent when the proposal before the Committee is a totally new structure.
Lord Phillips of Sudbury: I was thinking in terms of other democracies, where the division of powers that is prevalent in the Bill is common enough—but I know of none where a two-thirds majority is required.
Baroness Farrington of Ribbleton: At this stage, I bow to the noble Lord's greater knowledge. If I can find a way of demonstrating greater knowledge than his, I shall do so in writing.
Baroness Young: Listening to the Minister, I was slightly surprised at the arguments that she adduced against my noble friend's amendment. She started with the proposition that the assembly was quite unlike anything else in local government. That statement is one with which we can all agree—although a great number of alarm bells will ring in my head if the assembly is taken as a model for other towns that might have directly elected mayors, because the precedent is most undesirable. I was glad to hear what was said by the noble Baroness, Lady Hamwee.
The Minister said in defence of the assembly that it is not similar to anything else. She then explained that the whole London procedure is different and that that the powers given to the mayor are a new structure in a new system. That may be a statement of fact, but it is not an argument in support of giving the mayor what are effectively dictatorial powers over the budget. We all agree that the budget will be the most important thing for the mayor. The budget is the most important thing for any organisation. If the mayor can ultimately overrule the assembly, that cannot possibly be regarded as democratic. That may be different and new, but it is certainly not democratic in relation to anything in local government that I have come across—and not democratic in relation to other constitutions. It sets a dangerous precedent.
It may be that the amendments are not correctly drafted, but they raise an important principle. I hope that the Government will look at all this again.
Lord Brooke of Alverthorpe: There are a variety of reasons for introducing change to London—not least the fundamental issues of democracy and efficiency. One problem we have in local government is that democracy is in an ever-downward spiral with regard to the accountability to the electorate of those elected. The proposed change relates to efficiency, but also to democracy for London, with the aim of getting a greater number of people involved in a new type of democracy compared with the traditional model used in local authorities and county councils. That change requires the Government to introduce through Parliament new structures to create a balance between the elected assembly, mayor and electorate.
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The budgetary approach will, of course, be important. It is impossible to envisage a situation in which, in year one, there could be a complete stalemate between the mayor and the assembly, with the matter sent back to the public, who we hope will vote in significant numbers.
I hope that people are prepared to be bold and will try to understand the new structure, with its attempts to introduce greater democracy on a larger scale as well as producing a more efficient operation than in the past. I hope that the Opposition will withdraw their amendment.
Lord Birdwood: I appreciate the Government's motivation in trying to create a structure having a high degree of lubrication, which majority voting would achieve. I cannot think of the social dynamics of a body that would find it in its heart to oppose nearly every budget put before it.
I have some intellectual curiosity about whether the proposal was a pure creation from the Pandora's Box of the government draftsman; or was a model from anywhere else in the developed world used as a template?
Baroness Carnegy of Lour: It was refreshing to hear the noble Lord, Lord Brooke of Alverthorpe, describe some of the thinking behind the Bill because it assists those of us on these Benches to hear other than members of the Government Front Bench explain something so new and different.
Is it the idea that the mayor's budget will get a fair wind and be amended only if it has something badly wrong with it in the view of the electorate? My experience of a two-thirds majority is that which I had to operate on an education committee if we had to dismiss a teacher. It is difficult to achieve a two-thirds majority on a council when one is not dealing with a matter of party politics.
The assembly will be elected by proportional representation, and that, in addition to the two-thirds majority, will make it difficult to amend the budget. Is it the idea that the mayor should get away with it unless there is something so pressingly wrong with the budget that it is possible to assemble a two-thirds majority against it? That is the only reason that I can think of for the Bill being constructed in the way that it is. As my noble friend Lady Young said, that is not the normal way to approach a democratic decision in local government.
Baroness Farrington of Ribbleton: The word "democratic" is used by different people in different ways. The framework of the structure put to Londoners in the referendum embodied an executive mayor and an assembly with the primary task of acting as a body of scrutiny, but also of serving in various capacities on bodies working within the overall strategy established by the mayor.
Within that concept, it is important that there should be a separation of powers between an executive mayor and an assembly. It is entirely right that an executive mayor should be in the lead in deciding the GLA's budget. We are very concerned to ensure that there is no deadlock, which would leave the GLA with no budget. There needs to be a means of setting the budget in the extremely

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unlikely event of the mayor failing to set one. Schedule 5 accommodates such factors. As the noble Baroness, Lady Carnegy of Lour, said, it is difficult, but not impossible, to get a two-thirds majority. It involves people thinking very seriously and coming together. That is an important feature of the proposals before the Committee.
The noble Baroness, Lady Young, raised the issue of how we had developed this particular model. It is not a model based on a rigid blueprint which has been transposed from one place to another. Indeed, it comes from looking at a variety of different models and different relationships that exist between directly elected mayors and assemblies or councils of one sort or another, both within Europe and the United States of America. We believe it is important for the assembly to be able to participate in, but not dominate, the budget process.
The procedures set out in Schedule 5 will allow the assembly to have a real influence on the level of overall spending, on the level of spending by each of the functional bodies, and on spending on different services. We believe that the proposals before the Committee get that balance right.
Baroness Young: I am sorry to intervene once again, but I must say that I was very surprised to hear the Minister call the referendum in aid of her argument. After all, only 34 per cent of Londoners voted for this. The idea that everyone who voted actually voted for a mayor and an assembly with these particular powers is beyond belief.
Baroness Farrington of Ribbleton: The party of the noble Baroness and that of the noble Baroness, Lady Hamwee, and the noble Lord, Lord Tope, certainly did all they could to raise the models that they wished were before Londoners. In every election—be it a European parliamentary election or a referendum election—the parties claim victory with a majority of those voting in support of their arguments, whether the percentage is 15 per cent, 12 per cent or 35 per cent.
6.15 p.m.
Lord Dixon-Smith: I pick up on the last point. We are saying that it should be the majority of those voting who give the final approval of what is to happen. Surely that applies equally to the budget and to everything else. Perhaps I may return to where the debate began. However, before I do, I should like to say that I am most grateful for the support I have received from Members of the Committee on this side of the Chamber.
I should point out to the noble Baroness, Lady Hamwee, that the amendments we propose would make it possible for a simple majority to vote both for amendments to the budget and, indeed, for the budget. But at the end of the day it is the duty of the authority—and the authority in this instance is the mayor and assembly acting together—to approve the budget.
The extraordinary feature about Schedule 5 is that it appears to sanction a budgetary procedure which admits that there can be failure and allows a budget to be approved which does not have the approval of the authority—only the approval of the mayor. I think that that is quite unprecedented—new authority, or no; new
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system, or no; new democracy, or no. The Minister admitted that the whole process could lead to deadlock. This is a new model and a different model. To me, it is a very strange model of democracy. I find it absolutely unbelievable that the mayor cannot get agreement, or that the mayor and the assembly working together cannot get agreement.
The mayor's powers of patronage over the assembly are perhaps worthy of mention at this point. Out of an assembly of 25 members, the mayor can appoint 12 members to the police authority, nine members to the fire and emergency planning authority and four members to the London Development Agency. Eleven of the 25 members of the assembly are elected from party lists, which, I suppose, might just be an embarrassment to the mayor. However, it seems quite unlikely that the assembly will not have a majority of members from the party of the mayor, unless he stands as an independent. Of course, politics is always an interesting process.
I do not see how we can accept that one can have a new form of democracy where a minority rules. To me, that is a contradiction in terms; new system, or no. The comparison that I made was not with the normal situation that exists in any local authority's budgetary process, but the process which goes on in the other place over the nation's budget. It seems to me that London is being asked to accept, not that a majority view may prevail, but that the mayor, in this new form of democracy, shall have the right to dictate. That may be acceptable to the Government but I have to say that it is not acceptable to me. We have had a most interesting debate. I shall study with care in Hansard everything that has been said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 214A:
Page 199, line 34, leave out ("two-thirds") and insert ("a majority").
The noble Baroness said: In moving the amendment I shall speak also to Amendment No. 224D. With this amendment we turn to the paragraph in Schedule 5 which deals with any amendments to the mayor's budget. It is for this that we propose a simple majority. We are concerned here with amendments to the budget that we regard as crucial. As we read the Bill, the final draft is a matter for a simple majority. However, there is always the sword hanging over the assembly's head that, if it cannot agree, it is the mayor's budget anyway.
Amendment No. 224D deals with the provision requiring two-thirds of the assembly to agree any amendments to the mayor's draft calculations. In considering the Government's proposal, I wondered whether they were concerned about the mayor's autonomy and flexibility. If so, I think it is rather touching when one considers the very considerable powers on the part of the Secretary of State in the Bill, though admittedly not in this paragraph. I have in mind the powers as regards the overall control, which will work its way through into the budget. I also assume that the Government are concerned to ensure that there will be no frivolous amendments to the budget. However, as was said in the previous debate, if the assembly is to be a real check and balance on the mayor, it must have a realistic opportunity to exercise that duty.
We do not seek overwhelming powers in this amendment. We do not propose that the mayor shall not be in the lead in this matter. I have to confess a degree of admiration for the Government and whoever drafted the proposal in the Bill because, superficially, to achieve acceptance for a measure by two-thirds of the assembly would appear to require the mayor to be persuasive and to take the assembly with him or her on the relevant measure. However, as other Members of the Committee have made clear, to obtain the agreement of two-thirds of the assembly to an amendment will be a difficult exercise, unless, of course, the mayor has gone right off the rails. However, let us assume that we shall not have a mayor who goes completely off the rails. The simple majority which we seek is not, in our view, out of kilter—to use the Minister's words—with the respective roles of the mayor and the assembly. It is out of kilter only if one accepts that there will be a strong mayor and a rather weak assembly.
We also wish to consider what constitutes scrutiny. That, after all, is the assembly's primary role. We do not believe that it is adequate to allow the assembly to articulate its concerns but not to demonstrate them in a vote which will have a real effect. The Government fall back on the argument that the referendum in May of last year provided the detailed framework for the new body. I regard that rather as a fall-back position because, as I believe the noble Baroness, Lady Young, said, one did not expect Londoners who voted at that time to know all the detail of the proposal. In any event, the measure was not a manifesto commitment in the sense of a general election manifesto. We are seriously concerned about the good workings of the new authority. I beg to move.
Lord Dixon-Smith: After the bombardment to which we subjected the Committee in the previous group of amendments, I am delighted to support the noble Baroness on this issue. The measure constitutes a different form of expressing what I have been saying. I am delighted to support the noble Baroness.
Baroness Farrington of Ribbleton: These amendments would completely overturn a fundamental feature of the legislation; namely, that there will be a separation of powers between an executive mayor and an assembly to provide scrutiny.
If I recollect correctly, the position adopted by the party of the noble Lord, Lord Dixon-Smith, was that the only person who should be elected, and therefore have the democratic right to set budgets for London, was the mayor. The noble Lord's party was in favour of an elected mayor but not an elected assembly. Presumably if that had occurred, we would not have had the elected scrutiny body elected by all Londoners.
It is entirely right that an executive mayor should be in the lead in deciding the GLA's budget. However, after the comments made by the noble Lord, Lord Dixon-Smith, it is extremely important to repeat that our proposals seek to avoid deadlock; not, as he said, to create it. There needs to be a means of setting the budget in the extremely unlikely event that the mayor fails to set one.
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Amendment No. 214A would, in effect, give the role of deciding the GLA's budget to the assembly. The mayor's role would be limited to submitting draft and final budgets to the assembly. A simple majority of assembly members could throw his plans out and substitute their own. The mayor would not even have a vote in deciding the budget in those circumstances. The assembly has the ability to influence the mayor. The mayor must consult the assembly before preparing a draft. The assembly may amend a draft by a simple majority. If the mayor's final draft does not include the assembly's amendments to the first draft, the mayor must give reasons why that is the case.
Amendment No. 224D would similarly leave the mayor with no real say in making substitute calculations. An executive mayor who is responsible for deciding strategies must be in the lead in that matter. The procedures set out in Schedule 5 will allow the assembly to have a real influence on the level of overall spending, the level of spending by each of the functional bodies, and on spending on different services.
A power to amend the mayor's budget by a two-thirds majority ensures that there is wide consensus among assembly members that the mayor's budget is significantly flawed in some respects, and, crucially, wide consensus about the changes needed to put things right. Then the assembly will be able to act.
Reference has been made to the political party of a mayor and which party would constitute the majority in the assembly. That is a rather old-fashioned way of looking at the procedure that is to be put in place. A two-thirds majority would comprise people from all parties or none. It has been said that the referendum did not constitute a manifesto commitment. The Government have kept faith with the people. The manifesto stated that the Government would put forward proposals and would give the people of London a referendum on this matter. It is a bit much to say that the Government cannot claim support in the referendum for the proposals that are before us. These amendments are not in line with the proposals that were put to the people of London. I urge the noble Baroness to withdraw Amendment No. 214A.
Lord Dixon-Smith: Before the noble Baroness sits down, I should like to make the following point. Whatever proposals we or my colleagues may have put forward as regards the possible membership of the assembly, the assembly, once in place, will vote on the basis of a simple majority. At that level, at any rate, the process would be democratic. I wish we could stop referring back to the referendum. If the referendum had made clear that the budgetary proposals of the Greater London Authority could emerge without the approval of the authority, or could be passed on the back of a minority vote, I doubt very much whether the people of London would have accepted such a proposal, referendum or not. There is a fundamental disagreement of principle here. As I say, I support the amendments of the noble Baroness. I have heard nothing to persuade me to change my mind.
Baroness Young: Having supported my noble friend Lord Dixon-Smith, I should like to support the noble Baroness, Lady Hamwee. She makes a serious point in the amendment which deserves to be looked at. The proposal

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in the Bill for the separation of powers is based presumably on the separation of powers in the American constitution, on which it is perfectly possible to have deadlock. The separation of powers allows for that in a way that our constitution does not. In order to overcome what is clearly a possible constitutional deadlock, the Government have decided that they will remove the democratic element and say that the mayor will have overriding power.
The noble Baroness said that the assembly will have influence. Yes, it will have influence—but it will not have power. That is the difference. There has always been a fundamental prerequisite of democracy in this country—which has stood the test for a good many years—of no taxation without representation. In London, quite clearly, as my noble friend and the noble Baroness, Lady Hamwee, have made clear, there will be taxation—not through representation through the assembly, but through the one mayor that people may have voted for several years before. To a very large extent he will be able to run unchecked except for this extraordinary two-thirds majority. I think this is an extremely dangerous principle. I have heard nothing this afternoon which leads me to think that the Government have understood the path down which they are going.
6.30 p.m.
Baroness Hamwee: I do not wish to suggest that the Minister is not capable of responding to those points; however, I regard them as unanswerable. The Minister's argument almost seemed to suggest that the assembly may as well have no role at all when it comes to the budget. I am sure we will return to this issue at the next stage. In order that it is again on the record, I shall merely make the point now that we are not proposing that the Minister should not be in the lead; that role still remains.
Lord Tope: The mayor.
Baroness Hamwee: The mayor should be in the lead. It might as well be the Minister. I have written down "M in lead" with not enough gap between the words.
We look forward with interest to all parties and none playing their part and to the whipless culture that that suggests. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 215 to 219 not moved.]
Lord Tope Lord Tope moved Amendment No. 219A:
Page 200, line 5, leave out ("other") and insert ("earlier").
The noble Lord said: I beg to move Amendment No. 219A, which stands in my name and the names of my noble friends.
The amendment refers to paragraph 10 of Schedule 5 which gives the Secretary of State power to change the February dates for the budget, which we were debating earlier, to,
"such other day as may be specified".
The purpose of the amendment is to restrict that power to enable the Secretary of State to amend it to "such earlier day". We debated earlier our view that the
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February dates are already too late; certainly later than desirable. If the Secretary of State has power to make those dates even later, then that becomes even more undesirable.
Paragraph 151 of the Explanatory Notes to the Bill states:
"The purpose of this power is to accommodate any delay to the Local Government Finance Settlement".
In other words, what the Government mean by any "such other day" is any "such later day".
The effect of the GLA setting its budget and its precept any later than the last day of February—without presumably a similar permission for the London borough councils to delay their budget making—and all the consequences that will flow from that, make the whole process a mockery. It would be wrong. We must stick to this deadline at the very latest. We would wish to see the Secretary of State with the power to set an earlier deadline—indeed, we would wish him to exercise that power for the reasons we debated earlier. The Government's purpose in this provision of allowing the date to be later would make any meaningful consultation—even with London borough councils, let alone with the wider London interest groups£impossible. It would make the budget process for London borough councils even more difficult, if not impossible.
We propose that the Secretary of State should have the power to set an earlier date, but certainly not a later date.
Baroness Farrington of Ribbleton: Schedule 5 provides that the Secretary of State may, by order, change the 1st February date, by when the mayor must present his draft budget to the assembly, and the last day of February date, by when the GLA's budget must be finalised, for any other date he may specify. The amendment would remove the Secretary of State's power to specify dates later than the statutory dates in the GLA's budget process, as the noble Lord said in moving his amendment.
The power is needed because the GLA, like other major precepting authorities, will not be able to finalise its budget until it has the final figures for RSG and NNDR (national non-domestic rates) that are set out in the local government finance settlement. The power to amend the GLA's timetable would be used if for some very good reason the settlement were delayed, making it difficult for the mayor to prepare a draft budget and impossible for the budget to be finalised by the specified dates.
The effect of the amendment would be to remove the Secretary of State's ability to specify any revised date. It would be absurd to prevent him from using his discretion in deciding whether to take account of a delay. Surely it makes sense to allow him to decide whether such a delay is serious enough to require him to specify later dates for preparing a draft budget. We are not talking about normal practice but about serious circumstances where it would be necessary for the

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power to be used as a logical move to assist the GLA. For that reason we believe the amendment is unreasonable and ask the noble Lord to withdraw it.
Lord Tope: Before I consider what to do with the amendment, can the noble Baroness say whether the Secretary of State currently has the power to permit London borough councils to set their council tax by a later date than that provided in statute at the moment?
Baroness Farrington of Ribbleton: I am not aware whether the legislation the noble Lord refers to applies in London in the same way as elsewhere in the country. My understanding is that it does not apply. In this case we are talking about the equivalent of county councils as opposed to the GLA. I will write to the noble Lord about whether that power exists in that regard.
Baroness Hamwee: Could the Secretary of State postpone the GLA's announcement, as it were, the finalisation of its budget, beyond the date when the London boroughs have to set their budgets and start sending out bills? I am not suggesting that would be a sensible thing to do, but will it be allowed?
Baroness Farrington of Ribbleton: Even if it were possible in theory it would be ludicrous were it to be applied. It could only be a hypothetical situation.
Lord Bowness: Does it not verge upon the ludicrous to allow the Secretary of State to defer the date from 1st February to an even later date, as is specified on the face of the Bill? There will be enormous difficulties. Rather than a regulation to this effect, it would be more appropriate to place a duty on the Secretary of State to announce the rate support grant at an earlier date in time for people to set their budgets.
Lord Dixon-Smith: I find the debate quite fascinating. Of course the Government will say that they envisage having to use this power only in a particular emergency situation and all the rest of it. I should prefer not see this power on the face of the Bill in order that the Greater London Authority has to approve its budget itself. That would make more sense.
Lord Tope: It would be clearer and, if I may say so, more honest if this paragraph were to say what the Government mean—that is, not "other day" but "later day"—and we were clear that it meant a later day. I am subject to correction, but I think I am right in saying that the deadline by which the London borough councils—and presumably district councils as well although in this context we are talking only about London borough councils—have to set their council tax is determined by the amount of notice that they have to give before the start of the financial year. If memory serves me correctly, it is either 10th or 11th March. Am I about to be corrected?
Baroness Farrington of Ribbleton: Perhaps I may help the noble Lord. The Secretary of State cannot
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change the date by which a precept must be set for the GLA or any other authority, but a precept is not invalid if it is set late.
Lord Bowness: Can the Minister help us? Is there not a statutory date by which the borough councils have to set the council tax rate?
Baroness Farrington of Ribbleton: Yes, we are talking about the precepting authority here and the difference between the GLA and the borough councils. The borough councils do have to set a date.
Lord Bowness: I am grateful to the Minister for that, but bearing in mind that the date is, as I recall, in March, this date of 1st February could be deferred to such a point that it is virtually impossible to call a meeting of the borough council and set the appropriate level for council tax. As I understand it, that is what the noble Lord, Lord Tope, is attempting to point out. He is also trying to point out how impossible life would be if the date of 1st February could be deferred to any great extent.
Baroness Farrington of Ribbleton: We are not talking about deferring it to the point where it would not be possible to set a rate within the legal time; we are talking about circumstances which would be quite exceptional, where it was necessary for this power to be used. We are aware that the period of time necessary for the boroughs to set their rate by 11th March must be reasonable and the Secretary of State must automatically be required to act in a reasonable way. All we are seeking to do is to ensure that there is no problem should very exceptional circumstances arise.
6.45 p.m.
Baroness Hamwee: One of the concerns in my mind, which has grown during the course of this debate, would be what the Secretary of State might do if we find ourselves in the situation where the Secretary of State and the Government are of one party and the mayor is of another. Arguing over precisely what is "reasonable" is not going to help practical decisions. One can imagine the rows that there might be between central Government and the authorities, the two parties to the argument. This provision, which allows the possibility of later date, if not being completely unreasonable, could nevertheless be used in a very mischievous fashion.
Lord Tope: I have concerns about both February dates. As I said earlier, the beginning of February date, is too late to allow for proper meaningful consultations, but that may be forced upon us by what I accept will be exceptional circumstances. However, we are legislating for exceptional circumstances and these provisions are put forward to provide for exceptional circumstances.
I have an even greater concern about the last day of February being the last date by which the mayor is required to produce his or her final budget. I may not have completely understood what the Minister said just now, but I thought she was saying that the mayor would

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still have to levy the precept by the last day of February even if the budget can be delayed by order of the Secretary of State. I am not entirely clear how a precept is going to be levied before we have a final budget. Also, I do not think that I have had an answer to my question about whether the Secretary of State has power elsewhere in statute to amend the last date by which London borough councils have to set their council tax. I believe this to be 10th or 11th March.
Baroness Farrington of Ribbleton: I am sorry the noble Lord did not hear me. I said it is 11th March, and the Secretary of State does not have that power.
Lord Dixon-Smith: I think we are going to pursue this point for some considerable time, but it seems to me that the easy option here for the Government would be to fall back on Clause 26(8) which states:
"The Secretary of State may by order impose limits on the expenditure which may be incurred by the Authority by virtue of section 25(1) above".
Also, the Secretary of State may by regulation do one or both of the following: alter the constituents of any calculation made under subsections (4) or (5) of Clause 70, whether by adding, deleting or amending any items. Subsection (4) in aggregate, if I have understood it correctly, describes the expenditure of the authority. Subsection (5), if I have understood it correctly, describes the income of the authority.
The truth is that the Secretary of State, if he chooses to exercise it, has power to dictate the budget of the Greater London Authority. I would suggest that if the circumstances should become as exceptional as this debate would appear to suggest, he might feel inclined to exercise those powers rather than continue with what might be a difficult problem. I certainly accept that that would cause all the boroughs immense difficulty if in fact the budget of the Greater London Authority were not determined at a sufficiently early date to make it practical for all the London boroughs which are party to collecting the revenue for the GLA to set their precepts, because their precepts have to follow on as a consequence of the GLA's precept, and they cannot be made without it.
I think that perhaps we are slipping in our capacity for joined-up thinking here and we are not looking at the totality of the Bill but only at part of it. I am not sure that is a helpful thing to do, and still less am I certain that the Government would wish to be reminded that they have those powers.
Lord Tope: We are envisaging here exceptional circumstances in which the local government finance settlement is so delayed that the Secretary of State feels it necessary to exercise the powers that this schedule would confer on him to allow the mayor to delay the setting of the final budget beyond the end of February. However, the Secretary of State has no such power to extend the deadline for the London borough councils, which will be affected in exactly the same way by exactly the same local government finance settlement. So I cannot understand why we should be asked here to give greater power in respect of the GLA than exists for
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the London borough councils—power which, if ever it is used, would put those councils in an absolutely impossible situation.
We shall not press this amendment today but we shall certainly return to it. I hope that here we have unearthed a difficulty which I am quite sure the Minister, with her long experience, will very well understand is a difficulty which perhaps the Government, in the drafting of the Bill, had not foreseen. We shall certainly return to this and I shall certainly want the Government to explain to me, as currently a London borough council leader, how we would deal with a situation where the GLA's budget was set only days before we had to set our rate for council tax, or even theoretically after we had set the council tax rate—a situation in which the Secretary of State was actually powerless to help. For the time being, unless the Minister has something urgent to say to me—
Baroness Farrington of Ribbleton: I think there is some misunderstanding. I respect the years of experience that the noble Lord had at the time of the GLC, but he is speaking rather as though the setting of the London boroughs' budgets is dependent on knowing well in advance the amount being set by the GLA. There are two different issues: one is the date by which the Secretary of State would be bound as well, which is the date for legally setting the rate, and the Secretary of State would have to have regard to putting that into effect. But noble Lords from those areas which do not have two tiers of authority are tending to contribute to the debate as though it were essential for all the details to be known before the borough authority could take its decisions. Its decisions are independent. Those decisions and the sum total both have to be included in the levying of the rate at the council meeting. Those are two different issues. I see the noble Lord, Lord Dixon-Smith, nodding his head. I assure the noble Lord, Lord Tope, that it will not be possible for the Secretary of State to use the powers proposed in the Bill in order to prevent the borough council from acting in a legal way.
Lord Bowness: I do not want to delay the proceedings, but, as I understand it, the noble Baroness seems to be saying that not knowing what the precept will be does not prevent the borough council settling its own budget. However, the political reality is that the borough council, since it levies the council tax and actually collects the money, will want to know what the total bill is before it makes its final budget and levies its council tax. I understand what the noble Baroness is saying in theory. However, I do not believe that from her experience of local government, albeit in a precepting authority, she would expect the collector to make final decisions without knowing what the bill would be.
Baroness Hamwee: What action should the boroughs take if they consider that the Secretary of State is behaving unreasonably? We are told that this provision does not allow the Secretary of State to behave unreasonably. I accept that, at any rate for the purposes of this argument. But if there is a query as to whether or not the Secretary of State is being unreasonable, what

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can the boroughs do? One cannot realistically envisage the boroughs going to the court to require the Secretary of State to come out with a decision. I am unclear as to how the provision will operate if there is a real problem.
Baroness Farrington of Ribbleton: The London boroughs will set their budgets and council tax by 11th March. They should also calculate the total council tax by that time, and there is no difficulty. The problem to which the noble Baroness continues to refer does not arise. If the GLA precept is delayed, the London borough will want to set the final tax within the due date, and the information will be available for it to do so. We are not talking about the Secretary of State delaying between 1st February and 1st April. We are talking about only a marginal delay as a result of circumstances beyond anyone's control.
Baroness Miller of Hendon: I hesitate to enter the debate at this late stage, but if we are talking about only a very small matter, I do not know why the Government are unable to accept the amendment. The reference in the Bill is,
"such other day as may be specified in the regulations".
It can mean anything.
Lord Tope: I shall read the debate with considerable interest. The Minister appears to be saying that the GLA can set its precept without having finalised its budget. I suppose that that is theoretically possible, but it would be rather difficult.
Baroness Farrington of Ribbleton: I did not say that.
Lord Tope: The Minister indicates that that is not what she said. Clearly, I need to read the Hansard report of this debate carefully. It seems to me that we are giving the Secretary of State power in relation to the GLA that he does not have in relation to the London borough councils, which will suffer exactly the same difficulties from a delayed finance settlement as will the GLA. We are creating an extremely difficult situation. We tabled this amendment in order to set the dates earlier; but the argument has been about the Government's intentions of enabling the dates to be set later. We have exposed some very real difficulties that will arise in the exceptional circumstances for which we are legislating. I shall read the debate carefully. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 219B:
Page 200, line 5, at end insert—
("Publication
.—(1) The Mayor shall as soon as practicable publish each of the following documents

(a) the Authority's consolidated budget for the year; and

(b) the component budget of each constituent body for the year;

(2) In this paragraph "relevant document" means any document required to be published under sub-paragraph (1) above.
(3) A copy of each relevant document shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.
(4) A copy of any relevant document, or any part of a relevant document, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.
(5) In this paragraph "the appropriate period" in the case of any document is the period of six years beginning with the date of publication of the document pursuant to this paragraph.").
On Question, amendment agreed to.
Schedule 5, as amended, agreed to.
Clause 72 agreed to.
Clause 73 [Calculation of basic amount of tax]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 220:
Page 39, line 26, leave out paragraph (a).
The noble Lord said: After all the fireworks, the noble Lord opposite will be relieved to hear that this simple little amendment is purely exploratory. At present, all national non-domestic rates are distributed through all existing authorities. That includes a subscription which goes to the Metropolitan Police and the London Fire and Civil Defence Authority. It goes to the boroughs and all the local authorities across the land. That is a 100 per cent take-up of the national non-domestic rate. Now we are creating a new authority—and thus more than 100 per cent. But the pool is still the same.
I acknowledge that some of the parts of the Greater London Authority are already receiving national non-domestic rate as a contribution towards their expenditure. To that extent one feels no concern. But we shall now be distributing those funds to, let us say, a further 0.1 per cent of authorities. I am concerned that the 0.1 per cent might cause some difficulty, albeit marginal, to existing authorities. I thought it worthwhile tabling this amendment in order to enable the Minister to do two things: first, to explain what the new arrangements will be for the distribution of national non-domestic rate; and secondly, to demonstrate how the change will not affect any existing local authority in an adverse way. I look forward with a keen appetite to the Minister's response. I beg to move.
Lord Whitty: I was glad to hear the noble Lord describe this as an exploratory amendment. I was slightly unclear about the intention were he to pursue it in a legislative way. It might have been to ensure that the GLA did not receive a share of the non-domestic rate. It is our intention that the GLA should receive a share. In terms of its knock-on effects, the position would be that, if the GLA received a share, that would not have an effect on authorities outside London. In effect, there would be a corresponding decrease in the amount of redistributed national non-domestic rates going to other London authorities. But there would be compensating changes in the RSG entitlement for those authorities. In other words, one would have to look at the total system. We are talking about relatively small amounts.
If the amendment were pursued, the effect would be to increase council taxes throughout London, and potentially to leave the GLA, theoretically at least, with

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an excess of income over expenditure. Clearly, we should not wish that to be the outcome. However, as the noble Lord is not pursuing the amendment, I leave it to him to decide whether my explanation of what would happen is sufficient for him or whether he requires further details, either now or at a later stage, or in writing, to explain exactly how the process would work. I hope that he will withdraw his amendment, subject to seeking further clarification in that respect.
Lord Dixon-Smith: If I have correctly understood the Minister, his intention is that the changes resulting from the introduction of the GLA should not affect the situation outside London, and if there is any variation within London it will be taken care of by adjustment of the general revenue support grant which the Government make to the London boroughs. I shall study what the Minister said and satisfy myself that that is the situation. I am grateful for his explanation. It should be a simple matter, and I hope it is. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7 p.m.
Lord Whitty Lord Whitty moved Amendment No. 220A:
Page 39, line 43, after ("report") insert ("or determination").
The noble Lord said: In moving Amendment No. 220A I should like to speak also to Amendments Nos. 220B to 220D and 220G to 220K. This group of minor technical amendments is necessary because the general GLA grant will be the subject of a determination, not a report. All of the other items of income referred to in Clauses 73(2) and 74(4) are the subject of a report. These amendments merely ensure that the Secretary of State will be able to set out the amounts of general GLA grant that he considers relate to police and non-police services in a more appropriate place; namely, the determination in which the total amount of general GLA grant will be set out. Therefore, the amendments relate to terminology. Although there are a lot of amendments, they are designed simply to deal with that point. I hope that the Committee can accept the amendments. I beg to move.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 220B to 220D:
Page 40, line 4, after ("report") insert ("or determination").
Page 40, line 5, leave out ("(b) or (c)") and insert ("or (b)").
Page 40, line 7, at err insert—
("() in the case of the item specified in paragraph (c) of that definition, the determination under section 85 below for the financial year in question;").
On Question, amendments agreed to.
[Amendment No. 220E not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 220F:
Page 40, line 40, lease out subsection (9).
The noble Baroness said: Amendment No. 220F seeks to omit from the Bill Clause 73(9). That subsection provides that if the precept is negative, council tax bills
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will not be reduced. I am in the slightly curious position of moving an amendment moved in another place by the honourable Member for Bromley and Chislehurst. I do not always have a great deal in common with him but here I believe that he has a point. The amendment would enable the GLA to notify the billing authorities, the boroughs, to levy a negative precept on its behalf; in other words, to reduce the burden on London taxpayers. No extra billing would be required for refunds because the amount billed by the borough would be reduced by this mechanism.
We have been urged to anticipate a lean and mean authority, according to the popular meaning of that term. I hope that it will not be an excessively mean authority The Government's response in another place was that the Minister could not conceive of a case for treating the GLA differently from local authorities in general, but the GLA is a different authority with quite separate functions. This amendment is entirely in line with the arguments that we have put forward today about transparency and the importance of the authority's relationship not just with the boroughs but all Londoners. I beg to move.
Lord Whitty: We dealt with the issue of the effect of a negative council tax at an earlier stage, and I believe that the same issues apply in relation to this amendment and non-police services. The noble Baroness has in a sense anticipated my comments. There is no obvious reason why the GLA should be treated differently from other local authorities in this respect. If there is a grant it should not be offset by a reduction in council tax for a different service area. It would be odd for us to alter that principle in relation to these provisions. I did not hear any specific argument advanced by the noble Baroness to indicate why we should change it in this respect when we did not accept the argument in the earlier debate and we do not accept it generally across local authorities.
Baroness Hamwee: I hoped that we might have had a slightly more imaginative reply, accepting that reasonable flexibility was something to be encouraged. We have not argued for a change with regard to other authorities because they are not the subject-matter of this Bill. But if something does not work as well as it might so that in effect money goes back into the pockets of taxpayers, it does not seem to us that the fact it cannot be undertaken in other authorities means that it should not be undertaken in London. We regard this as an important point, but clearly we are not making headway, at any rate at the moment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 73, as amended, agreed to.
Clause 74 [Additional calculations: special item for part of Greater London]
Lord Whitty Lord Whitty moved Amendments Nos. 220G to 220K:
Page 41, line 41, after ("report") insert ("or determination").
Page 42, line 1, after ("report") insert ("or determination.'").
Page 42, line 5, leave out ("any of paragraph (b), (c) or (d)") and insert ("paragraph (b) or (c)").
Page 42, line 7, at end insert—
("() in the case of the item specified in paragraph (d) of that definition, the determination under section 85 below for the financial year in question;").
On Question, amendments agreed to.
Clause 74, as amended, agreed to.
Clauses 75 and 76 agreed to.
Clause 77 [Calculation of tax for different valuation bands]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 221:
Page 43, line 26, at end insert—
("(4) Where the precepting authority is the Greater London Authority, within one week of the Greater London Authority having calculated the amount to be stated under section 40(2)(a) in respect of any billing authority in Greater London in relation to each category of dwellings in that billing authority's area, the Greater London Authority shall cause to be published such amount in relation to each category of dwellings in that billing authority's area, these amounts to be expressed both as annual and weekly figures, publication to be by way of a prominent printed announcement in at least one local newspaper circulating in that billing authority's area and nominated by that billing authority.").
The noble Lord said: This amendment would oblige the GLA to publicise the consequences of its decisions about precept in the form of an estimate of its effect on council tax payers as soon as it has established its budget. This would enhance the accountability of the mayor and the assembly to London's taxpayers and so improve the democratic and open, I hope, nature of London's new authority. If we can ensure that the GLA publishes in local newspapers details of the amount for each category of houses in the area expressed as both annual and weekly figures, Londoners will be able to see exactly how much of their personal council tax bills arise from immediate decisions of the GLA. Thereafter, the Greater London Authority will not be able to hide the consequences of its spending decisions within an overall council tax bill. The boroughs must also determine their precept and, despite all of the potential difficulties in the process as a result of the Bill, an aggregate precept then goes to the council tax payer.
It is important for the council tax payer to know how the Greater London Authority taxes have been determined; and, more importantly, how the mayor and the assembly as the Greater London Authority are ordering London's affairs in the interests of London's residents; a mayor and an assembly whose decisions on taxation and spending are visible to the public immediately are more likely always to behave in a responsible manner. It seems to me that the Government cannot oppose the amendment.
In their White Paper, the Government promised that Londoners will be able to choose the person in charge of their city to ensure that he or she—I have included "she" for once; I must be slipping—is publicly accountable for his or her action. Our amendment ensures just that.
The White Paper also promised that under the new regime local people will better understand, and have a greater say in, expenditure and council tax decisions. In view of our previous debates, I admit that there is some
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doubt about whether local people will have any understanding of the process under which the Greater London Authority achieves its final budget decisions. Be that as it may, we have to go on.
The White Paper also stated that the Government are in favour of keeping spending in check. Our amendment, which will let people know immediately a decision has been taken, will help that.
The Government claim to be in favour of open government. I dare say that they will tell me that the amendment is unnecessary since it is similar to some which have been moved earlier today; and of course all this information goes out to the rate payer. If the Government chose to tell me that the amendment is unnecessary because of the assiduity of local newspapers which will be likely to take this calculation and interpret it immediately for its impact on a specific borough of London, that might be a reasonable explanation. But I do not regard the advent of a fairly closely printed, albeit detailed and clear, sheet of paper which sets out the Greater London Authority's decisions and their consequences, which arrives in the home of the council tax payer two and a half months later, as answering the point that the amendment seeks to bring home. I pay tribute to the press for the work that they do. But I suspect that the Government will tell me that the amendment is unnecessary for different but, to me, inadequate reasons. I beg to move.
7.15 p.m.
Baroness Farrington of Ribbleton: The noble Lord is not slipping; he or she is growing!
Under demand notice regulations brought in by the previous government in 1993, all council tax payers are sent a demand notice which is required to show the amount of council tax payable to a major precepting authority for their property. As a major precepting authority, the GLA is required to provide details to billing authorities so that they can be included.
The noble Lord obviously lives in a different household from many of us. In the past I have faced someone across the breakfast table, who looked at me sternly and said, "Are you responsible for this?" One of my sons also refused to be dropped off by me at a new girlfriend's front door to collect her because, as he explained, "Her father doesn't know you're the 'Rates Farrington' yet". So the noble Lord's world in which people do not peruse their bills in detail is one that I do not recognise.
All those people liable will therefore know the full details of the amount of GLA precept that they are required to pay. Publishing the information in local newspapers would involve local authorities in additional administration and costs which would have to be found from their budgets. For those reasons, I ask the noble Lord to withdraw the amendment.
Lord Dixon-Smith: I am grateful to the noble Baroness for her response to the amendment. It was entirely along the lines I expected. However, I am disappointed and shall study it. But I am grateful for the

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fact that the press will be more likely to do the job so that the amendment may be unnecessary. Although the Government's answer is factual, it is not adequate. It would have been better if they had been prepared to accept the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 77 agreed to.
Clause 78 agreed to.
Clause 79 [Substitute calculations under section 49 of the 1992 Act]:
Lord Whitty Lord Whitty moved Amendment No. 221A:
Page 44, line 6, leave out subsection (2) and insert—
("() For subsection (1) (power to make substitute calculations) there shall be substituted—
"(1) A major precepting authority which has made calculations in relation to a financial year in accordance with—

(a) sections 43 to 48 above (originally or by way of substitute),

(b) sections 70 to 75 of the Greater London Authority Act 1999 and sections 47 and 48 above, or

(c) sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and sections 47 and 48 above (by way of substitute),

may make calculations in substitution in relation to the year in accordance with the relevant provisions.
(1A) For the purposes of subsection (1) above, the relevant provisions are—

(a) in a case falling within paragraph (a), the provisions specified in that paragraph; and

(b) in a case falling within paragraph (b) or (c), the provisions specified in paragraph (c).").

The noble Lord said: In moving the amendment, I speak to the other grouped amendments which are technical in nature.
Amendments Nos. 221A, 221D, 222A, 223A, 223B, 223D, 224A, 225B and 225C ensure that, whenever the GLA carries out substitute calculations, either because it decides to or because it is required to, it does so under the relevant provisions, primarily Schedule 6.
If these amendments were not made, the Bill would appear to require substitute calculations to be made in accordance with Schedule 5. That would not be practical as Schedule 5 requires calculations to be made by the end of February, and the need for substitute calculations may well arise after that date.
Schedule 6 instead provides the appropriate procedure, and sets out the roles of the mayor and assembly in making the substitute calculations. The amendments make that clear.
Amendment No. 221B eliminates an unintended effect of the GLA's power to make substitute calculations. It makes clear that the mayor and assembly cannot reallocate money from one constituent body—that is, the GLA and the four functional bodies—to another part of the way through the financial year except in circumstances where they have to do so in accordance
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with Clause 81, so as to ensure that the Metropolitan Police Authority budget is adequate following a direction from the Secretary of State; or in accordance with Clause 82, in the event of an emergency or disaster. Apart from those two areas, the mayor and the assembly will have the power to make substitute calculations only to cut both the consolidated and component budgets. A newly elected mayor may wish to do that.
However, this does not mean that the mayor and the assembly have no powers to transfer money from one body to another. In a situation where there is an underspend, Clause 106 empowers the GLA, and, with the mayor's consent, the functional bodies, to pay revenue grants to one another. This will ensure that any "spare" money need not go to waste.
Amendments Nos. 221C and 223C remove unnecessary regulation-making powers from the Bill, and make clear under which powers the regulations referred to in Clauses 79 and 80 are to be made. These are technical and clarifying amendments. I beg to move.
Baroness Hamwee: Perhaps I may ask the Minister a question on Clause 106 to which he referred. It provides that the authority can pay grants. When I read subsection (1) I had understood that that provided the necessary conduit from central grant through to the functional bodies. Subsection (2) deals with moving money between the functional bodies. Is it correct that money can be moved only from the budget of one functional body to another if that is instigated by the functional body which has the excess? That is how Clause 106(2) is worded and it was one of the reasons for the concern I expressed on an earlier amendment.
Lord Whitty: The provision refers to Clause 106(2); namely, the ability to transfer from one functional body to another in the case of an underspend in the central grant and between bodies. However, in all such situations, the functional body and the mayor must agree on the transfer. I was distinguishing that situation from substitute calculations.
Baroness Hamwee: Can the mayor require that to be undertaken? In referring to the agreement, the Minister said that the mayor would not be in control and the functional body which had the excess could hang on to it if it wished. Is that correct?
Lord Whitty: Any transfer requires agreement; therefore the noble Baroness is right.
Lord Bowness: I hope that I am not alone in suggesting that Clauses 74 and 79, which the Minister now seeks to amend, are incredibly complicated. They were complicated in their original form and they are scarcely less complicated in their amended form. I and perhaps other Members of the Committee would find it most helpful if the Minister were able to place in the Library a layman's guide in plain English on the effects of these changes.
Lord Whitty: I shall inquire whether that can be done. I was afraid that the noble Lord was going to

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challenge me on my algebra in relation to parts of Clause 74. They are complex clauses and I had hoped that the relatively minor and technical amendments I have made would clarify them. I shall consult to see whether I can meet his point.
Lord Bowness: The trouble with minor and technical amendments is that they normally have unforeseen consequences about three years after the Bill has been passed.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 221B to 221D:
Page 44, line 20, leave out from ("Authority,") to ("any") in line 22 and insert—

("(i) the amount of any component budget requirement calculated under subsections (4) to (7) of section 70 of the Greater London Authority Act 1999,

(ii) the amount calculated under subsection (8) of that section. or

(iii)")

Page 45, line 22, at end insert ("under section 73(3)(b) of the Greater London Authority Act 1999 (in relation to item P1) or under section 74(5)(b) of that Act (in relation to item P2)").
Page 45, leave out lines 29 and 30 and insert ("the appropriate Greater London provisions in making the calculations.
(6A) For the purposes of subsection (6) above, "the appropriate Greater London provisions" means—

(a) in the case of calculations required to be made in accordance with sections 70 to 75 of the Greater London Authority Act 1999 and sections 47 and 48 above, those provisions; and

(b) in the case of calculations required to be made in accordance with sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and sections 47 and 48 above, those provisions.").

On Question, amendments agreed to.
Clause 79, as amended, agreed to.
Clause 80 [Minimum budget for Metropolitan Police Authority]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 222:
Page 45, line 35, leave out ("This section applies") and insert ("Subsections (1B) to (1D) apply, in relation to a financial year, to the making by the Authority of calculations required by section 70 in the case of the Metropolitan Police Authority.
(1A) Subsections (2) to (12) apply").
The noble Lord said: In moving Amendment No. 222 I shall speak also to Amendment No. 223. In our view, the Metropolitan Police force is particularly ill served by the financial provisions of the Bill. The two most objectionable provisions are addressed by our amendments to Clauses 80 and 81.
In preparing the Bill, the Government clearly recognised the risk that a mayor might not sufficiently fund the Metropolitan Police and the dangers that such a risk poses for the safety of Londoners. For that reason, Clauses 80 and 81 provide a mechanism for the Secretary of State to remedy the situation if he finds that a particular mayor has set the police budget at a level which he considers is insufficient to provide an efficient and effective police force for the Metropolitan Police area.
If the Government were not concerned about the possibility of mayoral underfunding of the police, they would not have felt the need to introduce measures such as Clauses 80 and 81. We share their concern. There is one particular mayoral candidate whose record might give grounds for concern. Nonetheless, we believe that the Government are right to worry about the possibility that mayors, separately from that one individual, might consider underfunding London's police.
The trouble is that the Government's solution fails to deal properly with the problem. It is inadequate for two major reasons. First, it begins to deal with the problem only after it has occurred. Clause 80 is a mechanism for remedying underfunding after the event, which would have to be the case. However, it carries a clear risk that once an irresponsible mayor has overspent in other areas the police shortfall will have to be met by an increased GLA precept, the cost of which will be borne by London's council tax payers.
We believe that prevention is better than cure and that Londoners should be protected in advance from underfunding. Their safety should not be put at risk because curative action can be taken only slowly and in retrospect. Even where a remedy is necessary, the time period of 35 days, in Clause 81, appears far too long. We believe that Londoners deserve better than to be uncertain about the future of the police force for such a period.
Both these aspects involve the safety and security of London as a whole, which we believe could be unnecessarily exposed. Our two amendments address the problem. First, the amendment to Clause 80, Amendment No. 222, proposes that subsections (1B) to (1D) offer a preventive rather than a remedial solution. We want to avoid the problem before it becomes a difficulty. Currently, the Bill enables the mayor to present a budget which might incorporate inadequate financial provisions for the police. Under the current Clause 80, the Secretary of State may then require that police funding be increased with an enjoinder to the mayor to seek offsetting savings elsewhere in the budget. If no such savings are identified by the mayor, the Secretary of State may substitute a higher total budget for the police in order to ensure that what he considers to be the necessary resources are provided.
The result is an increase in the GLA precept because of the timescale. Not only is there a period of uncertainty about the future of London's policing; the delay could also cause difficulties for the boroughs in establishing what their actual precept should be.
We believe that the solution is straightforward. Our amendment requires the mayor to gain the approval of the Secretary of State for the level of Metropolitan Police funding which he is proposing before he includes it in his budget. That proposal implies no change in the Secretary of State's powers over police funding. The safeguard on funding built into the Bill would become part of the budget process, not a possible late shock to London's council tax payers. Surely, it must be better that the mayor should go into discussions with the Secretary of State over his proposals for the police before he arrives at his budget rather than afterwards

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I should have thought that that would provide a much more satisfactory way of arriving at both the Metropolitan Police budget and the Greater London Authority budget, with satisfactory consequences for the people of London who have to pay their council tax bills. I beg to move.
7.30 p.m.
Lord Patten: I warmly support the amendment of my noble friend Lord Dixon-Smith. I think we are moving into uncharted waters. The Committee may care to reflect on the fact that for a very long time there has been a carefully modulated set of checks and balances between the Secretary of State for the Home Department and the Metropolitan Police, which has ensured that reasonable and adequate funding has come to the Metropolitan Police.
We shall find from time to time that, like all public services, the Met will say that it is being underfunded, that there are crises, and there will be panic on the "Today" programme. People will be demanding more money from the mayor and, through the mayor, from the government of the day.
Setting that aside, I think that by and large the funding mechanisms with which many Members of the Committee will be familiar, and which have underpinned the policing of London, have worked well in the past. I cannot imagine who the nameless mayoral candidate was to whom my noble friend referred. My noble friend Lord Archer of Weston-Super-Mare and I were speculating as to who might be this person who might gratuitously underfund the Metropolitan Police, given half a chance, in some future year.
But I believe that the suggestion of my noble friend Lord Dixon-Smith is extremely practical. This is not a partisan matter, and I urge the noble Lord, Lord Whitty, who takes such care to reflect on matters raised in the Committee, to think that nothing would undermine the status of the mayoralty and the intentions of the Bill more than problems with the Metropolitan Police. If people feel that, because of political changes, the introduction of a mayor and the resulting funding changes, they are not being looked after by the Met in the way to which they have grown accustomed, we could find that both the standing and status of the Metropolitan Police, who do so much to help, is undermined. We could also find that the office of the mayor is undermined.
I urge the Minister to reflect very carefully on the words in the amendments put forward so forcefully by my noble friend and to consider whether something pragmatic can be done to build on the provisions already in the Bill, which I support, to make sure that these possibilities do not come to pass under whoever is mayor of London.
Lord Whitty: I understand the concern that we ensure that the Metropolitan Police are properly funded. In my view, the Bill has the balance right.
We are changing the current system, whereby the Home Secretary effectively decides directly the funding of the Metropolitan. Police, to one where there is some
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democratic decision-making, through the mayor, and oversight of the police, through the Metropolitan Police Authority.
However, I accept what the noble Lord, Lord Patten, said about the need to preserve confidence in the police and the delivery of police services. In my estimation, that will in part be assured through the operation of the new Metropolitan Police Authority. We therefore need some reserve powers, which is what we have provided in these clauses to deal with the, in my view inconceivable, political circumstance, that the mayor did not provide adequate resources for the police. I cannot envisage any mayor setting a budget which would threaten service standards or the public's confidence in the police.
Moreover, I would assume that before the budget was set there would be a fair degree of informal contact between the Home Office and the authorities within London, and that if the mayor were inclined to set a budget which the Home Secretary was likely to regard as inadequate, that information would be conveyed and the mayor would heed that information, in order to avoid just such a direction as is provided in this reserve power.
It is important that the first responsibility should rest on the mayor to set the budget. I do not think it is sensible to do what the amendment would do, which is to bring the Home Secretary back into prominence in setting the budget and having authority over the police force directly. The single financial structure created by the Bill is designed to give the mayor and assembly responsibility for setting the aggregate budget for the authority and the four functional authorities. If we were to involve on a routine basis the Secretary of State in effectively determining the size of that budget before the total budget process was complete, that would be incompatible with that structure and with the objective of making clear to the electorate of London that it was the mayor's responsibility.
That having been said, clearly we require those reserve powers. They are there to be used in unlikely—indeed, extremely rare—circumstances. I therefore hope that the noble Lord will recognise that to push the amendments so that the Home Secretary effectively predetermines this element of the budget would be counterproductive. However, I repeat that we need the reserve powers as specified in the Bill.
Lord Dixon-Smith: I was not sure for a moment whether the noble Lord the Minister was saying that the procedure in the Bill was unnecessary or that my amendments were unnecessary. However, it is clear from the tenor of what he said that he feels that the procedure will be called into use only on very rare occasions. I think he actually said that it was unnecessary.
However, I return to the question of the primacy of decision-making with regard to the Greater London Authority's budget. Under my amendments, the mayor-would in fact determine, before he went to the Secretary of State, what the police budget should be. The difference is that under what I propose the mayor would take than proposal to the Secretary of State and gain his agreement to it before he took it to the assembly and the assembly discussed the matter and it became part of the authority's budget.

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The difference between us is marginal. However, there should be sufficient flexibility in the Government's approach to these matters for them to be able to consider making a change along the lines that I have suggested, if I do not have the wording of the amendments sufficiently precise to achieve the purpose which I have enunciated.
I shall study carefully what the Minister has said. I am sorry that he has a tickle in his throat which caused him problems, but that did not alter the quality of the content. I do not think that I entirely accept his conclusions, and I would certainly prefer to see the Government move on this, but, at this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 222A:
Page 45, line 36, leave out paragraph (a) and insert ("the Authority—

(a) has made calculations in relation to a financial year in accordance with sections 70 to 75 above and sections 47 and 48 of the Local Government Finance Act 1992, or

(b) has made substitute calculations in relation to a financial year in accordance with sections 70, 7) and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of that Act,
but").

On Question, amendment agreed to.
Baroness Farrington of Ribbleton: I beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that the Committee stage begin again not before 8.40 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Tax Credits Bill
7.40 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that the Commons reasons be now considered.
Moved, That the Commons reasons be now considered.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
COMMONS REASONS
[The page and line refer to HL Bill 39 as first printed for the Lords.]
LORDS AMENDMENT
1 Clause 6, page 3, line 31, at beginning insert ("Subject to subsection (1A).").
The Commons disagreed to this amendment for the following reason:
1A Because it is not appropriate for smaller employers to be exempted from paying tax credit to their employees.
Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment
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No. 1 to which the Commons have disagreed for the reason numbered 1A. I shall speak also to reason numbered 3A.
Amendments Nos. 1 and 3 were introduced by the noble Lord, Lord Goodhart, and were passed by this House, during our Committee stage debate of the Tax Credits Bill. They would allow employers with fewer than 10 employees to elect that any tax credit payable to their employees should be paid by the board. They would also enable regulations to be made governing the making and revoking of such elections.
The House of Commons has now considered the amendments and has disagreed to them. The reason given is that it is not appropriate for smaller employers to be exempted from paying tax credit to their employees.
Your Lordships will not be surprised to learn of this decision in another place. As I said when we debated these amendments in Committee, payment of tax credits by employers is central to the Government's policy of making work pay, and be seen to pay. The tax credits will be inextricably linked to the rewards of work because they will be shown on the employee's payslip as an addition to net take home pay. This will help to break the perceived link with benefits and will reduce the stigma which is often attached to claiming in-work support.
So these amendments really strike at the heart of the Government's tax credit policy by potentially exempting up to 825,000 employers—70 per cent of the total—from paying tax credits. The amendments would also be extremely complicated to operate because of the difficulty of identifying quickly those employers who would be eligible for the opt-out and wished to elect it. As I pointed out in Committee, in all cases of doubt the Inland Revenue would have to contact employers to check, first, how many people worked for that employer, and, secondly, whether or not the employer was prepared to pay tax credits through the payroll. That would mean delays in finalising tax credit awards and confusion for employees who would not know where they were from one award period to the next if employers moved in and out of the "fewer than 10 employees" category.
Your Lordships made much of the fact that employer payment of tax credits imposes some additional burdens on business. As I have said before, the Government have from the outset recognised that there will be some extra costs to employers in paying tax credits through the payroll and we are doing everything possible to keep those extra costs to a minimum. Since May 1998 we have been consulting representatives of employers and payroll software suppliers on the details of the scheme and significant changes have been made to meet the representatives' concerns.
We have also, as your Lordships are aware, decided that small employers who do not operate a PAYE scheme should not be asked to pay tax credits through the payroll. This is a practical measure to ensure that employers who currently have no dealings with the Revenue in their role as employers—for example, if they employ simply a nanny or a gardener—are not

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brought into the Revenue's employer database simply through once having a tax credit recipient on their payroll.
The new Small Business Service, announced in the Budget, will provide better and more targeted support and assistance to small businesses with: a new business guide, business tax starter pack and guidance for new employers; and, as was raised by the noble Lord and the noble Earl, Lord Russell, a new helpline service for new employers offering fast-track support.
As part of the Small Business Service all new small businesses will be provided with assistance with their payroll operations from April 2000. The DTI is currently consulting on the method of delivery of that service. The intention is that the service should be delivered by means of a voucher scheme whereby all eligible businesses would be able to redeem a voucher with any commercial provider on a list held by the Small Business Service. That scheme should do much to ease the burden on small firms which are running a payroll.
Specifically, in the tax credits context, all employers will be given ample guidance in the coming months and after April 2000 enabling them to pay tax credits smoothly and with the least possible extra work. There will be a targeted publicity campaign which will involve all the media. There will be seminars across the country which will be of particular interest to small businesses.
I hope that all I have said will convince your Lordships that Amendments Nos. 1 and 3 are unnecessary and inappropriate. They have been considered at length in the other place and have been firmly rejected there. The House of Commons did what this House asked it to do; namely, to think again. The Commons thought again and overwhelmingly reaffirmed the position which existed at the end of the Bill's passage through the other place. Therefore, I urge your Lordships to accept the Commons reasons for disagreeing to Amendments Nos. 1 and 3 so that the passage of this Bill will not be further delayed.
Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed for their reason numbered 1A.
Lord Goodhart: My Lords, I am not surprised that the noble Baroness has asked us to reconsider Amendments Nos 1 and 3, and I doubt that she will be surprised by the fact that, although we have reconsidered them, we think that they were right and proper amendments.
These amendments provide for payment of working families' tax credit by the Inland Revenue direct rather than through the wage packet in the case of small employees. The amendments were moved by me and supported by the Conservatives on Report.
The purpose is to give employers with fewer than 10 employees the right to ask the Inland Revenue to make payments direct. It is an opt-out, not an exclusion, and for that reason it would, to a large extent, get round the difficulties of those employers whose number of employees fluctuates above and below 10. Those employers in that situation would obviously be unlikely
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to wish to opt out because of the inconvenience to them of alternating between having to be in the scheme and out of it.
There are already some circumstances in which payments of WFTC will be made direct by the Inland Revenue; for example, where a couple agrees that payment should be made to the caring parent. So there does not appear to be any great point of principle involved in enlarging the list of cases in which payment is made direct.
The Government insist that payment through the wage packet is necessary to increase the incentive effect of the tax credit. I do not believe that. It is true that the tax credit will give people greater incentive to take a job but that is because of the considerable increase in the total family income which will result from the increase in the tax credit. The fact that the income may come in two dollops, not one, cannot make a ha'p'orth of difference. I believe that workers are sufficiently intelligent to know that the extra money which they receive does not come from their employer's own pocket even though it comes through the wage packet. Therefore, if there is any stigma effect in having an income which comes partly from the Inland Revenue, that stigma will not be eliminated by this scheme.
Against that, payment through the wage packet will impose significant burdens on many small employers. As the noble Baroness said, there are some 825,000 employers with fewer than 10 employees. The draft regulatory impact assessment suggests that about 100,000 of those will employ someone entitled to the tax credit. Therefore, the great majority will not. But payment through the wage packet for that 100.000 who are so entitled will involve significant extra time and cost. The impact assessment statement suggests that the recurrent costs to small employers who must pay the tax credit will be £370 per year. That figure looks to be somewhat on the high side and it may be that it is not entirely accurate. However, the impact would be quite substantial.
I do not believe that the Inland Revenue would find great difficulty in finding the employers with fewer than 10 employees in order to find out whether or not they were entitled to opt out.
Since Third Reading in your Lordships' House, as the noble Baroness mentioned, the Government have devised a scheme to enable some initial payments to be made by way of vouchers. That will deliver a limited degree of help to new small employers but the scheme is minimal and, as I understand it, is not intended to cover the recurring costs which are the main burden. It is simply intended to cover the start-up costs. The CBI certainly believes that the scheme is inadequate and would prefer smaller firms to be exempt, as we proposed.
Furthermore, 38 per cent of employers with fewer than 10 employees still use manual payroll systems. The working families' tax credit will be a particular problem for them. They will not be helped by any software that the Government are able to provide for those who have automated processing systems for wages.

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We therefore took the view that our amendment imposed no detriment on employees, unlike, for example, the exclusion of small employers from an obligation to designate stakeholder pensions for the benefit of their employees under the Welfare Reform and Pensions Bill which we believe would be detrimental to employees. Our amendment relieves small employers from a significant burden without any corresponding detriment to employees. We regret, therefore, that the Government have not seen fit to accept a useful amendment which, in our belief, does no damage to the principle of the Bill.
However, we now reach the point of considering whether to insist on the amendments. Insisting on amendments is a powerful weapon. It is not quite, perhaps, a nuclear weapon, but it is certainly a highly explosive one. That weapon needs to be reserved for occasions of outstanding importance: in football terms, "Premier League amendments". These amendments are important, certainly Division 1, but at the end of the day I feel that they do not quite make it into the Premier League. We do not believe, therefore, that this is an appropriate issue on which to force a battle between your Lordships' House and the other place and we do not propose to insist on the amendments.
Lord Astor of Hever: My Lords, it is not every day that I find myself in agreement with spokesmen from the party of the noble Lord, Lord Goodhart. However, as far as concerns this amendment, I am in complete agreement with what the noble Lord so eloquently said. We, on this side, feel that the Government are wrong. I agree with the noble Lord, Lord Goodhart, that the amendments are right and proper.
The Government are sending a message to the business community that they can expect a return to the sort of highly destructive, business-unfriendly regime last seen under the Labour government in the 1970s. The Minister recognised that there would be some extra cost to employers. However, the Government have under-estimated the administrative and financial burden that WFTC will create, particularly as there is no reimbursement of costs to firms on the lines of that operated for maternity pay.
No less a person than one of "Tony's cronies", the noble Lord, Lord Haskins, chairman of the Better Regulation Task Force, has said publicly that the Government have under-estimated the impact on small businesses. The Better Regulation Task Force was set up by the Prime Minister specifically to cut red tape on business. The Government therefore appear to have two contradictory objectives. On the one hand, they tell the business and small business lobby groups that they want to reduce the burdens on business. If that is really the case, why not accept the amendment? On the other hand, their real objective seems to be to increase massively time wasting and cumbersome burdens. Any noble Lord tempted to doubt that should read The Price of Fairness from the Centre for Policy Studies. The authors say that Labour's social legislation will add £4.6 billion to business costs and eradicate 880,000 jobs.
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The Minister mentioned the voucher scheme. Do the Government feel that this scheme is sufficient to alleviate the administrative burden which the WFTC will create? This is an area of special concern to the CBI which, as the noble Lord, Lord Goodhart said, is concerned that the vouchers will not reflect the cost of administering the tax credits.
In Committee, the Minister stated that virtually no work will be carried out by employers. She reinforced that by saying that work for employers will be minimal. If that really is the case, why is it necessary for employers to attend seminars, as she mentioned? Do the Government now accept that administering the tax credits is more complicated than the Minister first said and now needs explaining in detail at seminars?
How can the Government possibly hope to persuade hard-pressed businessmen and women to attend these seminars? Do not the Government feel that the time of such people would be better spent running their businesses, providing jobs and creating wealth? Certainly, that is the message which the Trade Secretary has been trying to send out.
Finally, will the Government review the situation a year after the legislation comes into force? It will surely be necessary to check that there are not the excessive administrative burdens and costs on businesses, particularly small businesses, which they themselves fear will happen?
Baroness Carnegy of Lour: My Lords, I rise briefly, in view of all that has been said by my noble friend and the noble Lord, Lord Goodhart. It seems extraordinary that the Government continue to maintain that it is not appropriate for small employers to be exempted from this provision. Small employers feel very strongly about the matter. Surely, the Government know that. I understand that they have established in their minds the need for employees to see the tax credit arrive with their wage packet. I do not believe that employees are as dumb as the Government think. They will understand very well that they are receiving an income supplement because they are in a job, however they receive it. It is unfortunate that the Government, who are flying a very strange flag, disregard the anxiety of employers who have under 10 employees and feel strongly about this. I am sorry about the Government's decision.
Baroness Hollis of Heigham: My Lords, I thank noble Lords for their contributions. I regret that so far the Government have not been able to persuade them of the propriety of our position. However, in response to the first point, we firmly believe that the entry wage of people going into work should be seen to be a qualitative leap from the benefits they would otherwise receive. This applies particularly to lone parents who will make up perhaps over 50 per cent of those on WFTC. The best way of doing that is to break the link of that tax credit with its former benefit wraparound, which is family credit. We believe that, and the research we commissioned indicates that our views are correct.
People want jobs where the entry wage, which they will receive through the wage packet, is a qualitative leap from what they would otherwise enjoy from benefit

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books, giros and so on. To some extent the proof of the pudding will be seen as this develops. However, the research from the Institute for Fiscal Studies already suggests that if we bring this alongside other improvements by government changes to national insurance and the like, in the longer term we can expect to see 250,000 extra people coming into work. That is from an independent organisation. We obviously hope that those figures could well be surpassed. However, we believe, as all our research shows, that it is the entry wage, and the perception of what comes in the pay packet, that determines the willingness of people to return to work.
Lord Goodhart: My Lords, I am grateful to the Minister for giving way. Am I right in assuming that the figure of 250,000 is the total of those likely to be persuaded into work by the working families' tax credit and not the difference between the figures of those who would be in and those who would be out merely because small employers were not part of the scheme?
8 p.m.
Baroness Hollis of Heigham: My Lords, that is true. We are talking about the total figure and not the specific tranche. As I said, it included WFTC, NICs and the temporary starting rate. It did not include the national minimum wage. But we expect the result to be an increase of something like 47,000 people in employment over a one-year period; up to 290,000 (I said 250,000) in the long run. This is the work of the Institute for Fiscal Studies.
The noble Lord is absolutely right. But the point remains—the institute established it—that the entry wage is what determines people's perception of whether or not it is worth while returning to work, particularly for lone parents. They come into work from a position of being in benefit whereas many of the couple families will already be in work and will need to acquire this benefit because, perhaps, temporarily their income has dropped, whether through shorter hours or because the partner has dropped out of work or whatever. So for lone parents in particular, the entry wage is important. This is a qualitative improvement and that is the philosophy behind the tax credits system; that is, that work pays and is seen to pay.
Lord Swinfen: My Lords, before the noble Baroness leaves that point, perhaps I may ask a question. The person seeking work will know what the employer is prepared to pay as a straightforward wage. But it is the Inland Revenue which will decide what the tax credit is to be. Before the individual takes a job, how will he know what tax credit he will receive? That is what will determine whether or not he takes a job. Will there be somewhere he can go for advice?
Baroness Hollis of Heigham: My Lords, there is a short answer and a long answer. The short answer is that he can certainly obtain advice as to what the implications will be. The noble Lord will also remember that lone parents on income support will be enjoying a four-week rollover for their first month of work. At the
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end of that time, they will receive their pay packet. At that point, they will have an option to continue to stay in work. If their entry wage is not high enough—they will have been buffered for the first four weeks by a rollover of income support—they will be able to go back on to benefit. That is why we want to see the world of work being a qualitative improvement from the world of income support, together with all the related benefits that they hitherto received. I repeat, most lone parents going on to WFTC will have come off income support. Income support will carry them for the first month. If the entry wage that they receive in their pay packet is insufficient, they will retreat back into the world of economic inactivity, and I am sure that the House does not want that.
We firmly believe that this is not an unreasonable responsibility for employers. I have to repeat this because we said this both in debate and in letters, but it is worth reaffirming. The average cost to the small employer will be £37, six minutes a week or 70p per week per employer. We believe that this is not an unreasonable burden.
Where it becomes difficult is for the small employers who have manual payroll systems. There the burden is not so much WFTC, but the existing burden of PAYE and NICs. Therefore the Business Advice Centre—I was asked what its role was—and the vouchers are part of an effort to help small businesses to move out of manual systems and into the software packages which will allow them not only to deal straightforwardly with WFTC, but also with the other more onerous burdens (no one suggests that they should not pay them) of NICs and PAYE. That is the point.
I go further than that. We believe that WFTC is not a burden on employers; and we believe that it will not only attract lone parents particularly into the labour market, but also that it will be to the benefit of employers because it will widen the labour pool from which they can draw their staff. As a result, we believe it to be in the best interests of business, of staff and of lone parents. I hope therefore that your Lordships will not press the amendment.
Lord Astor of Hever: My Lords, before the Minister sits down, I specifically asked about the vouchers. Does she feel that the amounts offered are sufficient to alleviate the costs of administering the tax credits?
Baroness Hollis of Heigham: My Lords, I should say first that the income support rollover is two weeks rather than four. Housing benefit is the longer one.
The documents that were sent out for consultation suggest that we are thinking of vouchers in the region of £50 to £200 which can be redeemed against a registered list of suppliers. From my modest knowledge of IT systems, that would make a substantial contribution to a modest software package. But it is a consultation document, and if it needs to be tweaked, the Government will listen very seriously. This is part of a wider effort to ensure that small businesses come

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into the 21st century in terms of their support systems, not just for WFTC, but also for the far more difficult responsibilities of NICs and PAYE.
Lord Astor of Hever: My Lords, does the Minister expect the Government to review the tax credits after a year?
Baroness Hollis of Heigham: My Lords, after six months we shall be moving from the current system of paying family credit into payment through the employer. At that stage we shall be reviewing how we are doing and shall continue to monitor the situation. If the Government's policies are not delivering the responses we want to see, obviously it would be foolish of the Government not to take that into account. But all the research, all the evidence and all the public responses—the reviews have been very good indeed—indicate that this is the way forward for the future of the tax and benefit system. As a result, we shall be able to help more people into work and to stop the poverty of unemployment being transferred to the children.
On Question, Motion agreed to.
LORDS AMENDMENT
2 Clause 6, page 3, line 35, at end insert—
("() The Board shall ensure that any single parent can decide to receive payment of any tax credit direct from the Board rather than from the employer.")
The Commons disagreed to this amendment for the following reason:
2A Because it is appropriate for tax credit paid to employees to be paid by their employers.
Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 2 to which the Commons have disagreed for the reason numbered 2A.
The amendment, which would have given lone parents a choice not available to other applicants, is not about putting lone parents in the same position as couples; it would allow lone parents to choose whether to receive tax credits in their pay packet or direct from the Revenue. That is not a choice open to couples.
Insisting on this amendment would mean a major policy change, not just a minor shift at the margins. The matter was fully discussed here, where it was decided that it would be better to give this choice, and in another place where it was decided that it would not. We should not insist on the amendment.
Before putting the point formally, it may be helpful if I recap the arguments. I have already alluded to one; that is, that it gives lone parents the same choice as is open to couples, where it clearly does not. The other two major arguments were that it would allow lone parents to preserve anonymity; and, thirdly, that it secures lone parents against being pressurised, discriminated against or victimised by their employer. I shall take each of those three arguments in turn.
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The argument in relation to choice and the analogy with couples is that in practice couples have a choice because they can choose which one of them is to receive WFTC. In the main, they will be families where the man works and the woman stays at home to care for the children. But I dispute that it concerns choice as to how the tax credit can be paid and that it can be paid at home.
If both partners in a couple are in work, they can choose for the tax credit to be paid to her; but in that case, it can be paid to her only through the wage packet. If he is in work and she is at home, they can choose for it to be paid to her, in which case it will be paid to her at home because she does not have a wage packet through which it is paid. If she is in work and he is at home and they choose for the tax credit to go to her, again it can be paid only through her wage packet because she is in work and not at home. Therefore, the analogy with lone parents is simply not valid. Lone parents are not being denied something that couples are being given. Lone parents are in work and therefore they will be paid through the wage packet in exactly the same way as though the choice in a couple was to pay to the mother and she was in work, in that she too could only be paid through the pay packet. That is the analogy.
The second argument concerns fears that tax credit payments will breach confidentiality. Lone parents will be treated no differently from anyone else. Employers will simply be told, as with other recipients, of the amount to pay. They will not be involved in any way in gathering personal information or determining the award themselves. Debates here and in the other place revealed concerns that employees' circumstances could perhaps be inferred from the amount they receive from the employer. We sought to allay those fears whenever they surfaced, either during debates or in writing to noble Lords. Perhaps I may assure the House yet again that because of the number of separate elements—the effect of the taper and the childcare tax credit—it will not be possible to work out what someone is being paid. No doubt payment through the wage packet will mean that the employee is eligible to one of the two tax credits, either WFTC or DPTC, but that will be the extent of the employer's certain knowledge.
Your Lordships' third concern was that employers would be able to discriminate against, or apply pressure to, groups of employees who might cause them administrative hassle by claiming tax credits. Employers are unlikely to know enough about a person when they take them on to make an accurate judgment about whether or not they are likely to qualify for tax credits. The evidence of research done for the DSS into family credit says that employers did not have enough information about potential recruits to adopt such tactics. There will be no more opportunity at that stage of recruitment than there would have been under family credit. Research carried out for the Joseph Rowntree Foundation has also shown that employers are increasingly seeking the least possible information at the time of recruitment to avoid possible charges of discrimination.
Once the credit has been claimed and awarded, it will become clear to any employers administering payment through the wage packet that the employee is getting a

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credit. It was because of the possibility of discrimination at that point that the anti-discrimination provisions at Clause 7 were included.
There is a danger in what was proposed in the amendment. Giving single parents alone a choice of payment method could say to employers—albeit the small number of bad ones who might wish to avoid their responsibilities—that searching out lone parents in their workforce might be a productive strategy. It would give them information about which employees they could approach to persuade or pressure them into asking to receive the tax credit directly. That is an uncomfortable thought and one that weighs against the amendment.
Given those explanations, and in the knowledge that Amendment No. 2 was rejected by an overwhelming majority after careful appraisal in the other place. I ask your Lordships not to insist upon it.
Moved, That the House do not insist on their Amendment No. 2 to which the Commons have disagreed for the reason numbered 2A.—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, the House will be grateful to the Minister for spelling out many of the arguments made previously. The purpose of our original amendment was to ask the other place to think again. I thought it appropriate to listen to the debates in the other place.
I confess that whenever I go to another place and sit in the Gallery, particularly during Prime Minister's Questions, I get the impression that there has been a serious mistake. Everyone appears to be sitting on the wrong side. On the occasion in question, that was not so. While there were a number of Members on the Opposition Benches, the only ones on the Government Benches were the Minister and the Whip, albeit that they were joined by the PPS half way through the debate. It is extremely arguable that the other place paid appropriate attention to what is undoubtedly an important matter.
It may be that Members in the other place were watching the debate on television. One of the problems is that MPs tend to watch the proceedings on TV in their rooms rather than be present in the Chamber. I always thought that an unfortunate development and certainly not one to which that House agreed. The amount of attention that seemed to be given to the debate on the Floor of the House on 22nd June was not as great as one might have expected, given the importance of the issue.
As I pointed out in Committee, not only did the National Committee for Single Parent Families support our amendment, as one might expect, but the Low Pay Unit, the Trades Union Congress, the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses all came down in favour. In Committee, I asked whether anyone had come out in favour of the Government's position but the noble Baroness did not respond. Perhaps she would like to do so now.
In the debate on the previous amendment, the Minister referred to the research by the Institute for Fiscal Studies, which is equally applicable to Amendment No. 2. The noble Baroness suggested that
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250,000 people, who, presumably, would not otherwise be in work, were likely to go into work. The general employment situation is such that more people are becoming employed, but presumably those are an additional 250,000 people.
It was not at all clear to me whether the IFS analysis referred to the incentive for people to get into work, involving massive expenditure of £1.5 billion, rather than the method of payment. If the Minister is to make a case for either the previous amendment or this one, it would have to hinge on the method of payment that would result in an increase of 250,000 jobs. Perhaps the noble Baroness can say whether it is the method of payment rather than the extent of the wage subsidy—as it has been described by a number of outside groups—that is likely to do that.
The reason given by the other place for rejecting an amendment that your Lordships felt appropriate is that,
"it is appropriate for tax credit paid to employees to be paid by their employers".
Following the debate and Division in another place, a select group would have gone to a little room behind the Chair to think up reasons for rejecting your Lordships' amendments. It does not seem that they did a good job of drafting. One would have expected the reason to be that it is appropriate for tax credit only to be paid to employees by their employers rather than the form of words on the Marshalled List. There is no supporting argument. The reason does not say why it is appropriate for tax credit paid to employees to be paid by their employers.
I refer also to whether the choice that we say should be given to lone parents is reflected in the choice that the Government have already given to couples but not, as the noble Baroness rightly spelt out—and I always admire how she manages to make her arguments so clearly from the Dispatch Box without reference to her notes—so far as married couples or partners are concerned who are both in work. We accept that that is something on which the Government have stood firm. However, the Government have said that where one person is working and the other is not, they will have a choice as to which of them receives the tax credit and by which method—whether through the pay packet to one person or the other.
Baroness Hollis of Heigham: My Lords, I must correct the noble Lord. We have said that there will be a choice as to which person the credit is paid—not that they may choose how it is paid. If she is at home, it can only be paid to her at home. If she is in work, it can only be paid to her in work. There is no choice as to how it is paid, only to whom it is paid. That question does not arise with lone parents because there is only one person to whom the credit can be paid—the lone parent.
Lord Higgins: My Lords, I fully accept that there is only one person to whom the credit can be paid where that is a lone parent. It is also the case—because if it is paid to one partner it is paid in one way and if to another

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partner, it is paid another way—that, to the extent that they are given a choice one way or another, they can determine which way the credit is paid.
Baroness Hollis of Heigham: Yes, my Lords, that happens if one of them is at home—not at work. Equally, they can still give that same choice to her and they would both be in work. Or they could give that same choice to her and she would be in work, not he. In other words, they are determining to whom it is paid. They are not determining the mechanism by which it is paid. The mechanism follows the choice of who it is.
Lord Higgins: Yes, my Lords—and to that extent, they have the ability to decide that it will be paid one way or the other, by deciding to which partner it will be paid. In any case, we believe that it is appropriate that lone parents should have the choice. That is the point we seek to make and it arose in the debate in another place. Referring to my honourable friend Mr. David Willetts, Dawn Primarolo said that,
"we are reaching the end of our consideration of the Bill. Does he accept that the purpose of the tax credit is to provide a work incentive and to reinforce the rewards of work, and that, throughout our consideration of the Bill, that has been our central argument in support of the Bill?"
My honourable friend replied:
"The argument that we have to boost in-work incentives does not mean that we have to compel people to receive the payment in a specific way".—[Official Report, Commons; 22/6/99; col. 959.]
Effectively, what we were arguing for with this amendment—and it is still a sound argument—is that the lone parent should have the choice as to whether or not this is paid through the pay packet.
There is an inherent view—I said a "paternalistic approach" in Committee—that lone parents are unable to comprehend the fact that if they are in work they get more, in the sense that they get what they are paid by way of a wage and they get what they are paid by way of a benefit. The idea that a lone parent, or indeed anyone, is incapable of understanding that rather simple point seems to us to be quite extraordinary.
In addition, as regards lone parents taking a job, it is only when they are actually in the job and see their pay packet that they realise they get more when they are in work. It is not something that they are able to see in advance. In any event, once they are in the job, they then find that there is a distinction as far as concerns their pay packet; but they also get a tax credit. For other reasons which have been elaborated in considerable detail both in Committee in this House and also in the other place—for example, the arguments about whether or not there is a stigma (we already know the extent to which family credit is taken up is very high), and the question of confidentiality, about which we still have some doubts—we think it is perfectly reasonable, and will not significantly influence the extent to which people will go into work, that lone parents should be given this choice.
I have one further point to make in relation to the attitude of the Government. I have in mind the use of an expression by Ms Primarolo in another place, which
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I do not think is one that the noble Baroness has used. She said that we must have the arrangements for paying the amounts to lone parents because it will drive home that work pays. Again, it seems to be to be a rather harsh attitude towards lone parents that you have to drive home to them the fact that they will be paid. As many outside groups have suggested, it is largely in the form of a wage subsidy. As I understand it, it is still the case that, once they get their pay packet, they will be able to see that this is something which is separate from the basic wage.
In debating the previous amendment, my noble friend pointed out that there is a burden on businesses. There is a real danger here, not for the vast mass of small businesses or large businesses but for some businesses which are less reputable than the others. For example, if a small business of the kind I have just described finds that it has to go through the necessary procedure to pay someone through WFTC as against paying someone who is not in that category, it may choose to avoid the administrative hassle and problems involved if it takes on someone who is getting working families' tax credit by taking on someone who is not receiving the benefit. To that extent there may indeed be some degree of discrimination. The Government have sought to meet that point by way of clauses in the legislation relating to non-discrimination. On the one hand, that demonstrates that they believe there is such a risk; but, on the other hand, we cannot be sure that this will not happen in practice.
For all those reasons, it seems to me that the amendments we put forward were appropriate. I regret the fact that those in another place did not appreciate our arguments and that the Government have continued to maintain their dirigiste attitude towards the policy, which we believe is not justifiable.
Lord Goodhart: My Lords, on our amendment the noble Lord, Lord Astor of Hever, began his remarks by saying that, somewhat unusually, he agreed with everything that I had said. Perhaps I may now return the compliment by saying that, on this occasion, I agree with every word that the noble Lord, Lord Higgins, has said.
The Government's arguments for rejecting this amendment are, frankly, inconsistent with their grounds for rejecting our amendment. Our amendment was rejected because of the view that there was no serious burden on employers, or certainly no burden serious enough to require steps to be taken to deal with it. On this amendment, the Government are saying that small employers will object to the payment of tax credit through the wage packet to an extent which will deter them from employing people who claim tax credit. Indeed, the Government have thought it necessary to include provisions in Schedule 3 to deal with employers who do discriminate. Therefore, unless one assumes that small employers are likely to behave in a wholly irrational manner, those two arguments cannot both be correct.
I believe that there is a burden here and a serious risk of discrimination. There is, in practice, as the noble Lord, Lord Higgins explained, a choice for couples—at

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least where there is one non-working partner. In that case, the working partner can agree that the payment is made to the non-working partner. If that is not choice, I do not know what is.
As far as concerns single parent employees, there may be cases—they will not be frequent but, when they happen, they could be considerably distressing—where an employee actually does not want the employer to know, for reasons of privacy, that he or she (usually it will be "she") has family responsibilities. Further, even if discrimination is not a problem and even if the employee does not mind the fact that the employer will know that she is a single parent, she may well be deeply concerned about the possibility of discrimination as regards taking her on as an employee. Discrimination is a possibility, notwithstanding Schedule 3 to the Bill. There may be a genuine fear of discrimination, which leads an employee to want to get the tax credit direct rather than through the wage packet. Certainly a job is better than a right to claim compensation for discrimination under Schedule 3.
Ultimately, the argument is a very short one. If a single parent employee wants WFTC to be paid by the Revenue direct, payment through the wage packet cannot possibly be an incentive; indeed, it could be a disincentive. For those reasons, it seems to me that this amendment is also a thoroughly reasonable one and one which I very much regret the Government did not see fit to accept.
Baroness Hollis of Heigham: My Lords, the noble Lord, Lord Higgins, opened his remarks by suggesting that, as there were only a few people on the government Benches in the other place, the Government should not have won, even though there was a vote. If that is an argument that the noble Lord wants to press, will he now say that no one on his Benches tonight should vote if he were minded to press the matter because they have not heard the argument? If the noble Lord cares to take a vote just from those present who have heard the debate, I would encourage him to do so. Indeed, if we confine it to those present in the Chamber, I am reasonably confident of the outcome. If not, someone will have my guts for garters tomorrow. I do not believe that the noble Lord was serious about his point. He knows perfectly well about the judgment of the House of Commons. They were asked to think again. They have done so; and they gave an overwhelming verdict.
I turn to the more substantive points made by both the noble Lord, Lord Higgins, and the noble Lord, Lord Goodhart. Both noble Lords persist in believing that couples have a choice in this matter but lone parents do not. I am running out of syntax in which to explain this matter. I again remind the House that 51 per cent of the current family credit population are lone parents and 49 per cent are couples. About a quarter of those couples have the Female as the main earner. In that situation, if a decision is taken to pay the money to her, the couple have no choice but to have it paid through her pay packet. In that case, the female is in exactly the same position as if she were a lone parent as opposed to having a dependent spouse who happens to be male and living at home If she is in work and the money is
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going to her, it must be paid through her pay packet. If she is at home and the money is going to her, it will be paid to her at home. The choice concerns to whom it is paid, not how it is paid. If she is in work, she cannot say, "I want it paid to me, but I want it paid at home". She has no choice but to have it paid through her pay packet, just as is the case with a lone parent.
I have used trisyllabic words, bisyllabic words and words of one syllable. I cannot believe that the noble Lords, Lord Higgins and Lord Goodhart, do not understand that point. I regard it as a piece of sophistry when they say that because two people are involved and they can decide to whom it is paid, they therefore have a choice. They have a choice as to whom it is paid but not how it is paid. Therefore, the claim that couples have choices which lone parents do not is not valid.
The noble Lord, Lord Higgins, suggested that no stigma attaches to family credit and therefore it is perfectly reasonable to continue to pay family credit and that it has a high take-up. However, that is not true. Only 79 per cent of those entitled to family credit take it up. It has the lowest take-up of the main income-related benefits. However, some 95 per cent of those on IS claim that benefit, and 97 to 100 per cent of those eligible for housing benefit claim that. Some 90 to 95 per cent of those eligible for CTB claim that benefit. Therefore, in terms of take-up, family credit has always been one of the lowest income-related benefits to be claimed. Although the position has improved somewhat in recent years—the take-up has increased from 69 to 79 per cent—the take-up is well below that of other income-related benefits. The noble Lord picked up the point—
8.30 p.m.
Lord Goodhart: My Lords, I am most grateful to the noble Baroness for giving way. The take-up in terms of the amount of money that could be claimed is, I believe, substantially higher than 79 per cent. I believe that the figure is around 85 per cent.
Baroness Hollis of Heigham: My Lords, expenditure is always higher than the case load. However, about 21 per cent of those who could claim a useful addition to their in-work pay fail to do so. We do not believe that that same failure to claim will arise in connection with WFTC by virtue of the fact that it will be paid automatically through the wage packet.
The noble Lord said that my honourable friend had said that work pays and that we would drive home that message. It is easy for us to be complacent about the details of the social security system. I should like to share with the noble Lord a statistic that shocked me when I read it the other day. I read that 60 per cent of those out of work who claim housing benefit believe that if they enter work they will lose their housing benefit. That is not true. Everyone who has listened to this debate today in this Chamber knows that that is not true. However, the majority of people outside the Chamber believe that it is true. They believe that if they enter work, they will lose their housing benefit. If there is that level of ignorance about the social security system, it is not surprising that lone parents do not claim

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family credit when they are entitled to do so. It is not surprising that they do not realise how much better off they will be in work as compared with being on benefit. If they do not have that information, they will not make an informed choice.
One of the aims of WFTC is to empower lone parents to make an informed choice so that they will know what they can expect to obtain when they enter work as opposed to being on benefit. The noble Lord, Lord Higgins, insisted that family credit was a wage subsidy. That is a little rich as the previous government introduced family credit without the underpinning of a minimum wage. That meant that family credit was a subsidy not to the employee, but to the low-paying employer who knew that he could pitch wages where he liked, knowing that the taxpayer would take the strain. It is precisely because the working families' tax credit is being introduced following the introduction of the minimum wage that we know that no longer will support for low wages be a subsidy and a sweatshop charter, as it was under the previous government.
The noble Lord, Lord Goodhart, said that an employee may not want an employer to know about his or her family responsibilities. I thought that we had discussed this at considerable length in Committee and on Report. Employers will not be able to infer details of an employee's circumstances from the amount of tax credit that is paid. They will simply not be able to "deconstruct" that back to its component parts.
Lord Goodhart: My Lords, I am most grateful once more to the noble Baroness for giving way. I apologise for intervening again. I have made this point several times before. I accept entirely the fact that the employer will not be able to know details of an employee's family situation. However, the employer will be able to know the one absolutely essential feature; namely, that the claimant—the employee—has family responsibilities.
Baroness Hollis of Heigham: Yes, my Lords. In other words, the employer will know that an employee forms part of the perhaps two-thirds of his workforce who could be married, widowed, co-habiting or have children, as opposed to those who are single. The employer will know that a certain employee is simply not single; that is all he can know. He will not even know whether a person is disabled. That person may be entitled to a disability tax credit and be single. The employer will not even know that. I think that the noble Lord's example pushes at the very edges of reasoned information.
The noble Lord also argues that there is inconsistency between the Government's position on lone parents and the earlier amendments on employers. That is not the case. We have argued that the burden on employers is not disproportionate. That is why we are against an exemption. However, that does not mean that some employers may not take the opportunity to avoid any extra work that is involved
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if they can. There will always be some who will seek to duck and weave. We do not want to expose employees—particularly vulnerable employees—to that kind of pressure.
I hope that for all those reasons the House will affirm the decision of the Commons. I do not refer necessarily to the argument about the sparsity of attendance in the Chamber tonight compared with the sparsity of attendance in the Commons. I refer to the false argument that lone parents are not analogous to couples in this respect. They are in the same position as couples with regard to making a choice as to whom the money is paid. I refer to the argument that family credit has a relatively low take-up compared with other income-related benefits, as opposed to what we expect will be the relatively automatic payment of the working families' tax credit. I again make clear the point that work pays. We shall ensure that work pays without the taxpayer subsidising the low paying, unfair, exploitative employer. As I say, I hope that the House will affirm the decision of the Commons.
Lord Higgins: My Lords, before the noble Baroness sits down, I hope that she will answer the two points that I raised. First, does the suggestion of the Institute for Fiscal Studies that 250,000 extra people will be employed refer to the method of payment or to the extent that the working families' tax credit is a wage subsidy? Secondly, have any outside bodies supported the view that the noble Baroness has expressed with regard to the method of payment?
Baroness Hollis of Heigham: My Lords, on the first point, the noble Lord disappoints me. If he had read the report which he is happy to argue about, he would know the answer to his question. The report does not even seek to go into that level of detail. I am surprised that I have to tell the noble Lord this because I would have expected him to have read the report and to have shared his views on that report with the House tonight before engaging in this kind of debate.
Lord Higgins: My Lords, I am aware of that, but the answer is not in line with the argument which the noble Baroness expounded earlier in reply to the noble Lord, Lord Goodhart.
Baroness Hollis of Heigham: My Lords, the argument surely is that we know that only 79 per cent of those who are entitled to family credit take it up. We know that loan parents constitute the majority of claimants—about 51 per cent of those on family credit. We know that as a result there is money not going to homes, even to those in work. We also know that many lone parents in particular who want to enter work feel that they cannot afford to do so because they fear that they risk losing benefit. They feel that they are better off not being in work. We believe that the working families' tax credit will take care of all of those problems and will benefit lone parents. Therefore, I hope that your Lordships will acquiesce in the Commons overturning the amendments tonight.
On Question, Motion agreed to.
LORDS AMENDMENT
3 Clause 6, page 3, line 35, at end insert—
("(1A) Any employer employing fewer than ten employees may elect that any tax credit to which an employee is entitled shall be paid by the Board instead of being paid by him.
(1B) For the purposes of subsection (1A), the Board may make regulations providing for—

(a) the method for making or revoking an election;

(b) the method for cancelling an election if the employer subsequently employs ten or more employees; and

(c) two or more connected employers to be treated in specified circumstances as if each of them employed the employees employed by the other connected employers as well as the employees employed by himself.")

The Commons disagreed to this amendment for the following reason:
3A Because it is tot appropriate for smaller employers to be exempted from paying tax credit to their employees.
Baroness Hollis of Heigham: My Lords, I have already spoken to the amendment. I beg to move.
Moved, That the House do not insist on their Amendment No. 3 to which the Commons have disagreed for the reason numbered 3A.—(Baroness Hollis of Heigham)
On Question, Motion agreed to.

Greater London Authority Bill
8.41 p.m.
House again in Committee on Clause 80.
[Amendment No. 223 not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 223A to 223D:
Page 46. line 15, leave out from ("sections") to ("calculations") in line 17 and insert (" 70, 71 and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of the Local Government Finance Act 1992 would be different from the last relevant").
Page 46, line 20, leave out ("sections") and insert ("provisions.
() In subsection (5) above, "the last relevant calculations" means the last calculations made by the Authority in relation to the year in accordance with—

(a) sections 70 to 75 above and sections 47 and 48 of the Local Government Finance Act 1992, or

(b) sections 70, 71 and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of that Act.").

Page 47, line 11, at end insert ("under section 73(3)(b) of the Greater London Authority Act 1999 (in relation to item P1) or under section 74(5)(b) of that Act (in relation to item P2)").
Page 47, line 15, leave out from ("with") to end of line 17 and insert ("the appropriate Greater London provisions in making the calculations.
() For the purposes of subsection (11) above, 'the appropriate Greater London provisions" means—

(a) in the case of calculations required to be made in accordance with sections 70 to 75 above and sections 47
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and 48 of the Local Government Finance Act 1992, those provisions; and

(b) in the case of calculations required to be made in accordance with sections 70, 71 and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of that Act, those provisions.").

On Question, amendments agreed to.
Clause 80, as amended, agreed to.
Clause 81 [Provisions supplemental to section 80]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 224:
Page 47, line 25, leave out ("35") and insert ("15").
The noble Lord said: The amendment is very short, very brief and very simple. It seeks to change the number "35" to "15". Before dinner we had a considerable debate around the question of the funding of the Metropolitan Police and the procedure to be followed in the event that the Secretary of State advised that the mayor's proposals were not adequate and that the mayor should do something about it. He is given a considerable period of time to do something about it. We do not think that that period of time is necessary. We think he should perfectly well be able to do it in much lesser time. After all, if he is a competent mayor he will have all the details of the Greater London Authority Bill at his fingertips, so to speak, and he will know what is and what is not possible and that if adjustments can be made he will be able to make them. For the peace of mind of the people of London, that prolonged period of time should be diminished. The amendment seeks to do just that. I beg to move.
Baroness Farrington of Ribbleton: This amendment would require the GLA to make substitute calculations in 15 days rather than 35 days. We believe that this is too short. The GLA will have to follow the procedure set out in Schedule 6, which involves both the mayor and the assembly. It is essential that any changes to the budget are considered carefully, especially where cuts are being made, as might be the case here.
In general, when a local authority is designated and has to set a new budget requirement it is expected to do so in 21 days. To insist that the GLA, which has to involve both the mayor and the assembly in the process, completes its substitute calculations in a shorter time is unrealistic.
There is no prospect of any gap in funding for the MPA unless the GLA failed to make substitute calculations within the 35-day period. After receiving a direction, the mayor will continue to receive grant income from central government and council tax income from billing authorities as usual. Once the substitute calculations have been made, income from billing authorities will be on the basis of the substitute rather than the original calculations. It is only if the GLA does not meet the deadline that it will cease to receive income from billing authorities. So reducing the deadline to 15 days would not reduce the risk of a shortfall in funding for the police. It would have the opposite effect.

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The GLA will, in any case, wish to complete these substitute calculations as quickly as possible as it may need to adjust its spending plans or rebill the local taxpayers. Therefore I ask the noble Lord to withdraw the amendment.
Lord Dixon-Smith: I listened to the remarks of the noble Baroness in response to the amendment with some fascination. She seems to be following the view that all things are possible in the best of all possible worlds.
We are facing a situation in which there is already a problem. Unless one actually imposes some need for expedition on the system of amendment, if it is required as a result of a difference of opinion between the mayor and the Secretary of State over the police budget, then, despite what the noble Baroness said, there could be difficulties. I accept that it is perfectly true that there could be difficulties after 15 days if an agreement was not reached. That would apply whatever the time limit suggested on the face of the Bill might be. The point about the 15 days is that it would bring the decision right back so that it was well within the current financial year and well within the current funding arrangements of the police. The proposals on the face of the Bill begin to take the decision day further and further away from the original budgetary proposals. More significantly, it brings it closer and closer towards the end of the financial year when the problems could really begin to rise.
I have heard what the noble Baroness said—I shall study Hansard with care—but I do not think that her explanation has gone to the core of the problem. We shall come back to the issue at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 224A:
Page 47, line 44, leave out ("to 75 above") and insert (", 71 and 73 to 75 above and Schedule 6 to this Act").
On Question, amendment agreed to.
Clause 81, as amended, agreed to.
Clause 82 [Emergencies and disasters]:
Lord Whitty Lord Whitty moved Amendment No. 224B:
Page 48, line 23, leave out from ("year") to end of line 26.
The noble Lord said: In moving Amendment No. 224B I shall speak also to Amendment No. 224C. These are minor amendments. The first amendment deletes Clause 82(2)(c), which is not necessary and is a relic from an earlier draft of the clause. Amendment No. 224C corrects a minor error in Schedule 6. It replaces a reference to the existing capping legislation with a reference to the relevant provision in the new reserved powers under the Local Government Bill. I beg to move.
On Question, amendment agreed to.
Clause 82, as amended, agreed to.
Schedule 6 [Procedure for making of substitute calculations by the Authority]
Lord Whitty Lord Whitty moved Amendment No. 224C:
Page 201, line 39, leave out from ("section") to end of line 40 and insert (" 81 of this Act or section 52K or 52V of the Local Government Finance Act 1992.").p
The noble Lord said: I beg to move Amendment No. 224C formally.
On Question, amendment agreed to.
[Amendment No. 224D not moved.]
Lord Whitty Lord Whitty moved Amendment No. 224E
Page 202, line 18, at end insert—
("Publication
.—(1) This paragraph applies where any substitute calculations are made in accordance with this Schedule.
(2) Where this paragraph applies, the Mayor shall as soon as practicable publish a document containing the substitute calculations.
(3) In this paragraph "relevant document" means any document required to be published under sub-paragraph (2) above.
(4) A copy of each relevant document shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.
(5) A copy of any relevant document, or any part of a relevant document, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.
(6) In this paragraph "the appropriate period" in the case of any document is the period of six years beginning with the date of publication of the document pursuant to this paragraph:").
The noble Lord said: I beg to move Amendment No. 224E formally.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 83 agreed to. Clause 84 agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 224F:
Before Clause 85, insert the following new clause—
("CHAPTER IA BORROWING POWERS GLA BORROWING POWERS
.—(l) The Greater London Authority shall by virtue of this section have the power to borrow money.
(2) The Secretary of State shall not intervene in decisions taken under subsection (1) above.
(3) The Secretary of State shall issue guidance on prudent levels of borrowings for the Authority.
(4) The guidance may include an indicative limit on borrowings which shall take account of—

(a) the need for prudent on-going debt management;

(b) specific capital projects proposed by the Authority; and

(c) the total stock of the debt of the Authority.

(5) The guidance issued by the Secretary of State shall be published after discussions with the Mayor, the Chartered Institute of Public Finance Accountants and the Authority's auditor.
(6) If the budget proposed by the Mayor, and agreed by the Assembly, requires higher borrowings than the indicative limit in the Secretary of State's guidance, an Assembly vote shall take place with a two thirds majority of members voting required for the higher level of debt to be approved.").
The noble Baroness said: I beg to move Amendment No. 224F and at the same time I shall speak also to Amendment No. 225D, standing in the name of the noble Lord, Lord Sheppard of Didgemere, to which have also put my name. These amendments deal with borrowing powers on the part of the authority. The Bill allows borrowing only with very considerable constraints, using the system of basic and supplementary credit approvals. These are very closely linked with the budgets of individual functional bodies.
I do not believe there can be any dispute that some of the functions of the GLA will be very capital intensive. For this reason, we think it is important to ensure that the GLA has adequate powers to invest. We prefer an approach which looks at the authority's overall budget, including, and because of, the revenue effects on the taxpayers. 'We believe that the GLA should have a general power to borrow.
We are prepared to accept that the Secretary of State should have a role, though not the only role, in this, and our proposed clause provides that the GLA shall have the power to barrow without the intervention in decisions by the Secretary of State. However, the Secretary of State might issue guidance as to the levels of borrowing, including an indicative limit on borrowing to take account of the various matters set out in the draft clause.
We provide for publication of the guidance after discussions with the mayor and with other bodies, and we also suggest that, if the budget proposed by the mayor requires a higher borrowing than the indicative limit to which I have referred, then an assembly vote on the basis of a two-thirds majority will be required for the higher level of debt to be approved. This is all part of the GLA being able to determine its own strategic priorities. It is a matter a general principle for us that, as we have said several times in the course of this Bill, authorities should be able to take their own decisions about financial matters. That would include managing their budgets in both revenue and capital aspects.
If the GLA is to succeed with its important and onerous duties, many of which will require investment, then it should be able to take the decisions which are so closely related with carrying out its functions—that is, how to carry them out and how to ensure that the funding for the investment is there. That is why we have proposed this widely-worded amendment.
Amendment No. 225D, to which I have already referred, is. I admit from these Benches, a fall-back position. But it is one to which I am very happy to speak to tonight. I know that the noble Lord, Lord Sheppard, is sad not to be here this evening but he is abroad. This amendment has come from the "stable" of London First, representing London's businesses. I believe it is very telling that it is London's employers who are so very vocally concerned with investment in public transport. The clause provides that the GLA can issue a loan instrument secured only on the revenue stream from new charges and levies: that is, from prospective revenue.
We believe that this amendment is something of a test of the Government's credibility in what they say about hypothecation in the context of this Bill. It is vital that
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Londoners see the spending effects of their payments and see what they will be paying by way of congestion and parking charges, assuming that the provisions proposed are implemented. They will also see how their money can be put to good use for investment in public transport without a long wait.
The ability to invest future income streams would, to our mind, be helpful—indeed probably vital—to ensure the success of what are undoubtedly going to be difficult policies to bring into effect. However, if the public are to be taken along with proposed new policies which will be the subject of very considerable debate and are likely in some quarters to meet considerable resistance, then the carrot of better public transport must be there at least at the same time as the stick of the charges.
Many of the most immediate improvements which the GLA will wish to put into effect through its functional bodies are likely to involve relatively small-scale expenditure—expenditure which may be able to be financed directly from revenues such as bus priority measures, measures for cyclists and so on. We will come to the details of these schemes later but, as the Committee will be aware, there is a need for capacity improvements on the London Underground. These, as we have already discussed, are likely to be beyond the scope of public/private partnership agreements. That is quite apart from how one deals with the need for investment before PPP bites: contributions to investment in better commuter rail services, improved interchanges, more radical bus and intermediate transport schemes, and so on.
This amendment anticipates future revenues, not with a profligate approach but with a sensible one. Without the ability to borrow outside the Treasury controlled total, either the investment will not be additional investment—and the views of the public on additionality will be very important to the success of this scheme—or the revenue will be able to be spent only on a pay-as-you-go basis, and that will very considerably limit what can be achieved. Having spoken enthusiastically about Amendment No. 225D, I commend Amendment No. 224F to the Committee.
Lord Berkeley: Perhaps I may intervene briefly to speak to Amendment No. 225D in the names of the noble Lord, Lord, Lord Sheppard of Didgemere, and the noble Baroness, Lady Hamwee. I have listened carefully to the noble Baroness's remarks. The principles behind the amendment are certainly worth considering. It seems that the main revenue of Transport for London will be parking and road user charges. It will probably take a number of years before those can be implemented. If the proposed improvements to public transport cannot begin until the revenue starts to flow in, the carrot and stick approach that the Government have been so keen to put forward—in other words, giving people an alternative to cars—will become very difficult. There will be no improvements, in terms of bus lanes and so on, for a very long time. If we take the example of the Jubilee Line or the World Squares' proposal for Trafalgar Square and the area outside this House, we see that these projects take a great deal of time.

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I am not convinced that this amendment is necessarily the right one. However, I should like an assurance that cash will be forthcoming from some source—which must be the Government—in the interim period. The record of the past 10 years is not particularly good, especially under the previous government.
Many surveys have indicated that people who pay charges or taxes for motoring related activities would be happier to pay more if they knew that the money would be allocated to transport expenditure—it is to be hoped public transport. I hope that my noble friend the Minister will be able to say that, if the amendment is not acceptable, the Government will find some extra money to fill the gap between the revenue coming in and the need for the expenditure to begin. I look forward to my noble friend's reply.
Lord Dixon-Smith: My Lords, it is a pleasure to support Amendment No. 225D, tabled in the name of my noble friend Lord Sheppard of Didgemere and the noble Baroness, Lady Hamwee, and supported by the noble Lord, Lord Berkeley, on the Benches opposite.
We would encourage the Government to listen to the principle of Amendment No. 225D with great care, and to act upon it if at all possible. This may not be the precise amendment that is required to meet the needs of the situation. In any event, there is a particular problem in this area. We have not yet reached the point in the Bill where we might approve possible charges. However, the hypothecation period for the application of those charges is only 10 years. It might be extremely difficult to have the Greater London Authority issuing a loan instrument secured only on those revenues if there were not an assurance that that hypothecation would continue and that, let us say, the revenues raised in London and for London might be filched by a different government department for other purposes.
I have no doubt that in that situation the Government might argue that that was for the greater good. But Londoners would have some difficulty in following that argument. The Government would have even greater difficulty in persuading Londoners that it was appropriate. That obstacle exists. The time may come when we shall be able to do something about it. But from the point of view of using that revenue stream as a capital resource, the 10-year limit is a positive embarrassment.
That said, we support the principle of using that revenue stream as the base on which a capital sum might be raised for the future which would permit major improvements to London's transport system, without wishing in any way to specify what those improvements might be. My guess is that we could all think of 10 different improvements that we should like to see and believe are worth funding. Around this Committee there would probably be not 10 projects but 60—and that is being moderately unambitious.
The amendment tabled by the noble Lord, Lord Sheppard of Didgemere, of London First, has wide support from London business and commerce. That is not to say that that automatically makes it right. But it
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does mean that there is a wide degree of public assent to the principle behind the amendment. I urge it upon the Government.
With Amendment No. 224F, the noble Baroness, Lady Hamwee, is in the business of once again enunciating one of her dreams. The dream is unexceptionable; we should all love to see that ideal state. But the problem is—and the Minister will undoubtedly check me if I am wrong—that at the end of the day the Treasury stands in and is the guarantor of any debts, particularly in a capital field, on the part of a public authority—which include all local authorities and the Greater London Authority. If the Treasury stands in as guarantor, much as I regret it, the Treasury will inevitably have its finger in the pie and its say in what happens. That has to be accepted as unavoidable.
I should prefer a situation in which local authorities and the Greater London Authority stood on their own feet without the Treasury as guarantor. That would make for a much more exciting ride for local authorities. If that were the situation, local authorities would have to behave in a totally responsible way. If they did so, this country, and the world, would be much better for it. But, unfortunately, for better or worse—in this case, it is for worse—that is not the situation. I share the dream of the noble Baroness and wish that we could remove the Treasury from these matters. I would do anything to support the noble Baroness if that was the proposal. However, I do not think that such an amendment would be appropriate for this Bill. Therefore, I cannot support Amendment No. 224F, but it gives me great pleasure to support Amendment No. 225D.
Lord Ponsonby of Shulbrede: I hope that my noble friend the Minister can answer the following simple point. My understanding is that if the GLA has a good case for capital borrowing, it can apply to the Secretary of State for credit clearance. That is exactly the way in which all other local authorities operate. The noble Baroness, Lady Hamwee, did not advance a case as to why the GLA should be treated differently from any other local authority. That is the crux of the matter. The noble Lord, Lord Dixon-Smith. fantasised about greater independence being given to local authorities. We all share that fantasy. I remember that it was his party which, when in government, took away a good deal of that independence. Nevertheless, the noble Baroness must explain to the Committee why the GLA is different from other local authorities in this respect.
Baroness Miller of Chilthorne Domer: Perhaps I may draw a lesson from the recent past where the Government have gone through hoops and loops to get out of a particular bind. I refer to the housing stock of many authorities. They were unable to borrow the money needed to make substantial repairs. It is not appropriate to go into the details this evening. The Minister will be aware that to get round it the Government suggested to local authorities that, rather than borrow more money, they should form local housing companies. There may be something to be said for such bodies because in that way tenants have a greater say. Primarily, however, local authorities were

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forced down that road because they were not allowed to borrow money for the repairs which everyone agreed were necessary to make capital improvements to housing stock. If we look at that lesson, we see that my noble friend's amendment should be more than a dream. Drawing on history, if we do not allow this kind of borrowing, eventually we run into problems that must be resolved in a less than appropriate manner.
Lord Whitty: I recognise the need to engage in early capital projects, particularly in the area of transport, and therefore some of the matters that lie behind the concerns of London First. I am aware that the noble Lord, Lord Sheppard of Didgemere, intends to pursue this matter at a later stage as he cannot be here tonight. Therefore, I need to place on record for any future debate—although I hope that it will not be pursued tonight—the position of the Government.
I do not regard this matter as being wholly dreamland. It is fascinating to note that in this matter the noble Baroness and the noble Lord are in the same territory. We consider it important that the GLA is not treated differently from other local authorities. I should like to distinguish between the two amendments. I take first the amendment in the name of the noble Baroness. That would give the GLA power to borrow money which would be restrained only through the guidance of the Secretary of State. The other would be specifically a loan instrument secured against revenues under the road-user charging scheme. Both cut across the Government's clear commitment that the GLA should be subject to the local government finance regime. I believe that the Members of the Committee who have spoken in support of these amendments should provide an answer to my noble friend Lord Ponsonby as to why that should be so. All local authorities use the current system of credit approval to borrow. Their expenditure through borrowing increases public expenditure and, ultimately, exposes the Treasury. Our aim is to ensure that borrowing by the GLA is subject to the same system of control as applies in other areas.
In response to my noble friend Lord Ponsonby, the GLA and any other authority can approach the Government for borrowing to be authorised by credit approvals. Further approvals can be sought from the Secretary of State or the mayor, in so far as he has power to make allocations. There is, therefore, provision for capital expenditure to be undertaken. We have also provided for the unique nature of the GLA in two important ways: first, by creating a special system of credit approval, which recognises explicitly the particular role of the mayor to produce a capital spending plan through which he approaches the whole of capital spending priorities across all the four functional bodies; and, secondly, in the production of the plan. Clearly there is an important need for the mayor to be able to tackle many of the problems of London's crumbling infrastructure, not least in transport. It will be important that the Secretary of State is able to view positively any proposals by the mayor for investment but within the total system of local government finance as we understand it.
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It is also true, to complicate matters slightly further, that we announced in July a review of the local government capital finance system. We are looking at alternative arrangements for regulating borrowing as compared with existing arrangements which may be unnecessarily restrictive in some cases. One of the options being looked at is to allow authorities to borrow subject only to limits relating to the level of debt and to the guidance on prudent levels which underlies the noble Baroness's amendment. However, we are looking at that and a number of other options in this review. In the interim it is not appropriate that we authorise an entirely new and different regime for the GLA.
It is true that in addition to the ordinary credit approvals the GLA and the functional bodies will have a number of options to raise money to meet their capital spending needs, including transport. They could work with the private sector in relation to PFIs. Any deals which meet the PFI rules would not count against borrowing, and such deals could be established on the basis of expected revenues. We have also made clear that those authorities with innovative local transport plans will in effect get a larger share of existing resources in the Comprehensive Spending Review settlement.
It is also open to the GLA and functional bodies, where they are clear as to the future income, to issue bonds. A bond issued by one of those bodies would count on the public sector borrowing requirement and it would need to be secured against all the revenues of the authority and not a particular identified revenue scheme. A bond issue would, frankly, be more expensive than if the Government borrowed the money. In practice, in recent years local authorities have rarely used the bond route as it is cheaper to borrow from the public works loan. Nevertheless, that option is also open to them given adequate returns for the investment.
Therefore, a number of instruments are available to the GLA even within the current regime to finance early transport and other capital projects. But the general system of local government finance must be, subject to minor modifications, the same as applies to other local authorities.
I hope that that rather lengthy explanation both indicates the principle that we are adopting in relation to the GLA and other local authorities, and that the regime is not a straitjacket but will provide and allow for a number of ways in which the GLA could raise the capital finance itself even within the current regime; and that we are looking at changes within that capital spending regime which would apply to the GLA as it would to other authorities.
9.15 p.m.
Lord Brabazon of Tara: Perhaps I may make a few comments on Amendment No. 225D which relates to the revenue stream from the parking charges and the congestion charges. In my opinion the amendment would be better if it allowed the borrowing by Transport for London rather than the authority itself. That would then ring-fence it for transport purposes

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Are there not two precedents? I refer, first, to the changes the Government have made to local authority airport borrowing, where I gather that they freed local authority airports from the public sector borrowing requirement constraints. Is that not a precedent for Transport for London?
Secondly, a private company is being allowed to borrow large quantities of money from the market for the building of the Channel Tunnel rail link, but it is guaranteed by the Government and the company is therefore getting the money at government rates in the market which are considerably finer than they would be for a private company on its own.
Those are, I believe, precedents which would apply to Transport for London borrowing against revenue from both the items specified in the amendment: parking charges and congestion charges. Can the Minister comment on that?
Lord Whitty: I do not think that the second of those options is analogous. Clearly there is an underlying assumption concerning government support for the scheme, but it is not a direct public authority that is being allowed to borrow. It is an entirely private company.
In relation to municipal airports, we have agreed that there should be a relaxation in relation to local authority airport companies where they have constituted a separate incorporated company. That is possibly the analogy of housing stock drawn by the noble Baroness, Lady Miller of Chilthorne Domer. But in relation to fully commercial operations such as municipal airports, we are in a different situation from that of an authority which is dependent ultimately on the Treasury for various forms of taxation for its finances. So there is not a direct comparison. Nevertheless, as I said, the Government are considering whether some change in regime should apply to local authorities as a whole. The point of principle I make tonight is that the GLA should not be treated differently from the rest of the local authority sector in this respect.
Lord Dixon-Smith: Perhaps I may comment briefly on the Minister's statement that in recent times the local authorities have not greatly resorted to the bond market. My experience has been that the decision of local authorities in the management of their capital debt depended very much on their reading of the long-term prospects for interest rates. If they were of the view that interest rates were likely to rise, the tactic was always to borrow long with the Public Works Loan Board (PWLB). However, if their view was that the interest rates were likely to be low, so far as they could they would borrow short and in the bond market. They did so for the good reason that they could borrow from the bond market for shorter periods than they could borrow from the PWLB.
That is the reading that tends to lie behind decisions on loans and I do not believe that we should assume that because local authorities have tended to use one type of loan debt as opposed to another at any particular time,
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the situation should or will continue for a while. In any major authority, the decision is tactical and can result in an authority which gets it right saving considerable sums of money on behalf of its council tax payers. Therefore, good financial management in responsible authorities does produce real and tangible benefits.
Baroness Thomas of Walliswood: Perhaps I may add a couple of points before the Minister responds. I am disappointed to hear the old canard that borrowing by local authorities adds to public expenditure. It does so only because the Treasury decides it does so. Many economists will not accept that that is sensible, but there we go! The argument is not easy to justify, because the borrowing would be done in the private market and would not have the effect of creating a new money supply.
The Minister said that the new authority could not be different from any other authority. The new authority is different. It is taking a direct charge from the people who live in its area in the form of congestion charging and levies on workplace parking. That is unique. Those powers combined are different. The new authority will have a new revenue stream, which is hypothecated within the Bill, and that will make it different from any other authority. I was chairman of my highways committee for three years and I know about borrowing, and the difficulties of it, for capital projects in highways and transport. But this authority will be different. We are talking about a stream of revenue which can be created by the local authority. In fact, the Bill provides for that. The GLA will not be the same as any other local authority.
The Minister referred to PFI for raising additional funds. Yes, that is possible. The various ways in which local authorities can combine with the private sector to achieve agreed objectives are most useful, but almost always the local authority has to make capital input to show commitment to the scheme. It is seldom that all the money is found in some magic way by the private sector. One of the uses which could be made of borrowing in this way against revenue streams is precisely to provide that top-up in the more expensive kind of schemes to which various members of the Committee have referred.
On the two last points, I should like the Minister to reconsider the theory that in this respect the GLA is exactly like every other local authority. In my submission, it is simply not like every other local authority. Therefore, it is at least worth considering whether its financial powers should not reflect that very different character.
We have taken note of the comment of the noble Lord, Lord Brabazon of Tara, and will consider whether the suggestion that borrowing against revenue streams might more properly be allocated to Transport for London is a sensible way of moving forward.
Lord Whitty: The view of the noble Baroness as to whether this should or should not be counted against public borrowing is a matter that we shall not resolve on the basis of this Bill. I understand that there are fairly firm views, and effectively we are now also bound by

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some European aspects which make our position more similar to that in other countries. Part of the argument against was that we were disadvantaging ourselves, but that is no longer the case.
As for whether the GLA is a different kind of local authority in terms of financial regimes, it is in certain respects, but there is no reason why the rest of the country should regard it as being subject to preferential treatment.
As for saying that the GLA is different because it will have a revenue stream arising from road-user charging, it is our intention, which has been signalled fairly clearly, to legislate more generally, and all local authorities should be able to raise such charges and levies. Therefore, the GLA would rapidly become the same as local authorities a year or so after the passage of this legislation, so that is not a particularly good argument for special treatment.
The noble Lord, Lord Dixon-Smith, has considerably greater knowledge of local authorities in earlier periods raising more money through bonds. It is true that at times they have resorted to bonds, based on the expectation of relative movements of interest rates. However, in general it has been for relatively short periods of time compared with the long-term capital that we would be looking to raise under the objectives behind this clause—perhaps long-term capital investment in transport.
In any case, any judgment at any particular point in the cycle must be fairly subjective. We could not rely on a relative improvement in the bond rate of interest, as compared with that of the Public Works Loan Board, lasting long enough to alter the fact that bonds are a very particular way of financing capital expenditure. Nevertheless, it is an option that is available to the GLA, depending on its long-term assessment of the capital projects under consideration.
I hope I have responded to those additional points. We shall no doubt return to this debate later in the Bill, and I hope that for the moment, with those comments for the record, we can move on.
Baroness Hamwee: In a moment.
One of the things that I have gleaned from the debate is that in the eyes of the Committee I have dreams and the noble Lord, Lord Dixon-Smith, has fantasies. I shall stick with some of my dreams.
My noble friend Lady Thomas of Walliswood referred to an issue that the Minister said we shall not resolve tonight: the definitions applied by the Treasury in the case of the PSBR. In our eyes, as was said in the report of the Select Committee on relations between local and central government, that is the Humpty-Dumpty argument—"Things mean what I say they mean."
As regards why the GLA should be treated differently from other authorities, we believe that these freedoms should be available to all authorities. Sadly, the Bill provides only for the GLA. Therefore, in our dreams, we wish the GLA to achieve that which we wish to see all authorities achieve. It is a question of taking advantage of the opportunities 'which are available.
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I note what the Minister said about future legislation. But time will have been lost. I am sad but not surprised that there has been no answer to the points that I made about the need for public support for the schemes which may be brought forward by the mayor. Congestion and parking charging will be new to this country and it is extremely important that those measures should have public support and that the public should see the additionality of the funds used. They should be confident that they are not, yet again, being ripped off by some bureaucratic and rather grasping government, whichever level of government we are talking about.
In our eyes, those political points underlie and underpin the need for those financial freedoms. As the Minister said, we shall clearly want to return to this topic. We shall be talking to the noble Lord, Lord Sheppard of Didgemere, about the right approach. We may return with more than one approach to the issue. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Clause 85 [General GLA grant]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 225:
Page 49, line 10, at end insert ("and the cost assumptions on which the amount of the grant has been determined, which shall be published in such manner as the Secretary of State deems appropriate").
The noble Lord said: Clause 98 is of fundamental importance to the future of London because capital expenditure predicates future revenue expenditure. One is not talking just about interest and loan repayments when one says that; one is discussing also running costs. That could be the cost of running the Underground, if one puts in a new line, new signalling equipment, new rolling stock, highway improvements or it could be, because we are discussing capital expenditure in general, the cost of a building, staffing it and all the associated costs which would run with that. Therefore, consideration of the capital budget is fundamental to the future of this great conurbation. Capital investment can be regarded as good, by definition; but, in the way of the world, it is like everything else because an excess may have an adverse effect.
I apologise to the Committee. I am dealing with the wrong amendment. Amendment No. 225 is a simple amendment which requires that the Government should publish the cost assumptions on which they calculate the amount of grant which they are to give to the GLA. It is a simple matter which the Government could reasonably accept.
The cost assumptions on which the budget are made for the GLA grant and the GLA transport grant are fundamental. If they are not well and widely known, it makes it much more difficult for the people of London to understand what is going on. It also makes it more difficult for the people of London to understand the budgetary process of the authority.
I use the word "authority" because we are talking about the authority's budget. We are not talking about the mayor's budget. In the end, it must be the authority's budget.
This is really another of those issues of open government. The case should be unarguable. I look forward to the Minister accepting the absolute validity of this simple little matter. I beg to move.
Baroness Farrington of Ribbleton: The Secretary of State will be obliged to consult the mayor before determining the amounts of grant to pay to the GLA. It would be very surprising if the mayor did not make public the content of those consultations. It would also be surprising if noble Lords and Members of another place with an interest did not table parliamentary Questions asking about the basis for the determinations.
We do not agree that the Secretary of State should be under a duty to publish the cost assumptions on which the amount of grant has been determined. Noble Lords will be aware of the clear principle that policy advice to Ministers should not be published. This amendment would not add anything to the information that will already be in the public domain. Therefore, I feel sure that I can ask the noble Lord to withdraw his amendment.
Lord Dixon-Smith: I always wonder at the wording of parliamentary etiquette. When the Minister feels sure she can ask me; for sure she always can. The question has to be whether I shall accede to the request. In this instance—
Baroness Hamwee: I thank the noble Lord for giving way. I sense that the noble Lord may be about to withdraw his amendment. Perhaps I may interrupt him to ask the Minister whether a cost assumption is a matter of policy. It seems to me to be based on economic assessments, and so on, and not something which is confined to the policy area.
Baroness Farrington of Ribbleton: Surely there is an element of judgment in putting together the amount in the end in terms of policy and priorities. In answer to the noble Lord, Lord Dixon-Smith, if he calls me Pangloss, I am bound to assume that he is prepared to withdraw an amendment.
Lord Dixon-Smith: We are back in the business of discussing open government. I believe that it would not be disagreed anywhere on this side of the Committee that the way the Bill is drafted and the way the Government are answering these questions leaves something to be desired on the question of openness. In the light of that comment, I shall study with care what the Minister said in response to the amendment. In the meantime, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 85 agreed to.
Clause 86 [GLA transport grant]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 225A:
Page 49, line 27, at end insert ("but the amount of the grant shall increase by at least the annual rate of the Retail Price Index in each year beginning from the Authority's second financial year.").
The noble Baroness said: Clause 86 provides that the Secretary of State will provide what is to be called the "GLA transport grant" to the authority for the purposes of transport for London. Our amendment provides that the amount of the grant shall increase by at least the annual rate of RPI in each year from the second year of operation of the authority.
As I mentioned in the debate on borrowing, it is important that Londoners have confidence that public transport is regarded by central government, as well as by the authority, as a very high priority. Indeed, from everything that has been said by the Government about the functions of the GLA and about getting London moving, I believe that they regard transport as a high priority.
The public must not be allowed to think that congestion and parking charges will go into a general pot rather than into improving public transport. We did not agree with the amendment proposed earlier today which linked in that case the precept to the rate of RPI. Amendment No. 225A, which is extremely modest, appropriately links the grant to RPI. There is a closer connection, although if any Member of the Committee has any other basis for ensuring that the GLA grant is kept up in a manner which the public would regard as keeping up with inflation, we are open to suggestion.
The general point is a question of public confidence and support for what the authority is doing. The travelling public must believe that the GLA is keeping up the proper level of investment in London's transport system. I beg to move.
Lord Whitty: I understand that the noble Baroness is after a degree of stability in the funding of transport, but that will arise when the mayor produces the plan, when the plan is agreed by central government and when we have some means of delivering that plan. To link the level of government grant to the RPI is potentially counterproductive and unhelpful to the mayor. The mayor may want, for example, to see some substantial increases over a short period of time in order to meet the costs of a major project which needs to fit in with the general timetable planned. Were central government to look at that request and know that that exceptionally high level of grant would thereafter be linked to RPI, they might well hesitate to accede, whatever their political complexion at that point.
Although I understand what lies behind the amendment, it may be counterproductive and I hope therefore that the noble Baroness will not press it. In relation to the congestion charge situation, I can reassure Members of the Committee again that the money arising from the road-user charging scheme will be available for transport projects. It will be hypothecated entirely to transport projects for the first 10 years of each scheme. There is therefore a built-in stability in that respect. This amendment does not add to that and it could deter a future Secretary of State from allocating specific resources to a specific need.
Baroness Thomas of Walliswood: Perhaps I may ask the Minister a specific question. He may already have made this point and I missed it.

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Behind Amendment No. 225A lies the question of additionality. There is real concern that the new revenue stream will be a substitute for existing income or existing permissions to spend (however one phrases it) in London on transport or other objectives. If the Minister could reassure the Committee today and, through us, a wider world that the principle of additionality is built into the way in which the Government regard this Bill and the revenue streams we are discussing—that is, the current transport grant and the new revenue streams—that would go some way to making these amendments unnecessary.
Lord Whitty: That is probably the wrong question. Additionality and non-additionality are not the issue; the issue is whether the mayor proposed a plan which needed to be financed, whether the Government agreed that plan, and whether adequate revenues were available for it. The source of those revenues will certainly include hypothecated road-user charges. For many years to come—I suspect, well beyond the 10 years that we are talking about now London will require substantial additional transport grant from the centre. The question of additionality therefore does not arise in that context. The key is need and whether that need can be financed by the various revenue sources.
9.45 p.m.
Baroness Hamwee: I believe that my noble friend's question was exactly the right question, even if it was an awkward question. The concerns expressed about the hypothecation of the two income streams are understood by the Minister when he says that he anticipates that they will be hypothecated for many more than the 10 years of which we have heard. That will certainly be necessary because it will take a large chunk of those 10 years to get such schemes off the ground.
Lord Whitty: I will clarify the position for the sake of the Chancellor of the Exchequer. I did not say that the hypothecation would necessarily last more than 10 years for each scheme that is started within the next 10 years. I said that I suspected that grants could be necessary for well beyond that period. I clarify that point just in case.
Baroness Hamwee: The Minister is absolutely right. I did not mean to put words into his mouth. Perhaps I was hoping to understand something of what was in his mind, but I would not like the noble Lord to find disfavour with the Chancellor.
The Minister challenged our amendment on the basis that it might be counter-productive but it is specifically worded as a minimum. We used the words,
"the amount of the grant shall increase by at least the annual rate of the Retail Price Index".
so I do not think that could be regarded as prejudicing the cause.
The main point is the question of additionality and stability, as identified by the Minister. If I were confident that central government were committed to funding the transport strategy and its implementation—
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including local implementation plans—I would have felt less need to table the amendment. However, for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 86 agreed to.
Clauses 87 to 91 agreed to.
Clause 92 [Judicial review]
Lord Whitty Lord Whitty moved Amendment 225B:
Page 52, line 4, leave out from ("1999") to end of line 5 and insert—
("(cd) a substitute calculation made in accordance with an) of sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act;" ").
On Question, amendment agreed to.
Clause 92, as amended, agreed to.
Clause 93 [Functions to be discharged only by certain authorities]:
Lord Whitty Lord Whitty moved Amendment 225C:
Page 52, line 14, leave out from ("1999") to end of line 15 and insert—
("(bc) making a substitute calculation in accordance with any of sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act;".").
On Question, amendment agreed to.
Clause 93, as amended, agreed to.
Clauses 94 to 96 agreed to.
[Amendment No. 225D not moved.]
Clause 97 agreed to.
Clause 98 [Aggregate credit approval for Authority and functional bodies]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 226:
Page 54, line 30, leave out paragraph (c).
The noble Lord said: It seems to me that it would be superfluous to repeat the words that I spoke in error when we were discussing the previous amendment. Therefore, with the leave of the Committee, perhaps we could take those words as having been spoken and relevant to this amendment. That would spare me the bother of repetition, which would, of course, greatly add to everyone's feeling that we were not making the progress that we ought to be making.
Clause 98 sets out pretty much a system which is largely consistent with existing local government practice. We have category A schemes which are specifically approved by the Secretary of State; we have category B schemes which relate to a nominated sum by the Secretary of State and which can be allocated by the authority; and we have category C schemes which, if I read the paragraph correctly, relate to designated amounts for allocation by the mayor to such authorities and for such purposes as he sees fit. I have no problem with any of those designations.
I have a little difficulty with category D schemes because this area appears to me to go back to giving the Secretary of State control, once again, over matters with

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which the mayor is dealing. I therefore find myself wondering more than somewhat whether that category really is necessary in view of the previous three.
Amendment No. 227 has been tabled because I must confess that Clause 99(3) is beyond my powers of comprehension, unless particular circumstances arise. As drafted, the subsection states:
"Where an additional credit approval is issued not more than six months after the end of a financial year"—
in other words, it seems to me that it is a post-dated approval—
"the period specified under subsection (2) above may be one which begins, or begins and ends, at any time during that financial year".
For that clause to have any place in the Bill, the GLA will, perforce, have carried out items of capital expenditure which are, presumably, outwith its capital budget and, more significantly, outwith any capital approvals which it has previously received.
It is possible that circumstances could arise where such post-dated approval is in fact required. But if that is the case, it does not give me a great deal of confidence in the financial management either of the authority or indeed of the system of approvals which could allow such a situation to arise. It is with that in mind that I have tabled the amendment to remove subsection (3). I await the Minister's response with considerable interest. I beg to move.
Lord Whitty: I could attempt to go into considerable detail on this clause, but it seems to me that I should indicate to the noble Lord the fact that I do not think his objectives would be achieved by these amendments. Amendment No. 226 would remove Category C from the aggregate credit approval that the Secretary of State will issue to the mayor before the start of the financial year. That would restrict the mayor. Amendment No. 227 would remove Clause 99(3), which provides that as long as,
"an additional credit approval is issued not more than six months after the end of a financial year"
the period for which it has effect may begin at any time during that year. It is important that the Government should have the option of supplementing the allocation of capital resources by means of the aggregate credit approval. The provision gives additional flexibility to the Minister in that regard if an authority approaches him.
In my view the amendments would add unnecessary restrictions to the GLA's capital finance system. Amendment No. 226 would severely restrict the role of the mayor in allocating credit approvals to the GLA. Amendment No. 227 would also be restrictive and would be inconsistent with the flexibility which applies in the issue of supplementary credit approval to other local authorities. Therefore it would place the GLA at a disadvantage.
I am happy to write to the noble Lord with further detail. I have some rather lengthy notes here which I could read out but I am not sure that that would greatly enlighten any of us. I believe that the noble Lord's amendments would have the contrary effect to that
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which he seeks. Therefore I hope that he will not pursue them. However, as I said, I am happy to provide further detail request it.
Lord Dixon-Smith: I am grateful to the Minister for his reply. He has filled in some of the background which was what I hoped to prise out of him in tabling these amendments. I shall study with care what he has said. I should be grateful if he would write to me with the pages of detail that he says he has. Other interested persons might find that useful too. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 98 agreed to.
Clause 99 [Additional credit approval]:
[Amendment No. 227 not moved.]
Clause 99 agreed to.
Clauses 100 to 103 agreed to.
Clause 104 [Power to redistribute capital receipts of functional bodies]
The Deputy Chairman of Committees (Lord Cocks of Hartcliffe): Amendment No. 228. Lord Dixon.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 228:
Page 57, line 46, at end insert ("provided that no such payment may be directed to be made by a body until that body's debts have been fully repaid").
The noble Lord said: I hope that the Deputy Chairman of Committees will forgive me if I point out that I need to be referred to as the noble Lord, Lord Dixon-Smith, as the noble Lord, Lord Dixon, sits on the Government Benches. He may be upset if when he reads Hansard in the morning he discovers that he has proposed opposition amendments.
The Deputy Chairman of Committees: The noble Lord, Lord Dixon, was one of my Whips. With his physique I would not like to offend him. I call Amendment No. 228 in the name of the noble Lord, Lord Dixon-Smith.
Lord Dixon-Smith: I am most grateful for those comments. Clause 104 gives the Secretary of State power to make regulations to enable the mayor to direct the allocation of a functional body's usable capital receipts to some other part of the Greater London Authority. Amendment No. 228 requires that before the Secretary of State can make regulations to permit the mayor to designate those usable capital receipts for other purposes the functional body should have paid off any of its capital debt that is outstanding. Once that has taken place, reallocation becomes permissible.
The issue of capital funding and the tactics of capital management is inevitably complex. There is not the slightest doubt but that, even with interest rates where they are today, the cheapest way of funding capital expenditure is to fund it directly on revenue. One is then not subject to interest charges and interest payments over a long period of time, which of course inevitably raise the cost of projects. If that happens, the consequence is that the present generation finds itself

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paying for benefits which are enjoyed and will continue to be enjoyed by future generations, benefits to which they make no contribution. Of course, they may undertake their own capital expenditure. Loans spread the cost across the generations but, in doing so, they also increase the costs.
We are discussing the good management of resources. It is an issue which requires careful consideration. There is a separate issue within it; that is, that the functional bodies within the Greater London Authority will need financial incentives of some kind if they are to manage their assets efficiently and effectively in the interests of the people of London. If the financial consequences remain with the functional body, good asset management will bring about either lower cost systems or lower costs. Alternatively, possibly more beneficially, it might permit an increase in the overall volume of service.
However, if we follow the Secretary of State's powers of designation and the mayor reallocates the usable capital receipts elsewhere, the functional body may well find that it is not receiving the direct benefits of its good financial management; and, if it finds that it is not getting the direct benefits of its good management or its good management of its property assets, it may feel less inclined to manage those assets well in the best interests of the wider public.
It is with that in mind that we have tabled the amendment. Perhaps it would only partially bring about the effect that I desire, but partially is better than not at all. I beg to move.
10 p.m.
Baroness Hamwee: The noble Lord will not be surprised that we have difficulty in supporting the amendment. We have taken the line throughout that the authority's budget should be regarded as one budget, not as a group of individual budgets from the functional authorities. Although we do not much like the need in Clause 104 for the regulations to come from the Secretary of State to allow the redistribution of the receipts, we do at least recognise that the mayor will be the beneficiary of any regulations and be given the power to make directions. We think it is appropriate that the budget is one single budget, not a group of individual budgets. Questions of the control and care to be taken by the functional bodies are ones to which the mayor should have regard in running the authority rather than being matters for legislation.
Baroness Farrington of Ribbleton: Amendment No. 228 would mean that a functional body could be required to give up part of its useable packet of receipts for the benefit of the GLA or another functional body only if it has become free from debt. In fact the power to make such regulations as those in Clause 104 is an important reserve power. We have no immediate plans to make such regulations and it may be that they would never be needed.
Clauses 105 and 106 enable the bodies to redistribute resources voluntarily, subject to the mayor's consent. If these arrangements are used in a co-operative way it
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may never be necessary to invoke the powers. The mayor's power to redistribute capital receipts is subject to a number of safeguards. First, amounts that the mayor directs a functional body to pay to him can only be used to meet the capital expenditure of the GLA or of another functional body. Secondly, the mayor cannot take away from a functional body capital receipts derived from particular disposals of assets. Thirdly, any regulation made by the Secretary of State will contain a number of safeguards to make sure that the power was exercised reasonably.
I must say that I find this amendment unhelpful, and its effect is unclear. It appears to mean that a body could be required to give receipts for redistribution by the mayor only if it was free from debt. This may be intended to require the prior discharge of long-term borrowing rather than all debts. That would need to be made clear. Assuming that that is the intention behind the amendment, it would prevent the mayor from securing the most efficient use of capital receipts across the GLA family, but at the same time it would do nothing to require or encourage the functional bodies to take any steps to discharge their debts.
This amendment could strain the use of any power conferred on the mayor to redistribute the capital receipts of functional bodies, and would certainly make it more difficult to use the power sensibly and effectively. It would probably render it unworkable. I therefore ask the noble Lord to withdraw this amendment.
Lord Dixon-Smith: I am grateful to the Minister for her explanation of the reasons why the Government feel they cannot support these amendments. I shall need to study the answer with great care before deciding whether to take the matter further. There is always a potential for conflict between the interests of the constituent bodies and the authority as a whole, and that is something which we have to face in this Bill and which must be faced by the authority in due course. Our function here is to try to make sure that the process will work as smoothly as possible within the authority. It was with that in mind that the amendment was moved, and I now beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Dixon-Smith moved Lord Dixon-Smith moved Amendment No. 229:
Page 58, line 26, at end insert—
("() The anticipated percentage of the available capital receipts of each functional body that are to be paid to the Authority as specified in subsection (I) above shall be published by the Mayor in the capital spending plan prepared for that body under section 106 below.
() The amount paid out of available capital receipts to the Authority by that body during the year shall not exceed or be less than the amount stated in the capital spending plan by more than ten per cent of available capital receipts.").
The noble Lord said: I beg to move Amendment No. 229. This amendment, with Amendments Nos. 230 to 235, appears on the Marshalled List in my name. With the leave of the Committee, I will speak to them all. The Government's proposals give a great deal of discretion: to shift capital receipts from the functional bodies to

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fund capital spending of other bodies within the authority in Clause 104; to make grants for capital spending in Clause 105; and even to make grants for current spending in Clause 106.
While some degree of flexibility is desirable, it seems to me that the amount of flexibility which is permissible under the Bill as drafted is perhaps rather more than is reasonable. In the wrong hands, it could lead to possible abuse by, for example, raiding the capital receipts of one body in favour or projects elsewhere, when the body that was, so to speak, raided was itself in desperate need of capital expenditure. I accept that there is always a judgment to be drawn. To borrow the words of the noble Baroness, Lady Hamwee, we are dealing with one authority and the mayor has to be able to set his priorities. But the authority should be bigger than the mayor. It will in the end be bigger than the mayor and the assembly too. A judgment will always have to be made as to what is responsible financial management. These amendments are directed towards that.
Turning to Amendment No. 233, the Bill as drafted seems to specify a minimum capital grant. The provision relates to grants under Clause 105. The Government's proposal is that the mayor's capital spending plans should set out the minimum amount of grant that the authority is to pay to each functional body for its capital spending in the coming year. To set out a minimum at this stage seems inappropriate. It would be better to set out the estimated amount of the grant rather than the minimum. That would be a tighter definition; it would be less capable of subsequently being, let us say, adjusted unfortunately if a mayor were so inclined.
Amendments Nos. 234 and 235 reinforce the disclosure requirements of the earlier amendments. The first amendment ensures that all the capital spending plans of each functional body should make clear all the funding resources for that functional body's capital spending: not just the capital grants from the authority but also any proposed transfer of capital receipts from other functional bodies. That would increase the transparency of the assembly and, through public access to public spending plans, the understanding of the wider public as to how capital spending was being funded.
The existing government proposal suggests that there should be some disclosure of funding from capital grants, but does not indicate what will come from the transfer of the capital receipts. The amendments are directed towards improving the transparency under which the authority is working.
Baroness Farrington of Ribbleton: This group of amendments would require the mayor to include in the capital spending plan a wide range of additional information about capital grants and the redistribution of capital receipts. That is information that could be given only if at the time when he came to prepare the capital spending plans for the forthcoming financial year the mayor had made, and was in a position to make, firm decisions about the distribution of such resources. Taken together, the amendments would greatly reduce the
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mayor's discretion in allocating capital resources to the functional bodies and they are not acceptable to the Government.
Four of the amendments relate to information in the capital spending plan about redistributed capital receipts. Members of the Committee will be aware from previous debates that Clause 104 gives the Secretary of State power to make regulations under which the mayor would be allowed to redistribute the capital receipts of functional bodies. If such regulations were made, Amendment No. 232 would require the mayor to include in section A of the capital spending plan the amount of capital receipts functional bodies would be expected to pay him or her.
Amendment No. 234 would require the mayor to estimate in section B of the plan the amount of capital receipts he would take away from one functional body and give to another.
The mayor would also be required under Amendment No. 235 to include in the figure for the expenditure that he expects each functional body to meet out of capital grants in Section D the amount he expects them to meet out of redistributed capital receipts and grants paid by the GLA.
Amendment No. 229 would constrain the availability of capital receipts to the mayor under Clause 104 to an amount which does not vary by more than 10 per cent from the amount that he states in the capital spending plan. These amendments would constrain the use of any power conferred on the mayor to redistribute the capital receipts of functional bodies and make it more difficult to use that power in a sensible and effective way.
Under Amendments Nos. 230 and 231 the powers of the GLA and functional bodies to pay capital and revenue grants to each other are similarly intended to be exercisable at any time during the financial year. The need for an exchange of resources between bodies in the GLA family could arise at any time during the financial year. The amendments would prevent and undermine this. I go back to the point made in several contributions by the noble Baroness, Lady Hamwee. These amendments could completely undermine one of the methods by which the Bill promotes the most efficient use of the resources of the GLA and the bodies as a whole. I do not wish to misquote the noble Baroness, who believes that we do not go far enough in this respect.
Finally, Amendment No. 233 would require the mayor to include in Section B a statement of how much capital grant he estimates the GLA will pay to each functional body. The Bill as currently drafted requires the mayor to state the minimum amount. The Government's Amendment No. 232A allows him to specify nothing if he has not reached a decision on that amount. In requiring all such payments to be estimated before the start of the financial year, the amendment cuts down the discretion and financial flexibility that the power is intended to confer. Thus, to reduce the mayor's discretion will disadvantage the functional bodies because the amendments will remove financial flexibility in making available capital resources.
The mayor is to be in a position to help meet the expenditure needs of the functional bodies, which can change during the course of a financial year. He can help by making available grants and helping with the

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redistribution of resources. We believe that it is not cost effective or sensible to have these matters tied down in a plan before the year begins. The amendments would seriously undermine the mayor's discretion and, therefore, cannot be acceptable. I ask the noble Lord to withdraw the amendment.
10.15 p.m.
Lord Dixon-Smith: I am grateful to the noble Baroness for her response, which takes me some way forward. She may well be right in saying that the amendments make it more difficult for the mayor to operate in a sensible and effective way with regard to management of the capital resources of the authority, but I also suggest that they would make it considerably more difficult—this is the intention—for the mayor to act in a rash and less effective way. Every coin has an obverse and reverse. One must always consider that aspect. Nonetheless, I shall consider with care the response of the noble Baroness. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 104 agreed to.
Clause 105 [Capital grants between Authority and functional bodies]:
[Amendment No. 230 not moved.]
Clause 105 agreed to.
Clause 106 [Revenue grants between Authority and functional bodies]:
[Amendment No. 231 not moved.]
Clause 106 agreed to.
Clause 107 [Form and contents of capital spending plan]:
[Amendment No. 232 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 232A:
Page 59, line 31, leave out paragraph (a) and insert—
("(a) if the Mayor has decided a minimum amount of grant which the Authority is to pay to the body for the year under section 105(1) above, that minimum amount;").
The noble Lord said: This is a minor amendment. It is intended to remove a possible misunderstanding of the existing draft; namely, that the mayor is required to state for each functional body a minimum amount of capital grant he will pay to that body (and therefore is required to decide four minimum amounts). That was not the intended effect of Clause 107(4)(a). It was intended to leave the mayor free to decide what capital grants to make to the functional bodies and to require him to specify an amount only where he makes a decision to pay a body no less than a certain amount.
The amendment ensures that the requirements for preparation of the capital spending plan are brought completely into line with other arrangements in the Bill. I beg to move.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Dean of Harptree): In view of Amendment No. 232A being carried, I cannot call Amendment No. 233.
[Amendments Nos. 233 to 245 not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 236:
Page 60, line 16, at end insert
("(7) Section E of a capital spending plan made for any financial year ("the relevant financial year") other than the first two financial years following the commencement of the Authority shall consist of—

(a) a statement of—

(i) the amount of the body's total capital spending in the preceding financial year, and

(ii) the total amount of expenditure which the Mayor had expected the body to incur in the capital spending plan for the previous year;

(b) where the amount in paragraph (a)(i) exceeds the amount in paragraph (a)(ii), a statement of the reasons for this and a proposal for reducing the capital spending plan for the relevant financial year by the amount of the excess.").

The noble Lord said: The purpose of the amendment is to guard against systematic overspending on capital items by publishing an outturn at the end of the year so that it can be compared with the planned amounts of capital spending for each functional body in each of the previous two financial years so that the level of financial management, or the competency of that management, can be perceived easily.
The amendment maintains a principle for which we have been pressing throughout the Bill of imposing greater visibility in the authority's spending. It reinforces the disclosure requirements of earlier proposed amendments. Were this disclosure to reveal an overspend in relation to the plan, it would require reasons to be given together with proposals to claw back or deal with the problem of an overspend. This would be a protection for the people of London and would help to prevent poor management of capital resources which might lead to an unacceptable risk for the people of London in the future, which would be permissible as the Bill is currently framed. I beg to move.
Lord Whitty: The amendment is somewhat overprescriptive. It would require the mayor to produce every year an extra part of his plan which reported precisely on the deviations from the plan the previous year and explained the reasons for the excess. It would also require proposals to be made for clawing back that excess.
The mayor will draw up every capital spending plan in consultation with the functional bodies and others, and with the GLA as a whole. It is clearly important that we have serious monitoring. But this is a vigorous straitjacket. Under Clause 109, the mayor may take account of any factors which appear to him to be appropriate. That would include the extent to which functional body spending departed in either direction from expected levels, bearing in mind that the expected level specified is not intended to fix the amount of capital spending for the functional body. There may well be good reasons why more or less spending is incurred by a functional body and its departure from the mayor's

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expectation may be for the general benefit not only of the functional body but of the GLA and London as a whole. Therefore, the requirement that not only should be publish it in this form, but that it should be subject to a commitment to claw it back in the following year would be excessive. The mayor needs freedom to exercise discretion responsibly. It would be wrong to prescribe his specific course of action in legislation. Having said that, I accept the mayor's responsibility to report on the monitoring, but not in this form.
Lord Dixon-Smith: I am grateful to the Minister for his explanation, which I shall study with some care. When I was involved in local government, we were used to the idea of producing a precise capital expenditure plan for every year which was entirely expenditure based. It was always the case that if there was an underspend, the reasons were established, explained and published. If there was an overspend, which one must admit could occur, the reasons had to be established, explained and the consequences dealt with in the subsequent year's financial plan. As night follows day, an overspend in one year was followed by a diminution of the planned spend in the subsequent year.
Nevertheless, I hear what the Minister said. I shall study it and, in the mean time, beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 107, as amended, agreed to.
Clause 108 [Preparation of the plan: consultation and completion]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 237:
Page 60, line 22, after ("Assembly") insert (", to each of the London borough councils, to the Common Council").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 238 and 239. We are still in the business of achieving greater approval and openness for the mayor's capital spending plans. The first two amendments propose that the boroughs and the Common Council, together with the assembly and the functional bodies, should be circulated with the draft and final version of the capital spending plan. The plans are almost bound to have a direct impact on the boroughs and at the least they should be aware of them as soon as they are available. The amendment would achieve that.
The third amendment deals with openness with regard to the capital spending plan and brings it more into line with local government standards of openness; for example, the right to make copies is clear in Section 14 of the Audit Commission Act 1998, which provides for the right to make copies of documents in relation to the period in which the authority's finances are under audit. That is a good principle to follow.
The Government's proposals refer to the right of inspection, but they do not refer to the right to make copies. We believe that the right to make copies should exist, particularly in this complex area of capital spending. Careful examination and careful consideration are needed if any lay member is to have some understanding of what has happened. Members of the
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public should be able to examine the plans properly and this right could well be essential for that to be possible. I do not believe that the Government should have any difficulty in accepting the amendments, although I am bound to admit that their ability to receive good amendments has not been much revealed in our proceedings up to this point. I beg to move.
Baroness Hamwee: We would not take issue with the first two amendments in this group, but the points made by the noble Lord. Lord Dixon-Smith, illustrate the importance of good consultation, not just on the financial matters but on the strategies underlying them. We have made comments already today about the importance of the authority's financial cycle and the provision of information and so on being sensible as regards the boroughs' own financial cycles. We perhaps stumbled on an issue about whether the Secretary of State can take decisions and give directions in such a way as would be a nonsense in view of the dates by which the boroughs have to agree their budgets.
The timing for the capital spending plan, its availability to the public and discussion of it seem to us necessarily to involve the other players on the London scene, and not just the assembly. But the January date is rather late; it highlights some of the points made earlier today.
On Amendment No. 239, I hope that the Government will tell us that somewhere in their amendments about making material available the point about copies is already covered. The amendment and subsection (5) illustrate the comment that has run as a thread through the points made from these Benches about how detailed the Bill has become, and also the amendments being put forward, because it seems not to be possible to deal with such matters in a general and common-sense fashion. We would not, of course, wish that copies of the capital spending plan should not be available for copying, however.
10.30 p.m.
Baroness Farrington of Ribbleton: Amendment No. 237 would require the mayor to send a copy of his draft capital spending plan to the London borough councils and the Common Council and invite them to submit their written comments within 21 days.
Amendment No. 238 would require the mayor to send the final version of the capital spending plan to those councils.
The capital spending plan is the means by which the mayor will control and influence the capital spending amounts and priorities of the GLA and the four functional bodies. It is clear that the assembly should be consulted on the draft plan, given its relationship with the mayor and the fact that its members are elected representatives of Londoners in relation to GLA functions. Similarly, it is clear that the functional bodies, which will be directly affected by the plan, should also have this right.
It is vital that the mayor should send the assembly and the functional bodies the final capital spending plan because the assembly will want to monitor the capital

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spending of the GLA and the functional bodies by reference to the plan, and the functional bodies will need to be guided by it. The plan also serves in part as statutory notification of credit approvals they have been allocated for the year.
The mayor could, of course, send the draft and final capital spending plan to the London borough councils and the Common Council if he thought that this would serve a particular purpose and—which I stress—if time allowed him to take account of any observations that they made to him. But their interest in the plan is not of the same kind as that of either the assembly or the functional bodies, and there is no case for requiring the mayor to do so in primary legislation.
With regard to Amendment No. 239, on making copies, government Amendment No. 238B fulfils our commitment to ensure that members of the public should be able to obtain copies of the capital spending plan for a reasonable fee. This right will, of course, also apply to the London boroughs and the Common Council.
In the light of what I have said, I invite the noble Lord to withdraw the amendments.
Lord Dixon-Smith: I am grateful to the Minister for her explanation, which I shall study with care. We move these amendments with no other purpose than to help London and its future. It is with that thought in mind that the amendment was moved and, for now, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 238 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 238A:
Page 60, line 33, at end insert—
("(4A) The Assembly shall debate and vote on the capital spending plan.
(4B) If the Assembly votes by a majority of those voting to reject the Mayor's capital spending plan, not later than 56 days thereafter an election shall be held for the office of Mayor and all Assembly members as if such election were an ordinary election and the Mayor and Assembly members so elected shall hold office until the first Thursday in May in the fourth calendar year following that in which the ordinary election preceding such election was held.").
The noble Baroness said: Under the clause, the assembly is to be consulted. On a previous occasion in this Committee, I moved that the words "have regard to" the results of consultation should be included in conjunction with a requirement to consult. I was told, and was glad to receive the assurance, that the words were not necessary. I, wonder whether, in including the provision in Clause 108(3), that the mayor is to consider the comments, that negates that point elsewhere. I hope that the Minister can assure me that simply because consultation is specifically to be followed by consideration and that the consideration is on the face of the Bill, that does not undo the requirement on the part of the mayor to have regard to the results of other consultations and to act reasonably.
However, the major point in the amendment is to give the assembly a greater role and voice in relation to the capital spending plan. One may regard that provision as something of a nuclear option. We have had a number
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of nuclear options already in the course of the Bill. Earlier this evening, I said that it seemed that Members of the Committee regard me as having dreams and the noble Lord, Lord Dixon-Smith, as having fantasies. I accept that that may be something of a nightmare.
The incentive for the assembly not to take a frivolous view of the capital spending plan is contained in the second part of the amendment, which provides that, if it votes to reject the plan, then not only the mayor but also the members of the assembly must submit themselves to the London electors for election.
As we have discussed already, the success of the GLA will be quite closely related to a number of major projects and new approaches to London's problems which will require considerable investment. In our view, the capital spending plan is extremely important to the success of the new authority. That is why this amendment proposes that the assembly should be able to vote on the capital spending plan but, as I say, we are providing an incentive to ensure that it does so in a sensible and constructive manner. I beg to move.
Baroness Miller of Chilthorne Domer: It seems to me that, without the inclusion of this amendment, the assembly is rather emasculated. It will be good that everyone will be able to discuss the state of London annually and to have public question time. However, nothing arouses the interest of people so much as discussions in relation to where the money is to be spent. If the assembly is not able to debate and vote on future spending plans, it will feel undermined from the beginning.
The assembly is to debate strategies; it is able to debate how owls are doing in the biodiversity plan: how ancient monuments are coming along in the culture plan. But, as the Bill is drafted at present, it will not have any say in how the money will be spent. That is regrettable and begs the question: why should it not have a say? What is the point in having an assembly? One of the biggest issues with which it will deal is how to spend the money and where it will be going. If that is controversial, that is a good thing. Hopefully the mayor will have done his consultation well, there will be a lively debate and the spending plan will go through. However, not to allow for that debate and vote will considerably weaken the position of the assembly. I look forward to hearing the Minister's views on why the assembly should not debate this. It seems to me a fundamental part of what their duty should be.
Lord Whitty: There may be some misunderstanding as well as total disagreement with our approach here. In relation to the misunderstanding, I assure the noble Baroness that, where we speak of specific requirements for the mayor to consider comments from the assembly and wider consultation, that applies in this area also. In view of her remarks, we will consider whether this reference is out of step with other provisions on consultation in the Bill. To ensure that it is clear, I will take her point away.
It is obviously important that the assembly has a chance to have its say about the capital spending plan. That is why the mayor will be under a duty to send it in

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draft to the assembly, consider the latter's amendments and have regard to them in making any changes to the draft. But if, at the end of that process, the assembly disagrees with the mayor, the idea of a two-thirds majority being able to precipitate an election on one aspect of the mayor's total stewardship seems to me a little out of kilter. After all, the mayor is responsible for the whole provision of transport for London; the whole of the police authority; the development of the various strategies; the fire agency, and so forth. This is a power for the assembly effectively to sack him and sack itself. That is probably more of a kamikaze tactic than a nuclear deterrent on this one important, but nevertheless single, dimension of the mayor's responsibilities.
I think that this would have an unfortunate effect on the relationship between the assembly and the mayor, even if it was never used. Were it to be used, it would be pretty disastrous for the stability and forward plan for London which the mayor is supposed to deliver. If, for example, the mayor was of a different political complexion or there was within the assembly a fluctuating majority which could reach two-thirds, there would always be the danger of the capital spending plan in any one year being subject to this trigger of an election mid-term or, indeed, in the first year of a mayor's mandate.
That seems to be entirely contrary to what everyone in London wants; that is, a degree of stability, of long-term strategic planning and of clear strategy from the mayor and the executive powers. If it was constantly under threat from such a clause as this, I do not think that would be appropriate. We have had this discussion before on earlier parts of the Bill. I am probably only repeating myself, but I hope that the noble Baroness will not pursue her amendment.
Baroness Hamwee: I am grateful to the Minister for his response to the first part of my comments on the amendment. As to this being out of kilter, we have proposed amendments elsewhere in the Bill with regard to the role of the assembly. The self-destruct option is certainly extreme, but that is because the issue of the capital spending plan is a matter of particular moment.
The Minister says that London wants long-term planning and stability. It will be Londoners who elect members of the assembly, as well as electing the mayor. I believe that above all Londoners will want the right decisions to be taken. The smack of government does not necessarily mean that that government are absolutely right and correct. However, I note the view of the Government, which is not unexpected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.45 p.m.
Lord Whitty Lord Whitty moved Amendment No. 238B:
Page 60, line 34, leave out subsection (5) and insert—
("() A copy of the capital spending plan shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.
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() A copy of the capital spending plan, or any part of it, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.
() In this section "the appropriate period" in the case of a capital spending plan is the period of six years beginning with the date of publication of that plan pursuant to this section").
The noble Lord said: This amendment was spoken to earlier. I beg to move.
On Question, amendment agreed to.
[Amendment No. 239 not moved.]
Clause 108, as amended, agreed to.
Clauses 109 to 111 agreed to.
Clause 112 [Proper financial administration and chief finance officer]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 239A:
Leave out Clause 112 and insert the following new Clause—
PROPER FINANCIAL ADMINISTRATION AND CHIEF FINANCE OFFICERS
(" .—(1) The Authority shall—

(a) make arrangements for the proper administration of its financial affairs; and

(b) secure that one of its officers (its "chief finance officer") has responsibility for the administration of those affairs and for the oversight of the financial administration of the functional bodies.

(2) Every functional body shall—

(a) make arrangements for the proper administration of its financial affairs; and

(b) secure that one of its officers (its "chief finance officer") has responsibility for the administration of those affairs.

(3) In subsection (1)(b) and (2)(b) above, the reference to officers includes a reference to employees or members of staff and, in the case of Transport for London and the London Development Agency, includes a reference to members of the relevant Authority.").
The noble Lord said: I rise to move this amendment because it is our opinion that Clause 112 as drafted does not make sufficiently clear the relevant lines of responsibility between the authority and the functional bodies, and the absolute need for the authority's chief finance officer to be a chief finance officer for the whole authority and in control and with oversight of all the finances of the authority, which must include those of the functional bodies.
Our amended Clause 112, in our view, reshuffles parts of existing Clause 112 to make those lines of responsibility and control absolutely clear and not susceptible to any misunderstanding. It is with that in mind that we tabled the new Clause 112 and we hope that the Government feel at the very least that it is worthy of consideration. I beg to move.
Baroness Farrington of Ribbleton: As the noble Lord, Lord Dixon-Smith, said, this amendment is intended to alter the arrangements for proper financial administration for the GLA and the four functional bodies. It would provide for the GLA's chief finance officer to be responsible for overseeing the financial administration of the four functional bodies. Put simply, the functional bodies' chief finance officers would be in the position of reporting to the GLA's chief finance officer. In the event of a disagreement, her or his advice would take precedence over theirs. Such an arrangement

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would be a recipe for confusion and blurred accountability and we cannot agree to it. Perhaps it would help if I were to explain the arrangements for financial administration for which the Bill provides.
The mayor, subject to the assembly's role, will be responsible for setting the budgets of each of the four functional bodies, but will not be accountable for the management of their financial affairs. That responsibility will rest with the bodies and authorities. For that reason, it is essential that the functional bodies, and the GLA itself, each have their own chief finance officer.
In financial management terms, once their budgets have been set, each of the functional bodies will operate independently. Each will be required to make arrangements for the proper administration of its financial affairs, and to appoint a suitably qualified person to oversee those affairs: namely, the chief finance officer. Each of those officers will stand in their own right within the body concerned, carrying out the full functions of their post—in accordance with the provisions of the Local Government Finance Act 1988—and reporting as necessary to the relevant board or authority. The GLA's chief finance officer will report to the mayor.
Each hoard and authority will be responsible for ensuring probity and regularity in the financial management of its own functional body. Each will be expected to have regard to any reports and recommendations made by its chief finance officer and to ensure action is taken where necessary. Those arrangements will provide a clear line of responsibility from each of those chief finance officers to their relevant boards. As each functional body is responsible for its own financial affairs, it would not be appropriate for the GLA's chief finance officer to have a role in the functional bodies' finances. That would blur accountability by depriving each board and authority of a single source of specialist financial advice and appropriate financial oversight.
To reflect the mayor's interest, we have provided that where a chief finance officer makes a report concerning a functional body, he is required to provide a copy for each member of the relevant body, the mayor and the Chair of the assembly. Responsibility for dealing with the report will rest with the board or authority concerned and it cannot transfer that responsibility to the mayor.
The Bill provides for clear arrangements for financial administration. Unfortunately, the noble Lord's amendment would lead to confusion and blurred accountability. I urge him to withdraw it.
Lord Dixon-Smith: Once again the noble Baroness has eloquently produced arguments to sustain the Government's proposals. She said that the mayor would not be responsible for the activities of the functional bodies in detail. The problem is that the mayor will be responsible for the policies that those bodies are obliged to follow and for the budget that they will have to follow. If the mayor has those responsibilities, I hope that he never disagrees with something that a functional body might do. If he does, under the arrangements in the Bill he will have no authority to do anything because the functional bodies will be free to act independently when the financial year has started.
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The noble Baroness may think that my amendment would lead to a certain amount of confusion hut, in practice, the procedures that the Minister enunciated would be equally likely, if there is any divergence of view, to lead to confusion. I will consider carefully the Minister's response but we may return to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 112 agreed to.
Clauses 113 and 114 agreed to.
Clauses 115 (Functions of chief finance officer as regards reports)
Lord Dixon-Smith Lord Dixon-Smith moved Amendment 240:
Page 63, line 29, leave out from first ("the") to end of line 33 and insert ("Chairman of Transport for London or, in his absence, the Deputy Chairman of Transport for London"")
The noble Lord said: The purpose of this small amendment is to ensure that where reports are being considered, the finance officer is obliged to consult the chairman or, in his absence, the deputy chairman of the functional body, rather than
"the person who is to be consulted under subsection (3A) above"—
which means that consultation could be dealt with by somebody with rather less authority.
The purpose of the amendment is simply to ensure that where reports under this clause are brought forward they are dealt with at the highest possible level in the functional body. I believe that that would be a proper way of handling the situation. I should add that it seems to me that the amendment has some relevance to the London Development Agency, which was referred to in the previous amendment, but we seem to have missed that one in our trawling through the Bill. No doubt the noble Baroness will be relieved that that is the case. I beg to move.
Baroness Farrington of Ribbleton: The chief finance officer of a relevant authority has a duty to ensure that where the authority has incurred, or might be about to incur, unlawful expenditure, he or she should complete a report and present it to the full authority. Before completing the report, the chief finance officer is, so far as it is practicable to do so, required to consult with the head of paid service and the monitoring officer. This requirement on the chief finance officer to consult with other officers of the authority seeks to ensure that there is agreement among the officers of the authority about the legality of the course of action being taken and that all the relevant facts are clear.
Once a report has been completed and passed to an authority, it must be considered at a meeting of the authority within 21 days of the receipt of such a report. The authority must then consider whether it agrees or disagrees with the report. The auditor must be notified of the meeting and, as soon as possible afterwards, informed of the outcome.
The Board of Transport for London will include executive members. The structure of the body may not follow that adopted generally by local government, and it may not choose to appoint a chief executive. However, it

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is important that it has members or officers specifically designated to fill those posts which have a responsibility for ensuring probity in the running of the body. Provision has been made for the appointment of a member or officer as the chief finance officer, and that officer must be a member of a recognised professional accountancy body. The chief finance officer will carry the full responsibilities attaching to this post in accordance with the provisions of the Local Government Finance Act 1988, including the completion of reports to the body.
While it may not be appropriate for Transport for London to appoint a chief executive or monitoring officer in the same way as a local authority, we nevertheless believe that it should appoint a person, either a member of the board or an officer, to fulfil the role of head of paid service and monitoring officer and with whom the chief finance officer can consult before finalising a report. Accordingly, we have provided that TfL should designate someone to fulfil this role.
Where the chief finance officer does complete a report about the actions of Transport for London, the body must consider it at a full meeting of the board. To require the chairman, and only the chairman (or his deputy), to be consulted before the report is finalised would limit the discretion of TfL to appoint whom it thinks fit to fulfil the consultation role and appointments may change from time to time or from case to case.
I agree that the chairman, or, in his absence, the deputy chairman, will need to be fully informed and be required to consider any report presented by whoever fills the role of the chief finance officer. This need not necessarily be during the preparation of the report. The chairman will accordingly be fully informed in the consideration of the report.
The arrangements that we are proposing will ensure that matters are considered properly and promptly by those with the necessary responsibility for taking action. I do not think that we should seek to limit the discretion of Transport for London to appoint whom it considers is most suitable to undertake these consultation roles. I have answered this amendment in some detail because I am confident that, on reflection, the noble Lord will feel that he may not need to return to the issue.
11 p.m.
Lord Dixon-Smith: I am confident that at this hour of the night I cannot match the eloquence of the noble Baroness's reply and I do not intend to do so. However, I shall study what she has said with great care and then consider what I wish to do about the matter. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 241:
Page 63, line 43, at end insert—
("(4B) In those cases referred to in subsection (4A)(a) and (b) above, the Mayor of London shall publish the report within 7 days of receiving it."").
The noble Lord said: This amendment requires that where someone has made an adverse report that report should be published. There may be some technical difficulties if a report names a particular individual. However, I believe that the facts of such a case could be reported without names. Again this is a matter of probity and openness. I believe that if an adverse report is made to the authority it is in everyone's interest that the main substance of the report is placed in the public arena as soon as it is practical to do so. At present reports are to be considered at a meeting of the assembly within 21 days. The mayor has to respond to any recommendation of that meeting within 14 days of that meeting. That in itself is a considerable delay. The opportunity for spin doctoring to spin out of control—as has been observed on occasions—would be much reduced if the report was placed in the public arena at the earliest possible opportunity. This amendment seeks to give effect to that. I beg to move.
Baroness Farrington of Ribbleton: We fully support the motive behind this amendment. We believe it is important that the GLA and functional bodies are publicly accountable for their actions and that all relevant reports are made publicly available.
Where a chief finance officer completes a report under the provisions of Section 114 of the Local Government Finance Act 1988, the authority or functional body must consider it at a meeting within a period of 21 days, as the noble Lord said. This meeting must be convened in accordance with Part VA of the Local Government Act 1972, which requires that details of the agenda and the reports themselves must be made available three days before the meeting.
Specific provision has been made for Transport for London to be subject to the provisions of Part VA of the Local Government Act 1972. It will therefore have to hold a public meeting within 21 days and make the chief finance officer's report available beforehand.
The responsibility for publication rests, as I think it rightly should, with the authority and each functional body. Therefore we believe the amendment to be unnecessary and hope that the noble Lord will feel able to withdraw it.
Lord Dixon-Smith: I shall study the words of the noble Baroness with considerable pleasure and consider the matter in the light of what she has said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 115 agreed to.
Clause 116 [Duties of Authority or functional body as regards reports]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 242:
Page 65, line 27, at end insert—
("(7A) Where any recommendation carries the support of a simple majority of members of the Assembly present and voting on that recommendation at a meeting under subsection (3) above, the Mayor shall comply with that recommendation when making any decision under subsection (6) above.").
The noble Lord said: I am amazed that I am finding my way through these amendments without getting into a greater muddle than I have on past occasions! Amendment No. 242 is designed to ensure that when a financial report on improper activity is submitted any action that is taken is not exclusively within the mayor's discretion. The Bill as currently drafted makes the Greater London Authority unique, in that it is the only local authority in the United Kingdom in which the mayor and not the entire authority decides what action should be taken when financial irregularities are discovered. This is a departure from the spirit and wording of the Local Government Finance Act 1988. I wonder whether it is a justifiable departure.
The assembly will have no powers to oblige the mayor to do anything in such circumstances, whereas an existing local authority can compel council leaders to take a particular course of action. The Bill merely states that the mayor has to take account of the assembly's views when coming to his decision. Once again, this is reducing the assembly to the position of a powerless talking shop.
We have heard evidence that that is what the Government think it should be. Despite that, we think it should be rather mote. We do not want the assembly to be incapable of bringing real scrutiny and supervision to bear on either the mayor's or the functional bodies' financial activities.
The mayor might decide to do nothing about one of those reports. That is a technical term for wasting the public's money. It could be through incompetence; it could be through something worse; but whatever the cause, it is not in the interests of the people of London. If the mayor takes a decision to do nothing, that is the end of the matter—and that cannot be right.
The amendment restores to the assembly the accountability which the Government have effectively left out of the legislation and puts the GLA on to the same basis as every other local authority in the country. That is essential given the size and scope of its budget. If this amendment is accepted, it will demonstrate that the assembly is a truly representative body and enable it to have some check on a small aspect of the mayor's activities.
I can anticipate what the noble Baroness may say in response to the amendment. I almost feel like inviting her to say that she will give me the expected reply, cut short the proceedings by saving her the necessity of giving it, and saying that I shall consider it in absentia. I am confident that I know what her answer will be. I beg to move.
Baroness Miller of Chilthorne Domer: For the same reasons that I mentioned when we were discussing my noble friend's amendment about accountability to the assembly for the capital spending plan, I support the amendment of the noble Lord, Lord Dixon-Smith. The assembly is the right body to hold the mayor to account.
Baroness Farrington of Ribbleton: The amendment would require the mayor to comply with any recommendations supported by a majority of the
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assembly in respect of any report published by the chief finance officer of the GLA and in deciding what action to take in consequence of the report. The amendment would, in effect, give the assembly the role of deciding what action to take following a report by the GLA's chief finance officer. We have rightly returned to the respective roles of the mayor and the assembly many times. It is plain that noble Lords opposite simply want a different sort of city-wide governance from the one proposed and the one endorsed by Londoners in the referendum.
Earlier in the debate the noble Baroness, Lady Young—who is not in her place—appeared surprised that we should produce a proposal for a separation of powers. It is common in the United States, in Canada, for example, in Toronto, and in Europe, for example, in Rome and in Barcelona, to have systems which involve this sort of separation of powers. I do not want to go over all those arguments again. I would, however, emphasise that under the model for London set out in the Bill the mayor is responsible for the strategic direction of the GLA and the functional bodies. The mayor must consider the report. If nothing is done, this could lead to the CFO producing another report at a later date. Therefore the mayor must consider the report and decide what action, if any, to take in respect of it.
Under our proposals, provision has been made specifically to require the mayor to attend the meeting at which the assembly considers the report. Furthermore, the mayor must have regard to any views or any recommendations of the assembly at that meeting. The assembly will therefore have influence in the matter but ultimately the mayor must retain the final responsibility for deciding how to respond to the report. In the light of this reply, I feel I should ask the noble Lord, Lord Dixon-Smith, to withdraw the amendment and to read what I have said at leisure.
Lord Dixon-Smith: I am fascinated that the noble Baroness did not accept my invitation to curtail her eloquence and say, "Yes, the reply is what you expected it to be." Instead she has tempted me, just marginally, by giving a longer reply. Without wishing to detain the Committee for more than a few moments, I would remind your Lordships that in a Question to the noble and learned Lord the Lord Chancellor last Thursday the subject of the separation of powers was under discussion. He had some views on that and on the way we do things in this country that were slightly at variance with what is in this Bill. While there are some aspects of the American system that are good, not the least of the problems we face with establishing an authority such as the GLA is that we are borrowing some parts of the American system, but only some. We are not borrowing all of them. The difficulty arises when you pick and choose between parts of a system to which the community is accustomed and try to translate them to somewhere else, to a community that is not accustomed to them.

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I shall study the noble Baroness's remarks with care. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 116 agreed to.
Clauses 117 and 118 agreed to.
Schedule 7 [Amendments of the Audit Commission Act 1998]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 243:
Page 205, line 22, at end insert ("; and
() the Assembly, the London borough councils, the Common Council and such other bodies as appear to him to be appropriate").
The noble Lord said: This amendment deals with a situation in Schedule 7 where the mayor is requesting the Audit Commission to undertake a study of one of the functional bodies. It is interesting that, before making a request under subsection (1) to make such a study,
"the Mayor of London shall consult … the functional body concerned"—
that is a sine qua non; it has to happen—
"and … such associations of employees as appear to him to be appropriate".
I have some difficulty in understanding why associations of employees should be the only people who are consulted before the mayor invites the Audit Commission to make a particular study. It seems to me that there may well be many groups, possibly user groups, people who are affected directly by the particular service, who would have a view. They may also have a perspective on the study which should be taken into account by the mayor before making a request for a particular study.
It would be possible—I put it no higher than that—to argue that that wording was included as a sop to the trade unions. I do not think that that is what should be intended in a Bill of this nature. We should play these matters absolutely straight. We have widened out the list of consultees in this situation. That is reasonable. Although the proposal may not be totally effective to undertake the purposes that I have enunciated, I beg to move.
11.15 p.m.
Lord Whitty: Without wishing to engage in a degree of controversy at this stage, I am always slightly resentful when a sensible requirement to consult the trade unions is regarded as a sop. In regard to Audit Commission reports, it is sensible to engage employees in this matter. The noble Lord suggests that certain other people should, by statute, be consulted as well. I do not see a need to place a statutory duty on the mayor to consult bodies that are already included in the general list of bodies which the mayor has to consider whether it is appropriate to consult in this and other contexts. It is not necessarily right that the mayor should be required to consult the London boroughs and the Common Council in this particular context.
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However, I accept that it would be sensible to consult the assembly before requesting a study. It may therefore be that some greater clarification and a possible extension of the areas of required consultation are required. Having started on an antagonistic note, I shall give the noble Lord some comfort that we shall consider his amendment and consider whether in this context any amendments are required at a later stage.
Lord Dixon-Smith: I am grateful to the Minister for the conciliation at the end of his remarks. I accept, almost with equal pleasure since this is the last of my amendments that we shall debate for some time, the smack over the head that he has duly administered. I shall study the Minister's remarks with care and I look forward to his response. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 7 agreed to.
Clauses 119 to 121 agreed to.
Lord Whitty Lord Whitty moved Amendment No. 243A:
After Clause 121, insert the following new clause—
NO DISCRETIONARY RATE RELIEF FOR FUNCTIONAL BODIES
(" .—(1) Section 47 of the Local Government Finance Act 1988 (discretionary relief) shall be amended as follows.
(2) In subsection (9) (which provides that a hereditament is an excepted hereditament, and accordingly not eligible for relief, if all or part of it is occupied by any body there mentioned) at the end of paragraph (b) (which relates to precepting authorities) there shall be added "; or
(c) a functional body, within the meaning of the Greater London Authority Act 1999".
The noble Lord said: This new clause amends Section 47 of the Local Government Act to ensure that properties occupied by the functional bodies cannot be granted discretionary rate relief by billing authorities.
The situation at present is that Clause 47 will allow billing authorities to grant rate relief to organisations such as charities and so on. That provision will explicitly exclude the precepting authorities. But it needs also to exclude the functional bodies. The GLA itself therefore already falls within the scope of the exception, but the functional authorities do not. That needs clarification. I hope the Committee will accept the amendment. I beg to move.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendment No. 243B:
After Clause 121, insert the following new clause—
LOCAL LOANS
(" .—(1) In Schedule 4 to the National Loans Act 1968 (which specifies the bodies to which local loans may be made) in paragraph 1, in paragraph (a) of the definition of "local authority", the word "and" immediately preceding sub-paragraph (iii) shall be omitted and after that sub-paragraph there shall be added "; and
(iv) a functional body, within the meaning of the Greater London Authority Act 1999".
(2) In section 2 of the Public Works Loans Act 1965 (new form of local loan and automatic charge for securing it) in sub-paragraph (1) (which includes a definition of "relevant authority") in paragraph (a), the word "and" immediately preceding sub-paragraph (iii) shall be omitted and after that sub-paragraph there shall be added ";and
(iv) a functional body, within the meaning of the Greater London Authority Act 1999".").
The noble Lord said: In moving Amendment No. 243B. I should like to speak also to Amendments Nos. 455F to 455H. A range of bodies, including local authorities, whose capital finances are regulated by the Local Government Acts, borrow from the Public Works Loans Commissioners. The GLA and the functional bodies will be among those local authorities. These amendments are necessary to give the commissioners a complementary power to lend money to the functional authorities. This means that amendments need to be made to the National Loans Act 1968 and the Public Works Loans Act 1965, which refer back to the Public Works Loans Act 1875. Such loans are secured by a charge on the revenues of the authority concerned. The GLA is already a local authority for this purpose, but the amendment is needed to make a functional body a local authority for these purposes. The other amendments are consequential repeals in parallel with the words omitted by these amendments. I beg to move.
On Question, amendment agreed to.
Clause 122 agreed to.
Clause 123 [General transport duty]
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 243C:
Page 67, line 18, after ("within") insert ("and across").
The noble Baroness said: The Committee now moves into the exciting world of transport, where it may remain for some time in logjams of various kinds. This is a very simple amendment. In addition to the mayor having to consider travel to, from and within London, he or she should also consider travel across London. I am aware that in another place the Minister argued that journeys in and out of and within London subsumed journeys across London so that the amendment was unnecessary. However, there are some very important routes involved in northern, southern, eastern and western journeys, which is what is meant by "across London" as opposed to the in and out radial routes with which we are all very familiar. That is the pattern of travel in and out of London. Those routes are particularly important, for example for access to and from the airports. They are also controversial because they will require additional space on existing lines or those that are about to be built or improved. We believe that the transport duty should cover a range of new transport possibilities as well as existing ones. I beg to move.
Baroness Hamwee: I support my noble friend in moving this amendment. I should like to ask another question relating to Clause 123(1), which requires the mayor to
"develop and implement policies for the promotion and encouragement of safe, integrated, efficient and economic transport facilities and services".
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Members of the Committee will be familiar with the terminology "efficient and economic" in the context of requirements on local authorities as to the provision of services. They are repeated in the Local Government Bill which is currently going through the House. Those terms are normally coupled—although I am not sure that it is correct to use that word when there are three of them—with "effective". It seems to me it is a requirement that the transport facilities and services to, from, within and across London should be effective—for example, trains should not stop in tube tunnels for half an hour at a time and so on. I use that as one example. I hope that the Minister can explain the adjectives in answering my noble friend's amendment.
As this is the first amendment on this part of the Bill, perhaps I may say how sorry I am—it is understandable that the Government want to get on with this long and complicated Bill—that they choose to start the debate on such a major part so late at night. Major issues are raised in the first chapter on transport. I am sure that the Government will realise that there are some gaps on the Benches, and that voices they had expected to contribute to this part of the Bill will not be heard. Points which might appropriately have been made at this point in the Bill will be made later. That may not be very convenient. Alternatively, they will be made on Report. It is the Government's decision. But I think that these issues deserve rather more prime time.
Lord Brabazon of Tara: I had not intended to speak to this amendment, but I endorse entirely what the noble Baroness says. We start this section on transport at a late hour. I think that it is regrettable that we start so late. Nevertheless, the agreement has been reached that we should go a little way into it.
The Government have tabled an enormous number of amendments to this part of the Bill. They gave notice that they were going to do so, and have been helpful in writing to us explaining the purpose of the amendments. Nevertheless, large sections of the Bill are being almost completely rewritten in Committee. That will not help our considerations. It will mean that we have to do more work at the next stage. I give the Government warning that it will require more time at Report stage as a consequence.
Baroness Gardner of Parkes: I, too, am concerned that we are starting this section at this time of the evening, although I am quite bright and raring to go as I said nothing earlier. However, the Minister must be getting tired.
As regards the amendment, it is possible that "within" includes "across". If so, that is satisfactory. But one requires a comprehensive responsibility for the whole of London. Passengers have been inconvenienced with the chopped up, short bus routes which now exist. Many women, in particular if they have small children or heavy shopping, would rather wait longer for a bus that takes them their entire journey than wait in the rain and

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cold for a connection. Consideration should be given to improving the connection of transport throughout London.
Lord Berkeley: I had not intended to speak to this amendment. However, following the comments of the noble Lord, Lord Brabazon, and the noble Baroness, Lady Hamwee, when I first read the Bill it struck me also that there were few government amendments. Now that we have them, I welcome them as contributing to improving the Bill. I believe that the amendments have been tabled after listening to comments made by Members of all parties, and I welcome them. I do not necessarily agree with them all, but they contribute to the Bill's improvement. I look forward to some interesting, short and sweet debates on them.
11.30 p.m.
Lord Whitty: I thank my noble friend for those remarks. We consider that the amendments we tabled to this part of the Bill are appropriate and to a large extent address technical deficiencies or concerns expressed in another place and here informally. This is not a case of rewriting the Bill, as the noble Lord, Lord Brabazon, suggested. It is a case of turning the Bill into an effective document which meets a number of concerns.
As regards starting the subject at this hour of the night, as we proceed with the Bill it may be regarded as somewhat early. We must complete our consideration of the remaining nine parts; we have hitherto covered three parts.
As regards the amendment, I agree with the noble Baroness, Lady Gardner, that "to", "from" and "within" cover "across". I also agree with her about the problems of connection which must be addressed by the mayor of London. Most of those are "within" in the normal sense. As regards adding "across", I do not want to be too pedantic, but if one is travelling from Manchester to Brighton one will travel "to", "within" and "from" in the course of the journey. To add "across" merely adds an additional word. If one travels across London, entering and emerging in the same journey, that is covered by "to", "from" and "within".
Again, I do not want to be too pedantic, but I believe that the noble Baroness, Lady Hamwee, referred to the adjective when she meant the adverb. I believe that the adverbs meet the point and additional adverbs will not necessarily improve matters. I hope that, with that understanding, the noble Baroness will withdraw the amendment.
Baroness Thomas of Walliswood: I believe that my noble friend was referring to the adjectives "safe" and "efficient". Those are adjectives. I am sure that her grammar is impeccable. She is, after all, a lawyer and she must know how her language operates. She cannot afford to make mistakes of that kind.
I hear what the Minister says in reply. I am sorry that he will not add "across", which seems to me to give a slightly different dimension. However, at this point I shall not press the amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 243D:
Page 67, line 18, at end insert ("with the minimum adverse environmental impact").
The noble Baroness said: This is a simple amendment which provides that whatever is done in the transport strategy by the council authority should have,
"minimum adverse environmental impact".
That requires an ability, a wish and an intention to balance "goods" and "bads" against each other. For example, one can reduce traffic speed by rumble strips, but they will not have a minimum adverse environmental impact. On the contrary, in built-up areas they have a bad environmental impact.
We propose an additional encouragement to the mayor to ensure that she always bears in mind the balance which must be struck between benefits in this area. I beg to move.
Lord Whitty: I understand the concern which lies behind the amendment. I appreciate that not only the noble Baroness but others are concerned that it should be explicit. However, we argue that the Bill already provides for a regard to environmental duties within the transport strategy. The reason it is not explicit at every point is that in the interests of keeping this extremely large Bill within reasonable bounds and ensuring integration between environmental and transport issues we have covered that only in Clause 33.
That clause requires the mayor to do a number of things in drawing up or revising the transport strategy. First, he or she must have regard to the principal purposes of the authority, which include promoting the improvement of the environment in Greater London. Secondly, he or she must pay regard to the effects on health and the achievement of sustainable development. Thirdly, the mayor must ensure that all his or her strategies are consistent. This means making sure that the transport strategy and the various environmental strategies—on air quality, municipal waste management, bio-diversity and noise—all pull in the same direction. Fourthly, the mayor must ensure that the strategy is consistent with national policies and with any international obligations of which he or she has been notified. This means, therefore, that the mayor must take account of the national integrated transport strategy and national air quality and waste strategies in preparing his or her transport strategy for London.
The mayoral strategies will, of course, be the key vehicle through which the mayor will work. That is why Clause 33 expressly made clear the need for integration between transport and the environment. Therefore, we do not regard a repetition in this clause, which the amendment would provide, as necessary.
I hope that the noble Baronesses and those outside the Chamber who are concerned with this issue will accept those assurances and accept that Clause 33 meets the point.
Baroness Hamwee: As the Minister said, there are many outside this Chamber who have expressed concern about this issue. While I accept the intellectual argument

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that reading the Bill as a whole takes one back to the earlier clauses and the various matters raised there, it is a pity that the Government, who have not been short on words in the Bill, do not put down the important marker at the beginning of Part IV that those who are concerned with transport should look back and remind themselves of the environmental issues and duties.
I accept that the earlier provisions of the Bill will apply, but it would have been welcomed by those who wish to see improved transport if it had specifically been provided that regard should be had to environmental considerations, and a marker had been put down at the start of the biggest part of the Bill.
Baroness Thomas of Walliswood: My noble friend has made the point well that we, and others, are trying to put important considerations up front so that they do not have to be constantly repeated in this part of the Bill. That is the object of some of the amendments. I do not know what people outside the Chamber will say about this, but for now I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 243E:
Page 67, line 18, at end insert—
("() These policies shall achieve road traffic reduction targets set by the Mayor pursuant to this Part.
() The Mayor shall set road traffic targets for Greater London provided that any such targets shall not be less than those set by the London Planning Advisory Committee.").
The noble Baroness said: Here we come to a very different set of amendments. With Amendment No. 243E we are taking Amendment No. 245, in the name of the noble Lord, Lord Graham of Edmonton. He is not in his place, but, with the leave of the Committee, I propose to make some comments about that amendment.
In our amendment we suggest that the mayor should include in his transport policies traffic reduction targets. The targets should be at least as ambitious as the current targets under the LPAC. The amendment in the name of the noble Lord, Lord Graham of Edmonton, would add a requirement for the transport strategy to contain progressive targets to reduce traffic volume. The two obviously go hand in hand.
When this was debated in another place, the response was that the mayor's policies had to be consistent with national policies and that because of government policy on road traffic reduction, it was not necessary. The Government's policy on road traffic reduction is that local authorities shall have road traffic reduction targets. The Government have not set a target for road traffic reduction. Therefore, it is not satisfactory to say that the matter is completely dealt with by national policy.
The question of the necessity for targets has been applied. The advantage is that, first, it gives the policy a direction. Secondly, it aids in the selection of the best tools to implement the policy. If there is a target which says that X must be achieved by Y, it is possible to assess the methods to be adopted as to their relative
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effectiveness in achieving that objective. Thirdly, it provides a method by which to test and measure progress.
Elsewhere in the early part of the transport section, there is a great deal about what is to happen if the local borough implementation plans are not successful. But unless targets are set to measure the success, it is difficult to know the level of success. That is why those targets are set.
I have had some experience of that. We set targets in the Surrey transport plan which is now many years old. It was one of the first in the country. I shall not say that the plan was brilliantly successful because we were experimenting in a world in which it was difficult to carry out such experiments. But certainly, the targets assisted us in measuring what we had achieved. I beg to move.
Lord Whitty: The requirement to have targets for reductions is not really the issue here. The issue is whether the amendments are appropriate to that when we have a national policy, with which the mayor's strategy must be consistent, which will lead us to road traffic targets.
We indicated in the White Paper that we are considering how national targets can help in dealing with congestion and pollution. We are seeking advice from the new Commission for Integrated Transport on this matter. As the noble Baroness said, it is already our policy that local traffic authorities are required to consider traffic reduction in accordance with local circumstances and therefore to set local targets. We have tabled Amendment No. 297G which relates to the traffic chapter of the transport part of the Bill. Our proposed new clause, which will amend the Road Traffic Reduction Act 1997, will explicitly link the work of the boroughs formally to the mayor's transport strategy. Taken with the Bill's existing provisions, that gives a clear message on road traffic reduction.
In view of the requirement on the mayor with regard to the policy of the GLA and TfL in this area and the amendment which we have tabled, it is not appropriate that, on the face of the Bill, we should agree to targets which relate to those set by the London Planning Advisory Committee, which will cease to exist when the GLA is established. Nor is it necessarily appropriate to agree to "progressive targets", as specified in the amendment in the name of my noble friend Lord Graham of Edmonton, because they may apply differently in different parts of London, as the mayor comes to develop his strategy with the London boroughs.
It is therefore important that the mayor and the London boroughs, in the light of developing national policy, are allowed to develop their own targets, rather than have them pre-set, as these amendments would provide. I would therefore ask the noble Baroness to withdraw her amendment.
Baroness Thomas of Walliswood: I thank the Minister for that answer. I shall read it with care and I

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shall also refer to Amendment No. 297G, which I must confess I have not yet mastered. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 244:
Page 67, line 23, after ("pedestrians") insert ("and cyclists").
The noble Lord said: Amendment No. 244 stands in my name and that of my noble friends Lady Miller and Lord Dixon-Smith. It is a simple amendment. Clause 123(3) makes specific provision for transport facilities and services to include pedestrians but it does not include cyclists, and this amendment does. The expression "transport facilities and services" would not normally be held to include cyclists who, like pedestrians, are self-transporting. Although specific provision is rightly made that such facilities and services include facilities and services for pedestrians, no mention is made of facilities and services for cyclists.
Cycling is a means of transport that is environmentally friendly and healthy—certainly to the cyclists if not always to pedestrians—and in inner London it is reasonably fast. However, despite encouragement which successive governments have tried to give to cycling, it has declined in recent years and deserves to be further encouraged. Provision of facilities and services for cyclists can play a part in doing so. It should be made clear in the context of the general transport duty to which this clause refers that such facilities and services must be included.
The noble Lord may be surprised to see that I am moving the amendment. I have not always been a friend of the cyclist, certainly in London. I was delighted to read in the newspaper only yesterday that the Government intend to increase penalties for cyclists who ride on the pavement. That is an extremely good move. I hope that the Minister will be able to confirm it.
Any facilities and services that are made to improve the lot of cyclists would, I hope, encourage them at the same time not to ride on pavements and ignore pedestrian crossings, traffic lights, one-way streets and various other rules which motorists have to obey.
Amendment No. 245A, in the name of the noble Baronesses on the Liberal Benches, is grouped with this amendment. It is right that that should be so. I cannot quite see the logic of including Amendment No. 246A in the group. That seems to relate to consultation, which is a slightly different issue. I beg to move.
Baroness Thomas of Walliswood: I must confess to a certain envy that the noble Lord, Lord Brabazon of Tara, who, as he says, has not been noted in your Lordships' House as a promoter and defender of cycling should have nevertheless got in the word "cyclists" before I did. They certainly appear in the list of amendments we wish to discuss. However, the noble Lord has made an excellent introduction to the amendment.
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What is striking about cycling in central London is how incredibly dangerous it is for everyone. It is dangerous for pedestrians, as we have often discussed in your Lordships' House. It is dangerous for cyclists; it is even dangerous for motorists. The reason is that cyclists are mixed up with motorists in a way which makes it virtually impossible for the two types of transport to avoid coming literally into collision with each other.
I do not know how many Members of the Committee have driven in any form of transport around Trafalgar Square at, let us say, half past eight in the morning. I am absolutely astounded that cyclists are not killed every day in that very dense stream of traffic. Certainly my taxi driver was furious the other day because the previous day he had had the whole of one side of his taxi scraped by part of a cycle. That was extremely expensive for him and, as he said, he could not chase the cyclist.
Everybody is angry with everybody else because there is no provision for cyclists. I remind the Committee that we are talking of "cyclists", not "bicycling" or "cycling"; it is the cyclist or vulnerable road user we ought to be considering. We can see how different the situation has been for pedestrians. For over 100 years, they have had footways to walk on; in more recent years, crossings and lights have been provided. Those facilities are simply not available for cyclists. That is one of the reasons why everybody on the roads in London is at loggerheads and why cyclists turn to pavements as being a freer and safer place to travel, and therefore come up against pedestrians.
This is an important element to include in the Bill at an early stage. Two amendments are grouped with Amendment No. 244. As the noble Lord, Lord Brabazon of Tara, said, they require the mayor to obey the national cycling strategy and to consult cycling groups. The two elements are not the same, but if we are interested in producing good policies for cyclists, it is natural to consult cycling groups. I am happy to leave the amendments grouped as they are. I support Amendment No. 244.
Viscount Craigavon: I support all three amendments in my own way. At Second Reading, I said that I hoped that we could persuade the Government that it was not unreasonable to declare on the face of the Bill slightly more sympathy for cycling and cyclists. I also said that the cycling fraternity of this House might assist me in doing that. But, as was explained earlier, I hope the Committee understands that at this time of night it is not unreasonable to let people lead a more peaceful life. We hope to have more cyclists here at a later stage; quite a few are Members of your Lordships' House.
For those reasons I did not table amendments of my own, but I support the amendments grouped before us. Because of the lateness of the hour, I shall not launch off on a general encomium on the benefits of cycling. I support what was said by the noble Baroness, Lady Thomas, and was pleasantly surprised to have the noble Lord, Lord Brabazon, praising the merits and benefits of cycling. I hope that he continues to do so. I assume

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also that the Minister, the noble Lord, Lord Whitty, is basically sympathetic to cycling. I hope that we can take that as read in regard to cycling amendments.
Amendment No. 244 was spoken to by the noble Lord, Lord Brabazon. It is an important amendment. I had the benefit of reading the mini-debate on cycling in the other place and this issue was not resolved. It is a serious issue; it is almost a legal or technical issue. Whether or not to include it in the Bill is almost not a matter of choice. Reading the speech of the Minister in the other place, Miss Glenda Jackson, I noted that she twice used the phrase, "I am advised"; first, that the amendment was unnecessary; and, secondly, that the phrase "transport facilities and services" legally includes cyclists. But when she was questioned by various Members of the Committee, she concluded by saying that she would go away and investigate and in some way report back the result of her inquiries.
I have a copy of the letter that the Minister wrote to the person advising the Cyclists Public Affairs Group—and I have the benefit, as do some others, of its invaluable advice on the Bill. The Minister, in that letter, used the same phrase—which did not take the matter any further. When a Minister precedes his or her remarks with the words, "I am advised that", one wonders whether the Minister fully believes what he or she is saying. I hope that the noble Lord, Lord Whitty, will omit that preamble when he responds to the amendment. I hope that he will give a substantive answer. If not, we should try to get to the bottom of the legal position.
I also support the noble Baroness, Lady Thomas, on Amendment No. 245A. It would be desirable to include the national cycling strategy within London separately in this part of the Bill. I wish to ask the Minister a question on a related matter—the London cycle network, which I mentioned on Second Reading. Is the Minister satisfied that the London cycle network is likely to be completed by the target date of 2005 without further encouragement in the Bill?
The London cycle network is a mammoth project and we do not want any slippage. A lot of money has already been spent, and more spending is expected. I would like the Minister's opinion on the subject.
Baroness Hanwee: I am not at all surprised to see amendments referring to cycling and cyclists, given that there is reference to pedestrians in Clause 123(3). Can the Minister explain why it is necessary to refer specifically to pedestrians'? I understand that those who consider the transport needs of Londoners and academics regard walking as a mode of transport.
Most journeys in London are made on foot. Those journeys may be short but, numerically, walking is the most frequent choice. I do not for one moment suggest that facilities and services for pedestrians should be ignored, but I would be glad of clarification as to why it is necessary to make specific reference to pedestrians. We have debated not adding unnecessarily to the Bill
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If one starts on what might be regarded as a list, it is almost inevitable that noble Lords will add to it their genuine concerns.
Lord Whitty: I warmly welcome the slightly unusual support for cyclists. When this Chamber is somewhat fuller, one gets a different impression of the general view. I particularly welcome the conversion of the noble Lord, Lord Brabazon—although he could not finish his remarks without taking a slight sideswipe at cyclists. I accept in part that there is a problem.
The Government have indicated a significant degree of support for cycling as a mode of transport. We have put substantial additional resources into the London cycling network, increasing the figure from £3.5 million to £5.5 million. We presume that the mayor will take on the major responsibility for developing that network and providing facilities for cyclists. 'The balance of allocations by the mayor will be for him or her but the mayor is required to have regard to the national policy on cycling. The purpose of the national cycling strategy is to increase the level of cycling in this country. In passing, I should add that 2 per cent of people cycle to work in this country. The usual comparison cited is that 30 per cent do so in Holland. I believe that the noble Lord, Lord Brabazon, just said that it is a lot flatter in Holland, but it also true to say that in Switzerland 10 per cent of the people travel to work on cycles. In comparison, despite the relative flatness of London, only a very small proportion of people travel to work on cycles.
I cannot understate the Government's commitment to supporting an increase in cycling as a mode of transport, for all sorts of reasons. My honourable friend Glenda Jackson has made her commitment clear in many contexts. Our concern about this amendment is legalistic and linguistic. There is a problem here. We have sought further clarification on the matter and we have been strongly advised that the term "transport facilities and such services" subsumes a reference to cycling. The word "transport" means that you are carried. Pedestrians are not carried. "Transport facilities" does not include pedestrians. Therefore, an explicit reference to pedestrians must be added.
Cycling is already included under the term "transport facilities and services" both here and elsewhere in the Bill and in other legislation. If we were to include a reference to cycling as an additional matter, as distinct from all other modes of transport, it would cast doubt on whether the term "transport facilities- elsewhere in the Bill included cycling. It clearly does include cycling and must do so. Whether or not there are other ways of doing so apart from the commitment that I have reiterated today and which my honourable friend Glenda Jackson has made quite clear in another place—namely, that cycling is expected to be a major part of the mayor's approach to integrated transport in London—it is not appropriate to do that in the form proposed by the amendment. Indeed, if we were to include it here, it could be counter-productive.
That is the advice I have received. I can only inform Members of the Committee of that advice. There may be a natural reaction, which is certainly mine and that

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of my colleagues, to that advice, but it has to be taken into account when drafting Bills. The noble Baroness said earlier that lawyers such as the noble Baroness, Lady Hamwee, have to use such words continuously, but that is our clear legal advice and we are sticking to it. Therefore, I ask the noble Baroness not to pursue this amendment and to accept our reassurance to all concerned with cycling that it is a major priority for the mayor. We would expect the mayor to pursue it in line with the national commitments.
Midnight
Baroness Hamwee: Whatever the legal position, I hope that the Minister will understand that it is quite hard for Members of the Committee to consider that advice. The noble Lord has told us that he has been advised as to what words should or should not be included in the Bill, but he has not explained why he is so advised. It would be helpful to my noble friend and to me—and, indeed, to the rest of the Committee—to know the precise basis of that advice. I do not impugn what the Minister is saying as to the legal requirements, but I hope that he will understand that noble Lords would appreciate some knowledge as to the underlying argument which is the basis for the Minister's response.
Of course, the noble Lord may not be able to put that information into Hansard now. However, I am sure from the comments that have been made from all sides of the Committee that this is an issue which will attract attention at a later stage. Indeed, that may provide the opportunity for placing such points on the record. If that is not practicable, I hope that the Minister will be prepared to write to Members of the Committee setting out the basis of the argument.
Lord Whitty: I am certainly prepared to write to the noble Baroness but the advice is simple; namely, that we have to include pedestrians in the measure because they do not constitute transport, whereas cycling does. To differentiate cycling from other modes of transport would be detrimental to assuming that transport elsewhere in the Bill includes cycling. The letter will be short but I am happy to write to the noble Baroness and to other interested noble Lords.
Baroness Hamwee: I may not have made myself clear. Given the way that we build up law in this country using legislation and case law, I would have expected references to comparable decisions or legislative provisions which would have illustrated the issue. I am sorry to continue to be "picky" at this time of night but this is an important point.
Lord Brabazon of Tara: I remind the Minister that we are discussing my amendment. As the Minister and the noble Baroness, Lady Hamwee, have said, this matter hinges on a legal interpretation. The noble Baroness, Lady Hamwee, made a good suggestion; namely, that we should get some clarification from the Minister between now and the next stage of the Bill which will allow us to decide how to proceed with this issue. As I understand the position, this legal process
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can be taken into account in court. I believe that is what the Minister meant when he discussed this part of the Bill. Perhaps he would like to add that point to his letter.
I would not want the Committee to believe that I had been completely converted, as the Minister appeared to suggest. My point is straightforward; namely, I am in favour in cycling but I am not in favour of a great many cyclists, for the reasons which I gave. However, if this amendment helps make provision for cyclists then it is a good thing. For the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood had given notice of her intention to move Amendment No. 244A:
Page 67, line 26, at end insert ("and waste").
The noble Baroness said: We have discussed this amendment at length on a previous occasion. I shall not move the amendment.
[Amendment No. 244A not moved.]
Lord Berkeley Lord Berkeley moved Amendment No. 244B:
Page 67, line 26, at end insert (", and
(c) the needs of all road users, assessed in relation to the efficient movement of people and, in particular, the needs and safety of pedestrians and cyclists").
The noble Lord said: This amendment seeks to amend Clause 123(3)(b). We have discussed this subsection at some length. I am pleased and surprised to hear that the noble Lord, Lord Brabazon, is a convert to cycling. I did not see him on the parliamentary cycle race a couple of weeks ago. Several other colleagues were present, including my noble friend the Minister. However, the noble Lord, Lord Brabazon, must have made a late conversion.
With regard to Clause 123(3)(a) and (b), I get the impression that the transport facilities and services for public transport are covered by paragraph (a), whereas paragraph (b) covers freight, which I of course welcome. However, I felt that something was missing. My amendment seeks to address the question of space allocation on the road. We have heard much—in the White Paper and elsewhere—about encouraging local authorities to consider the needs of all road users. In the discussion on the previous amendment, several Members of the Committee said how important it was to give cyclists road space. One could argue that pedestrians also need such space. However, it appears that many local authority road engineers still measure their success in terms of numbers of road vehicles rather than in terms of numbers of people. I suggest the following wording,
"protecting from congestion the priority categories of traffic including emergency and other essential services, public transport, pedestrians, cyclists, disabled travellers and deliveries".
I wonder whether such a wording might not be more appropriate.
Many things can be done by these engineers. A pedestrian can press the button on traffic lights and the lights go green immediately rather than 30 seconds elapsing, as happens in many locations—certainly in Westminster. We have talked about priority bus and

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cycle lanes—to some extent ad nausea. We have heard of pedestrianisation. The underlying logic is that if there is not enough road space for unrestricted use by everyone, then certain classes of traffic must have priority in order to protect essential commercial, social and strategic interests.
Many techniques are now available for achieving this aim quite cheaply. One can see the logic of according greater priority to a bus carrying 50 or 60 people rather than a car with two or three people in it. The natural reaction of many people—including, I suspect, the noble Lord, Lord Brabaton—will be that if you give one group of people, say those in buses, greater priority, that causes more congestion for other people. Professor Phil Goodwin, of University College London, chairman of the advisory group used in preparing the transport White Paper, carried out research and collected international evidence which showed that although there is more congestion it is not as serious as has been suggested. The reason is that a certain proportion of the displaced traffic disappears from the system. It is not a very large proportion—the estimate is between 10 to 20 per cent in most cases—but it creates quite significant results. It needs courage to restrict certain types of traffic and promote others.
There are many examples one could give. At this time of night, I shall not do so. I give the example of a new idea by the Highways Agency to create a bus lane between Witney and Oxford on the A40. That road was built for three lanes; it was subsequently reduced by white paint to two. The agency wants to build another lane for buses only, which is commendable. But why not turn the road back into three lanes and make one of them a bus lane? That would save probably £10 million of capital costs.
A signal needs to go out to local authority engineers that people must be counted in the allocation of road space rather than traffic. My amendment is a short, not very good, attempt to draft something which I hope can be developed into instructions, guidance and all the other codes of practice which may follow on from it. I beg to move.
Lord Brabazon of Tara: The noble Lord, Lord Berkeley, mentioned my name twice in moving the amendment. I do not propose to respond. He appears to me to have made a speech which bears absolutely no relation whatever to the amendment. It was more applicable to a general transport debate, which we could have at a more suitable hour.
Baroness Gardner of Parkes: I shall not speak at any length because of the time. The noble Lord has included in his amendment the words "in particular"; I could suggest to him places such as Hyde Park, where a cycle track across the bridge has restricted all other traffic to one lane. 'The park is now full of stationary, polluting traffic. There are all sorts of arguments, but I cannot support his amendment.
Baroness Thomas of Walliswood: My name is joined with that of the noble Lord, Lord Berkeley, in the amendment. I regard it as an extremely interesting
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amendment. From the way the noble Lord introduced it, it is clear that he considers it a probing amendment to see whether this important matter can be incorporated into the Bill.
We are not in a situation in London—and never will be—where we can create more road space. We have all the road space we are ever going to have, with very minor amendments to that statement. As a result, if we are to have efficient movement of people through the streets of London we have to have regard to the allocation of road space in the most efficient way as between different uses. That is what the amendment is about. I commend the noble Lord, Lord Berkeley, on having brought it to the attention of this Committee. I very much hope that the Minister in responding will deal with it in the serious way in which it was proposed, because these are ideas which could be extremely fruitful in terms of the mayor's transport strategy.
12.15 p.m.
Baroness Miller of Chilthorne Domer: I agree with my noble friend, but I could not disagree more with the noble Lord, Lord Brabazon of Tara, about the amendment not being relevant. If we were a little younger, we would know that there is yet another group of potential road users who are neither pedestrians nor cyclists. I wonder where roller-bladers fit into the definition. Roller-blading is a growing method of transport and it is not as strange as people may think. You get from A to B more quickly than if you walk, and blades are more transportable than a bicycle. That is the sort of group that I think is addressed by this amendment, which is useful in widening our minds with regard to the groups of people who may be able to use the roads safely if they were not quite so much taken up with motor vehicles.
Lord Whitty: This has been an unexpectedly wide-ranging debate. I do not come suitably briefed on a national strategy for roller-blading, but I recognise that it is a particular form of transport which we have failed completely to register in our integrated transport policy so far. Nevertheless, I take the point
My noble friend Lord Berkeley raised a lot of issues, many of which I have some sympathy with; but the terms of his amendment run up against the same objections as I raised earlier in relation to specifying cyclists as if they were not subsumed by "transport". It also runs up against some of the problems raised by the noble Baroness, Lady Gardner. Whether or not one agrees with her, it is clear that not in all circumstances will one wish to give preference to a particular modality. It must be part of the mayor's broader decisions on a strategic transport policy not to have the word "particularly" written into the Bill in one context when clearly in other contexts it may give some priority to particular modes and not to others. We have therefore couched the clause in a non-modal form so as to give the mayor responsibility for considering an integrated approach. I appreciate some of the points raised in our

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discussion but I do not think that the drafting of this amendment is helpful. I therefore hope that my noble friend may feel able to withdraw it.
Baroness Thomas of Walliswood: I am more and more regretting this negative and legalistic attitude to the suggestions that have been made. This whole series of amendments seeks an inclusive approach to a transport policy up-front, so that we do not have to keep coming back over and over again to a series of arguments about whether a certain set of road-users should be mentioned in this or another context. There may be deficiencies in the drafting of the amendment, but it is an important one and, in my view, deserving of a more serious answer.
Lord Berkeley: I am very grateful to my noble friend for his comments. This was a probing amendment, as has been pointed out. I shall read very carefully what he said and perhaps revisit the amendment in a different form at the next stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 123 agreed to.
Clause 124 [The Mayor's transport strategy]:
[Amendments Nos. 245 and 245A not moved.]
Lord Berkeley Lord Berkeley moved Amendment No. 245B:
Page 67, line 36, at end insert—
("() In preparing the transport strategy, the Mayor shall take into consideration—

(a) the government's policy for integrated transport;

(b) the needs of those who do not have access to a motor vehicle;

(c) the availability of strategic routes, water, rail and road; and

(d) the needs of commerce and environmental protection.

() In preparing the transport strategy, the mayor shall consult—

(a) the Strategic Rail Authority;

(b) London borough councils;

(c) local authorities covering areas within the responsibility of Transport for London;

(d) representatives of users of transport, including train, bus. underground, cyclists, pedestrians, as well as road, rail and air freight;

(e) any other person or body whom the Mayor considers it appropriate to consult.").

The noble Lord said: I shall be brief. This is entirely a probing amendment. It seeks to ensure a nice, long list of those who should be consulted in preparing the transport strategy. I felt initially that there was a great deal of consultation at the next level down, but not much in regard to a particular transport strategy.
The whole business of consultation was discussed on an earlier Committee day. It is important that the mayor consults with those listed. However, I expect that I shall be told that it is not necessary to put this list on the face of the Bill. I beg to move.
Baroness Thomas of Walliswood: It is very late. I shall do no more than register my support for the amendment.
Baroness Gardner of Parkes: We had amendments very similar to this in regard to the national health Bill,
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where everyone set out pretty well everything. No matter what is set out, someone will be left out. Therefore, it is far better not to have such a list.
Baroness Farrington of Ribbleton: I hope that I can convince my noble friend Lord Berkeley and the noble Baroness, Lady Thomas of Walliswood, that the amendment is unnecessary.
Looking first at the matters which it is suggested the mayor should take into consideration, the transport strategy will be subject to Clauses 33 to 36 of the Bill. Those clauses lay down the process by which the mayor's strategies will have to be prepared. He or she will have to ensure that all strategies are consistent. That means that the mayor will need to integrate transport policies with environmental, economic development and planning policies.
The mayor will also need to ensure that the transport strategy is consistent with transport policy; in other words, with the Government's policy for integrated transport. He or she will need to have regard to how the strategy furthers the principal purposes of the authority, one of which is promoting social development in Greater London. Under Clause 124, the strategy must also include proposals for accessible transport for people with mobility problems.
I hope that the noble Lord and the noble Baroness can therefore agree that the Bill as drafted will require the mayor in drawing up the strategy to take into account the matters listed in this amendment.
The matter of consultation occupied us for some time in our earlier consideration of the Bill. Under Clause 34, in preparing a strategy, the mayor must consult each London borough council and any other body that he or she considers appropriate. In deciding which other bodies are appropriate, the mayor must consider the list of bodies in Clause 27. That list includes voluntary bodies, and bodies which represent businesses.
The noble Baroness, Lady Gardner of Parkes, indicated the difficulty in drawing up lists. This list is not intended to be exclusive. It is simply impractical to list every single body which the mayor should consider consulting. The fact that the noble Lord has included on his list a body which does not yet exist—the strategic rail authority—shows the difficulty of the task facing anyone seeking to do so.
The provisions in the Bill as it stands mean that, where the mayor fails to give proper consideration as to whom he or she should consult, or fails to consult bodies representing groups with legitimate interests which would be affected, he or she could be challenged by the interested parties, the assembly or, ultimately, the courts. I hope that, with that comprehensive reassurance, my noble friend will feel able to withdraw the amendment.
Baroness Hamwee: Before the noble Lord responds, he is entirely right in hoping that we shall see a strategic rail authority before too long. The Government have, after all, tabled amendments, and indeed have included provisions in the Bill, which anticipate legislation that is not yet in effect. So the noble Lord is not entirely out

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of kilter—a term that seems to have come into favour this evening—in proposing a body that does not yet exist.
Baroness Farrington of Ribbleton: I did not imply in any way that that body was not important or that it would not come into being. The thought that crossed my mind was how many other bodies might come into being in future which noble Lords would consider appropriate to add to the list.
Lord Berkeley: I am grateful to my noble friend and the noble Baroness, Lady Hamwee, for her contribution. This is a probing amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 124 agreed to.
Clause 125 [Directions by the Secretary of State]:
Baroness Ham wee Baroness Ham wee moved Amendment No. 245C:
Page 68, line 5, leave out ("direct") and insert ("request").
The noble Bareness said: In moving Amendment No. 245C, I should like to speak also to Amendments Nos. 245D to 245F. Grouped with these amendments is Amendment No. 246 in the name of the noble Lord, Lord Brabazon of Tara, and his noble friends. Clause 125 provides for further significant powers of direction on the part of the Secretary of State. They provide another pie out of which the Secretary of State is clearly not prepared to keep his finger.
The clause provides that if the Secretary of State considers that the transport strategy is inconsistent with national policies, and that the inconsistency is detrimental to an area outside London, he can direct the mayor to revise it. Why are these provisions necessary? With regard to national policies, Clause 33 provides that regard must be had to them. Conversely, why is that reference necessary in Clause 33 if we come upon it in the present context? Is it really appropriate to provide for directions on the part of the Secretary of State? The mayor may well have regard to national policies but have very good reasons for doing something slightly different in London.
As to detriment to an area outside London, I believe that it is up to the mayor to negotiate with such an area. I do not believe that counties are so directly restricted from doing things that are detrimental to their neighbours, including London. Perhaps the Minister can confirm that. I do not suggest that they should set out to do things that are detrimental to their neighbours; I simply inquire whether they are subject to a legislative prohibition in that context.
In our view, the structure that the Government create under this Bill will increase the risk of conflict. The authority will always be in the shadow of nanny who is ready to sort things out. The Secretary of State is apparently not prepared to nurture self-reliance on the part of the mayor and assembly and leave them to grow up a bit and understand how to foster good relations.
We agree with the Conservatives. By indicating their opposition to the Question that the clause shall stand part of the Bill, they indicate that the Bill would be
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improved without the clause. But if it is to remain in the Bill, we propose that the direction should be a request so that there is the implicit requirement that there should be discussion and debate, and that the direction or request should be to the mayor and the assembly. The assembly will have views, embracing no doubt the effects outside London since by definition many members of the assembly will represent areas on the boundaries of London. Assembly members are likely to have the expertise to act as some moderating force on the mayor. Judging by the amendment in the name of the Conservatives, I believe that they may have a similar notion of the role of the assembly.
Finally, Amendment No. 245F proposes to leave out subsection (2). We find the "jump to it" spirit of the provision rather distasteful and inappropriate. I beg to move.
Lord Brabazon of Tara: I agree with what the noble Baroness, Lady Hamwee, said in moving the amendment. I speak to Amendment No. 246, and to the Question whether Clause 125 shall stand part of the Bill, because the two issues go together. My opposition to the clause standing part of the Bill is at the extreme end of the equation. I am glad that the noble Baroness indicates support. We believe that if one sets up this body with the mayor and the assembly, they should be allowed to get on with their job in this instance and the Secretary of State should leave them alone for all the reasons that the noble Baroness gave.
Amendment No. 246 is a compromise. It states:
"No direction by the Secretary of State shall come into force if it is rejected by a resolution of the Assembly".
In other words, if the mayor and the assembly agree with one another, as we hope they will, and the assembly votes on it, that will overrule the Secretary of State. Otherwise I agree with the amendment of the noble Baroness.
Lord Whitty: I am slightly astonished at the intervention of the noble Lord, Lord Brabazon, given the history of his government in Parliament, that we should set up the GLA and let them get on with it without the power of intervention by the Secretary of State.
I believe that in some circumstances the Secretary of State has to have the power of intervention. As the noble Baroness, Lady Hamwee, indicated, the powers of intervention in Clause 125 are limited. They relate to a situation where a strategy is inconsistent with the national transport policy and at the same time has demonstrably adverse effects outside Greater London. In those circumstances, there is a responsibility on central government to act on behalf of the nation as a whole and the neighbouring or other part of the United Kingdom affected adversely by the policy.
Amendments Nos. 245C and 245D remove the reserve power insurance policy for the rest of the country by downgrading it to a request. Amendment No. 245F would remove the duty on the mayor to respond by changing the strategy in accordance with the direction. The circumstances in which that would arise

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would be rare; and the circumstances in which the power of a direction would be used probably rarer still. A deliberately high hurdle must be crossed before the Secretary of State can act. However, there may be circumstances where it is necessary to act to avoid detriment to the national policy. Amendment No. 245D in effect makes the Secretary of State's direction subject to the assembly. That seems to me an odd constitutional position which I cannot accept.
Amendment No. 246 would mean that if the assembly voted to reject it, any direction by the Secretary of State would not come into force. That raises a constitutional objection. It would not be an appropriate role for the London assembly which is there to scrutinise the actions of the mayor. The responsibility of the Secretary of State is, as always, to Parliament. There would be a serious confusion of roles. I do not believe that it is an overweening power. It would be used to protect the rest of the country as a reserve power and we would wish to see it retained on the face of the Bill. I therefore hope that the noble Baroness will not pursue the amendment.
Baroness Hamwee: I accept that on this occasion, in contradistinction to intervention powers in another Bill which the House is considering, the basis for the exercise of the reserve powers is spelt out in the Bill. That much I welcome. Other than that, we disagree. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 245D to 246 not moved.]
Clause 125 agreed to.
Clause 126 agreed to.
Clause 127 [Preparation of the plan]:
[Amendments Nos. 246A and 247 not moved.]
Clause 127 agreed to.
Clause 128 [Approval of plans by the Mayor]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 247A:
Page 69, line 22, at end insert—
("() The Mayor shall approve a local implementation plan if he considers that it meets the criteria set out in subsection (3).").
The noble Baroness said: Clause 128 puts constraints on the approval of a local implementation plan. Under subsection (3) the mayor is not to approve an implementation plan unless in his view it meets certain criteria which are set out in paragraphs (a), (b) and (c). I do not believe that the clause provides that the plan should be approved if it does meet those criteria. That is not implicit, especially as in subsection (2) the wording is that the mayor "may" approve a local implementation plan. Can the Minister clarify the position? I beg to move.
Lord Whitty: The amendment would reduce the mayor's discretion over whether or not to approve the local implementation plan. The amendment would mean that, provided the three conditions were met, the mayor would have no option but to approve the plan. That would mean that he or she would be unable to consider any other factors. While it may be true that the criteria are fairly wide and it is therefore unlikely that the mayor
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would wish to reject the plan on other factors, there are issues of whether, for example, the plan is unsatisfactory compared with the other plans submitted by other councils or would have a detrimental effect on their achievement.
Local implementation plans will be key to the successful implementation of the mayor's overall transport strategy and the mayor must have power to ensure that the plans contain all that is necessary. The boroughs must be consulted about the transport strategy, so they will already have had their chance to express their views about its nature and how it might affect their responsibilities. When they come forward with their own plans, there must be some flexibility with the mayor on whether he or she accepts them and whether he or she engages in a process of discussion with the local authorities to approve the plans and make them more compatible with the overall strategy. That is the intention of the clause.
I hope that, with that explanation, the noble Baroness may see fit to withdraw her amendment.
Baroness Miller of Chilthorne Domer: Before my noble friend comes back, I should like to say that I find the reply of the noble Lord the Minister somewhat disappointing, given the difficulties that will inevitably arise from working in this two-tier way. I found the clause very negative in the first place. We are given a list of reasons why the mayor will not approve the strategy "unless". It would have been more positive if the clause had been drafted to say that he will approve it "if". The spirit of our amendment would be likely to provide a much better dialogue between the mayor and those boroughs drawing up the local implementation plan. Therefore, I think that we shall return to this subject, especially when we see the length of the Government's Amendment No. 248D, for example, which anticipates that there will be many problems and that life will not be easy.
Our amendment would make much clearer for those boroughs that are working on their plans exactly the spirit in which the mayor shall approach such matters. It would make it clear that the criteria are very important and that he is definite about them, so that both parties approach things in a positive spirit. The clause as it stands without our amendment is negative in spirit and will inhibit that.
Baroness Hamwee: My noble friend is absolutely right. If we are to have the negatives, would not it have been better simply to provide that, as subsection (1) says,
"Each London borough council shall submit its local implementation plan to the Mayor for his approval"?
That says all that is required. But I have made that point a number of times, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 128 agreed to.
Clause 129 [Power of the Mayor to prepare a plan]:
[Amendment No. 248 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 248A:
Page 69, line 36, leave out from ("refuses") to ("unless") in line 39, and insert ("under subsection (2) of section 128 above to approve a local implementation plan, the London borough council which submitted the plan shall prepare a new local implementation plan and submit it to the Mayor under subsection (1) of that section")
The noble Lord said: I shall also speak to the rest of the amendments in this group: Amendments Nos. 248B to 248P and 249A to 249F. These amendments, which relate to the local implementation plans, are here because when we discussed those plans in another place we were pressed on why we had not included any provisions for review of the plans. There were other questions, including why the mayor could claim only reasonable administrative expenses, rather than all reasonable expenses, from the boroughs if he or she had to intervene to implement a plan. Other issues were also raised.
We agreed to go away and reflect on these matters, and the amendments in this group are largely the fruits of those reflections. Rather a large number of amendments are required, but it is necessary to ensure that the same process is followed for a revised plan as for the original.
The amendments have three main purposes. First, they make it clear that the boroughs have a duty to revise their local implementation plans when the transport strategy is revised, unless they notify the mayor that this is unnecessary. Secondly, they enable the boroughs to propose revisions of their own to local implementation plans if they see fit, even in the absence of a revised mayoral strategy. Thirdly, they enable the mayor to recover any "reasonable expenses" from the boroughs when he or she has had to prepare or implement a local implementation plan on their behalf, rather than, as under the previous provisions, being limited to "reasonable administrative expenses".
The rest of the amendments are consequential on those three main purposes. They apply the procedure for preparing and submitting local implementation plans under the existing clauses to revised implementation plans under these clauses.
Amendment No. 248E, a new clause, allows revisions to be made to a local implementation plan either when a borough wants to propose changes to its own implementation plan, or when the transport strategy has been revised. In the latter case, a borough may notify the mayor that it doe; not think any revisions to its LIP are necessary.
Amendment No. 248E specifies what a revised LIP should contain and whom the borough should consult in preparing it. Subsection (3) applies Clause 128 to a revised LIP. Those procedures replicate those for the initial LIP.
Amendment No. 248F allows the mayor to intervene if a borough's revised LIP does not fully implement the strategy as it applies to its area or if a borough has not prepared revisions when those are necessary. This clause
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therefore replicates the mayor's powers in Clauses 128 and 129 which were in relation to the initial plan. It extends them to apply to a revised implementation plan.
Although this seems to be a complicated set of amendments, it squares the process of revision of LIPS, as we were requested to do in another place. I hope that Members of the Committee will understand the need for the amendments. I beg to move.
On Question, amendment agreed to.
12.45 a.m.
Lord Whitty Lord Whitty moved Amendment No. 248B:
Page 69, line 40, leave out ("in writing").
On Question, amendment agreed to.
[Amendment No. 248BA not moved.]
Lord Whitty Lord Whitty moved Amendment No. 248C:
Page 70, line 19, leave out ("administrative").
On Question, amendment agreed to.
Clause 129, as amended, agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 248D to 248F:
After Clause 129, insert the following new clause—
REVISION
(" .—(1) A London borough council may at any time prepare such revisions as it considers appropriate to the council's local implementation plan.
(2) Where the Mayor revises the transport strategy under section 33(2) above, each London borough council shall as soon as reasonably practicable after the Mayor has published the transport strategy as revised prepare such revisions to the council's local implementation plan as it considers are necessary in order to implement that strategy in its area.
(3) Where a London borough council considers that no revisions are required to be prepared under subsection (2) above the council shall notify the Mayor.
(4) For the purposes of this section, the "local implementation plan", in relation to any London borough council, means whichever of the following has been most recently approved, or as the case may be, prepared, by the Mayor, namely—

(a) a local implementation plan prepared by the council and approved by the Mayor under section 128 above;

(b) a local implementation plan, as proposed by the council to be revised, approved by the Mayor under that section; and

(c) a local implementation plan or revised local implementation plan prepared by the Mayor on behalf of the council.").

After Clause 129, insert the following new clause—
PROCEDURE FOR REVISION
(" .—(1) In preparing any revisions under section (Revision) above a London borough council shall consult the bodies and persons required to be consulted under subsection (2) of section 127 above, taking the references in paragraph (d) of that subsection and in subsection (5) of that section to the local implementation plan as references to revisions under section (Revision) above.
(2) Each local implementation plan as proposed to be revised shall include the matters specified in section 127(1) and (3) above.
(3) The provisions of section 128 above shall apply to a London borough council's local implementation plan as proposed to be revised as they apply to the council's local implementation plan.").
After Clause 129, insert the following new clause—
POWER OF THE MAYOR TO PREPARE A REVISED PLAN
(" .—(1) Where the Mayor has published the transport strategy as revised but it appears to the Mayor that a London borough council has failed—

(a) to prepare such revisions to the council's local implementation plan, or

(b) to submit to him for approval such a local implementation plan as proposed to be revised,

as the Mayor considers necessary in order to implement in the council's area the transport strategy as revised, the Mayor may issue to the council a direction under section 132 below requiring the council to do so within such period as the Mayor shall specify in the direction.
(2) Where the Mayor has issued a direction of the kind mentioned in subsection (1) above but the council has not complied with the direction within a reasonable time, the Mayor may prepare a revised local implementation plan on behalf of the council.
(3) Where the Mayor refuses to approve under subsection (2) of section 128 above a local implementation plan as proposed to be revised, the London borough council which submitted the plan shall prepare new revisions and submit to the Mayor under subsection (1) of that section a new local implementation plan as proposed to be revised, unless the Mayor notifies the council that he intends to exercise his powers under subsection (4) below.
(4) Where the Mayor—

(a) refuses to approve under subsection (2) of section 128 above a local implementation plan as proposed to be revised, and

(b) has served on the London borough council who submitted the plan a notice under subsection (3) above,

the Mayor may prepare a revised local implementation plan on behalf of the council.
(5) In preparing a revised local implementation plan the Mayor shall consult the bodies and persons required to be consulted under subsection (5) of section 129 above, taking the references in paragraphs (a) and (e) of that subsection and in subsection (8) of that section to a local implementation plan prepared on behalf of a London borough council as references to a revised local implementation plan prepared on behalf of such a council.
(6) A revised local implementation plan prepared by the Mayor under this section shall include the matters specified in section 127(1) and (3) above.
(7) Where the Mayor prepares a revised local implementation plan on behalf of a London borough council, he may recover from the council as a civil debt any reasonable expenses incurred by him in preparing the plan.").
On Question, amendments agreed to.
Clause 130 [Implementation by a London borough council]
Lord Whitty Lord Whitty moved Amendments Nos. 248G to 248N:
Page 70, line 27, at end insert (", or a local implementation plan as proposed to be revised,").
Page 70, line 29, leave out ("prepared") and insert ("submitted").
Page 70, line 31, after ("above") insert ("or, as the case may be, section (Procedure for revision) (2) above").
Page 70, line 33, at end insert ("or, as the case may be, section (Procedure for revision) (2) above").
Page 70, line 34, after ("plan") insert ("or a revised local implementation plan").
Page 70, line 35, after first ("above") insert ("or, as the case may be, section (Power of the Mayor to prepare a revised plan) above").
Page 70, leave out line 38 and insert ("approved by the Mayor under section 128 above or, as the case may be, a local implementation plan as proposed to be revised, approved by the Mayor under that section.").
On Question, amendments agreed to.
Clause 130, as amended, agreed to.
Clause 131 [Implementation by the Mayor]:
Lord Whitty Lord Whitty moved Amendment No. 248P:
Page 71, line 2, at end insert—
("() Subsection (1) above applies in relation to a local implementation plan, as proposed to be revised, approved by the Mayor under section 128 above as it applies to a local implementation plan approved by the Mayor under that section.").
On Question, amendment agreed to.
[Amendment No. 249 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 249A:
Page 71, line 15, leave out ("administrative").
On Question, amendment agreed to.
Clause 131, as amended, agreed to.
Clause 132 [Directions by the Mayor]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 249AA:
Page 71, line 21, leave out paragraph (b).
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 249BA, 249EA, 249EB, 249G and 249H. Under Clause 132 the mayor has considerable powers of direction over the boroughs with regard to the manner in which they are to exercise their functions regarding local implementation plans.
I can understand the mayor's interest in the outcome, but should the mayor be concerned with the process, say, for the time by which the local implementation plans will have been created and put into effect, Clause 132(2) includes the timetable as one of a list of six matters, and they are not, in themselves, exclusive.
Amendment No. 249AA deletes from Clause 132(1)(b) the mayor's power of specific direction as to the manner in which a London borough council is to exercise the functions. Amendment No. 249BA deletes Clause 132(2)(b), which contains directions as to the bodies or persons who must be consulted about a local implementation plan. Consultation by a borough is a matter for the borough; it is a local matter.
Amendment No. 249EA deletes Clause 132(2)(e), which sets out directions as to how the borough is to implement the proposals contained in the local implementation plan. The action to be taken by the borough seems again to be a matter for the borough since the mayor is concerned with overall strategic matters which will include important local details but should not, in our view, allow the mayor to become involved unduly in detail at local level.
Amendment No. 249EB deletes Clause 132(2)(f) which provides for directions as to the steps required to be taken to remove the effects of action which is incompatible with local implementation plan proposals. That seems to us to be very wide. Whose action is the mayor able to direct the London borough council to agree with? One hopes that borough action will have

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been determined with consultation with residents and neighbouring boroughs. This seems to be a particularly wide provision.
Amendment No 249G provides that direction should be given only with the agreement of the assembly. As I have said, these are wide powers. Even if we are told, as we may be, that these are again reserved powers, we believe that the scrutiny role of the assembly would appropriately give it a role in this exercise.
Amendment No. 249H requires prior consultation with the borough in question before these powers of direction may be exercised. The Committee may gather from this that we do not much like Clause 132. I beg to move.
Lord Brabazon of Tara: I have tabled a Motion that Clause 132 does not stand part of the Bill. I may as well speak to that now. I shall be brief because the noble Baroness has pretty well deleted the clause with the amendments she has just moved.
This amendment is a boost for subsidiarity. The mayor should not have untrammelled rights to dictate to councils how they perform their transport functions. Councils are close to the local people affected and more knowledgeable about local circumstances. Councils are responsible and better able to ensure that the local implementation plan interfaces with the other policies and functions of the council. Councils should be accountable to their electorate and not to the mayor for the implementation of policy. Therefore, I agree with the amendments moved by the noble Baroness.
Lord Whitty: This clause provides the mayor with the ability to give legally binding instructions to councils on the manner in which they perform any of their duties under this clause or the previous four clauses. It is vital that the mayor has sufficient powers to ensure that the strategy is properly implemented. Our intention is that the mayor's strategy should cover high-level areas with the detail left to the boroughs, as the noble Lord implied in his general approach to this clause.
Nevertheless, there will be specific areas where, in order for the overall strategy to work and for the co-operation to exist between the boroughs, the GLA and the London boroughs, there will need to be specific powers; for example, if local boroughs' policies cause problems on a GLA road, then the mayor needs to have powers to intervene. If, as was alluded to at an earlier stage in the consideration of this Bill, there are problems where one borough has given parking priority to residents on one side of the road and the other borough has given parking priority to residents on the other side of the road to the detriment of cyclists and through traffic, then the mayor has to have powers to intervene specifically.
I hope that these general powers will be used on only limited occasions. The wide range of traffic and transport responsibilities which the mayor has will only he implemented if a positive and constructive relationship is built between the boroughs and the GLA. It is important, therefore, that we do not rely on reserve
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powers to deliver the strategy. The kind of instances to which I have referred will arise from time to time and there will be difficulties in resolving them unless the mayor is given reserve powers.
It is important to recognise that the boroughs will already have been fully involved in the development of the mayor's strategy in the first place; that the requirements of that strategy are well communicated to the boroughs prior to them drawing up their own local implementation plans; and that in the same way that local transport plans in the rest of the country will be scrutinised and accepted or otherwise amended by the Secretary of State, within London those powers are there for the mayor. The mayor will have powers of direction should the overall policy or co-operation across London be jeopardised by the failure of the local implementation plan to operate in a way which delivers that strategy.
It is not the intention that the mayor should have the responsibility for dealing with every individual item within the boroughs' strategy; that must be for the boroughs. But there will be exceptions where the mayor will need to intervene. To remove these powers entirely, as would happen with the removal of Clause 132 and as suggested by the combination of measures put forward by the noble Baroness, would leave the mayor in a very much weakened position.
The specific requirement that the mayor should seek the agreement of the assembly, which is covered by Amendment No. 249G, is again a confusion of the powers of the assembly and the executive powers of the mayor. A direction is a matter for the mayor. It may be sensible to discuss this with the assembly, but at the end of the day, the decision should be the mayor's to issue a directive.
These are reserve powers. They would not be used very frequently but, in order to make a reality of the strategy, they have to exist and, unfortunately, on occasion situations will arise where they will need to be invoked. I hope therefore that noble Lords will not press these amendments which drastically reduce that power.
Baroness Thomas of Walliswood: Can the noble Lord tell the Committee, in relation to this and some of the previous amendments relating to the relationship between the mayor and the London boroughs, what importance he lays upon a system which will encourage good relations between the boroughs and the mayor as compared with a series of provisions which are almost bound to put the mayor in conflict with the boroughs? That is at the root of the objections to the clauses by members of both the Conservative and Liberal Democrat Front Benches.
Having lived in a two-tier authority area and worked as part of a two-tier system, I know that one has to work hard to secure agreement between the two levels. Simply putting in the hands of the chairman of Surrey county council a requirement that the local borough or district council should do such and such would have contributed nothing to the creation of good relations between the two tiers in that county.
1 a.m.
Baroness Miller of Chilthorne Domer: My noble friend is right. I return to something that the Minister said earlier—that the mayor is elected to do a job and how would the electorate feel if he does not do that job? The converse applies in this case. London borough councils have been elected to do a job and some of the new powers will take away the jobs that they were elected to do. The Minister's contention is that in some cases, the councils will be performing the job poorly. Surely that is for the electorate.
If the Government intend that, as soon as a council does not perform well, someone else should take over and run matters, that is yet another disincentive to the public to turn out and vote through the ballot box for a more efficiently run council. I accept that there is a fine balance in letting inefficiency continue but it is not the mayor's job to interfere in what is clearly a local issue.
Clause 132(2)(b) refers to the people who should be consulted. The borough council may have consulted a number of bodies and persons and produced a set of issues and a way forward that is acceptable locally. The mayor may not find that way easy to work with. He may not like it. But it is not reasonable for him then to ask a different group of people to come up with a different question. It is a matter of subsidiarity. I do not think that writing into the Bill something that takes that away will add to the wish of local people to contribute to the implementation plans—which is important if they are to work—or strengthen the role of the mayor.
There is confusion in the drafting of the clause between what is truly strategic and what is operational. If the mayor were involved in such detail in several London boroughs, he would not have time to pursue much of his strategic role.
Lord Whitty: Most of what the noble Baroness said indicates that we are not absolutely agreed that a strategic authority is needed. There is a clear commitment in the Bill to produce a transport strategy. I thought we were all agreed that the mayor should be the major instrument for drawing up that strategy, entering into consultation and ensuring that involvement takes place at all levels—with the boroughs as one of the key elements in delivering the strategy.
If we all accept that London has been lacking an overall approach to planning different modes of transport—as I believe we do—we cannot also say that the mayor shall have no powers over the boroughs and the other elements, in terms of the functional bodies and so on, in delivering the strategy. Clearly we want that to be done with an ethos of partnership, understanding and give-and-take between the various planning levels. At the end of the day, the person and institution responsible for the strategy must have the tools to carry it out.
Sometimes it will come down to a particular issue. For example, there may be a conflict about a road that is a strategic road. If there is a conflict where a borough takes a decision which distorts the modalities of the rest of the strategy, then that may appear to be a very
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particular decision to the borough but it will have wider strategic implications. Therefore, the mayor requires these reserve powers.
I am sure that the noble Baroness and all concerned will accept on one level that that is the case, but the working through of the strategy means that where there is a problem which cannot be overcome by negotiation or by a joint approach, then one party or the other has to have the decision-making process. In our view, it must be the mayor because, at the end of the day, he or she will be responsible for the delivery of that strategy. I therefore hope that noble Lords' opposition to this clause will be reduced by what I have said and that they will not pursue their amendments.
Baroness Hamwee: As I said when I moved the amendment and spoke to the rest of the group, our concerns relate to the mayor's prospective involvement in the process and not just in the outcome as regards ensuring that his strategy is implemented. Of the examples given of possible difficulties, I have to say that, arguably, one of them is not strategic, while the other suggests that the mayor's views must override those of the borough. That is exactly the self-fulfilling recipe for conflict to which my noble friends so correctly alluded.
We believe that there should be a strategic authority: indeed, we have been quite clear about that. However, we have also been quite clear that the boroughs need to be allowed to work in partnership. Although the Minister used that terminology, we do no see that the clause assists that partnership. With regard to the role of the assembly, we are not confused about it. We acknowledge that we take a different view from the Government. However, that will not deter us from continuing to make points which we believe are apposite.
I am not sure how much longer we shall continue tonight, but I shall leave room for further debate in this respect. In the meantime, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 249B:
Page 71, line 26, after ("plan") insert ("or revisions to such a plan").
On Question, amendment agreed to.
[Amendment No. 249BA not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 249C to 249E:
Page 71, line 28, at end insert ("or revisions to such a plan").
Page 71, line 29, after (" 127(3)(a)") insert (", (Procedure for revision) (2) or (Power of the Mayor to prepare a revised plan) (6)").
Page 71, line 30, after (" 127(3)(b)") insert (", (Procedure for revision) (2) or (Power of the Mayor to prepare a revised plan) (6)").
On Question, amendments agreed to.
[Amendments Nos. 249EA and 249EB not moved.]
Lord Whitty Lord Whitty moved Amendment No. 249F:
Page 71, line 35, at end insert—
("() The reference in subsection (2)(e) above to the local implementation plan includes a reference to—

(a) a local implementation plan, as proposed by a London borough council to be revised, approved by the Mayor under section 128 above; and

(b) a local implementation plan or revised local implementation plan prepared by the Mayor on behalf of a London borough council.").

On Question, amendment agreed to.
[Amendments Nos. 249G and 249H not turned.]
Clause 132, as amended, agreed to.
Baroness Farrington of Ribbleton: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at eight minutes past one o'clock.

  Paraguayan Chaco Project
  Paraguayan Chaco Project
  NATO: Local Procurement of Goods and Services
  NATO: Local Procurement of Goods and Services
  EU Development Spending
  EU Development Spending
  Neighbourhood Renewal: The Arts and Sport
  Neighbourhood Renewal: The Arts and Sport
  Antarctica: Over-fishing
  Antarctica: Over-fishing
  Belgrade: Damage to Embassies
  Belgrade: Damage to Embassies
  Kosovo: Demilitarisation
  Kosovo: Demilitarisation
  Conflict Resolution Initiatives
  Conflict Resolution Initiatives
  Filming and Broadcasting Steering Group
  Filming and Broadcasting Steering Group
  House of Lords: Proposed Film
  House of Lords: Proposed Film
  Appellate Committee Hearings: : Photocopying and Fax Facilities
  Appellate Committee Hearings: : Photocopying and Fax Facilities
  Legal Aid in Cases of Public Importance
  Legal Aid in Cases of Public Importance
  No. 2, Marsham Street
  No. 2, Marsham Street
  UN Peacekeeping Operations: Memorandum of Understanding
  UN Peacekeeping Operations: Memorandum of Understanding
  NATO Operations: Costs
  NATO Operations: Costs
  Depleted Uranium Use in Yugoslavia
  Depleted Uranium Use in Yugoslavia
  NATO Air Campaign: Termination
  NATO Air Campaign: Termination
  Kosovo: UK Units' Flying Hours
  Kosovo: UK Units' Flying Hours
  Kosovo: British Service Personnel Deployed
  Kosovo: British Service Personnel Deployed
  Medicines Selected List Scheme: Exclusions
  Medicines Selected List Scheme: Exclusions
  Hepatitis C and Haemophiliacs
  Hepatitis C and Haemophiliacs
  Mobile Phones: Health Risks
  Mobile Phones: Health Risks
  UN World Conference on Science
  UN World Conference on Science
  Primary and Secondary School Spending per Capita
  Primary and Secondary School Spending per Capita
  Walkergate, Durham: Planning Application
  Walkergate, Durham: Planning Application