Sitting of 18 April 2000

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

    CITY OF NEWCASTLE UPON TYNE BILL [LORDS]
    Order for Third Reading read.
    To be read the Third time on Tuesday 2 May.

    GREENHAM AND CROOKHAM COMMONS BILL
    Order for Second Reading read
    To be read a Second time on Tuesday 2 May.

Oral Answers to Questions
  SCOTLAND
  The Secretary of State was asked—
  SCOTLAND

    Referendums
    Mr. Desmond Swayne: If he will make a statement on his powers in relation to the holding of referendums in Scotland. [118126]
    The Secretary of State for Scotland (Dr. John Reid): I have no powers in relation to the holding of referendums in Scotland.
    Mr. Swayne: The Scottish Parliament lacks the benefit of a second Chamber to keep it in touch with popular opinion on contentious and difficult matters. Will the Secretary of State take the powers in a short Bill to make greater use of referendums to make good that omission? Will he earn the lasting thanks of parents throughout Scotland, see off his rivals in the dismal Scottish Executive and perhaps bring some relief to nervous colleagues sitting behind him by announcing today that the first such referendum will be on section 28?
    Dr. Reid: I know from previous exchanges that the hon. Gentleman does not fully understand the idea of devolution. I remind him that the point is to pass powers to other institutions, and not to decide to run those other institutions by decisions made here. Section 28 is a matter for the Scottish Executive. I am not sure that it is productive or useful for the hon. Gentleman to make his views known. The last time he did so, his views were so
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    intolerably extreme that they distressed even the Scottish Conservative party, which takes a bit of doing. Having agreed, after several years of debate, to give devolution to the Scottish Parliament and the Executive, we should allow them to get on with it.
    Mr. David Stewart: Does the Secretary of State share my view that referendums are useful gauges of political opinion? If he were to hold a referendum among the business community in my constituency, it would be overwhelmingly in favour of the retention of assisted area status. Would the Secretary of State agree to meet me urgently to discuss that issue?
    Dr. Reid: I congratulate my hon. Friend on his ingenuity in managing to make a plea for Inverness. I am aware that he is a doughty fighter for the interests of his constituency and its business community. I would be glad to meet him to discuss these matters during the consultation period.
    Mr. Eric Forth: Does the Secretary of State agree that one of the great glories of our constitution is that nothing is irreversible? Will he keep an open mind on the possibility of arranging a further referendum in the future to give the people of Scotland the opportunity to say whether or not they regret their decision in the last referendum?
    Dr. Reid: Our constitution has a number of great glories, one of which is the right hon. Member, who brings the House long hours and much amusement. Even the worst enemies of devolution would consider it a little premature to reverse in 10 months something it took 100 years to deliver.
    Mr. Dominic Grieve: The Secretary of State will recollect that, before the last general election, the then Labour Opposition were keen on local referendums—such as the unofficial Strathclyde water referendum—to influence Government. In terms of the right hon. Gentleman's own reserved matters, does he think that he might have a referendum on whether the contracts for the ships at Govan should be commercial or military? That would allow an opportunity to nail the calumny put out by the Government that the commercial status is due to the last Government, as it is entirely the responsibility of his Government that that has come about.
    Dr. Reid: Any opinion poll, representative sample or referendum held by an elected body is up to that elected body. The contracts for the ro-ro ferries were classified as commercial contracts under the advertisements put out in the European Gazette in January 1997, which even those with the urge to have collective amnesia about the last Government can remember was during the period of that Government. Rather than political point-scoring over Govan—particularly when the hon. Gentleman inevitably will score own goals, as he has just done—we would all be better served by concentrating our minds on the real issue, which is how we maintain a competitive and productive shipbuilding industry in this country, including at Govan.

    Digital Transmission
    Miss Anne Begg: What steps he has taken to ensure that digital transmission is extended to the widest possible audience in Scotland before withdrawal of analogue transmission. [118127]
    The Minister of State, Scotland Office (Mr. Brian Wilson): We will ensure that all those who currently receive the main free-to-air channels on analogue television can receive these channels digitally before analogue transmission ceases. The BBC and the Independent Television Commission, which are jointly responsible for the terrestrial television network, are now considering, in consultation with digital broadcasters, Government and others, how to develop the coverage of digital television across the UK.
    Miss Begg: My hon. Friend will be well aware that some parts of Scotland at present do not even receive terrestrial analogue television and that reception is very poor in other areas. Will he reassure me and the people who live in those areas that they will not be forgotten again and left out of the digital revolution?
    Mr. Wilson: I am very pleased to give my hon. Friend that assurance. The objective must be to do better than is done at present in terms of coverage. The period of transition can be used to develop the technology, for instance using satellites, to take digital reception into the small pockets that do not at present receive terrestrial television. It is also important to make the point that digital is about more than television, because it will also be increasingly important in education and commerce. It would be a real disadvantage to any area if it did not have access to digital television, quite apart from the inability to receive television pictures. We must try very hard and we must not limit our ambitions to replicate what exists at present. We must do better and we must achieve our aims sooner than the planned period of transition.
    Mr. Alasdair Morgan: Further to that reply, the Minister may be aware that some of my constituents can receive certain channels only from Northern Irish transmitters or from English transmitters, which may not be a problem during party political broadcasts but which certainly upsets people during football matches. Will he make representations to ensure that digital transmissions in Scotland come from Scottish transmitters?
    Mr. Wilson: I remember the days when people travelled to places such as the hon. Gentleman's constituency to see football matches when they were denied to the rest of Scotland. The hon. Gentleman's point will be overtaken by technology, because digital will open up more choice. I hope that people in Scotland, and indeed in every part of the United Kingdom, will be able to see programmes that are generated from within Scotland as well as UK-generated programmes. In fact, that is the answer to dilemmas such as which version of "Newsnight" one wants to see. Perhaps I should get a plug
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    in, and suggest that with digital it is possible—and some might say desirable—to see the UK version of the programme for all 45 minutes.
    Sir Robert Smith: While I welcome some of the reassurances on the technical side, can the Minister assure the House that those who have to access digital transmissions by satellite will not face additional cost barriers? The Minister mentioned the greater diversity of digital television. Will he ensure that in any switch to digital television lessons are learned from the takeover of Grampian Television about the importance of regional diversity in the future of broadcasting and in its regulation?
    Mr. Wilson: Like many other people who are familiar with Grampian Television and who remember the great patriotic battle that was fought for the north and north-east of Scotland to keep a separate channel for those areas, I have looked with some cynicism and regret at what has been done since in terms of selling the Grampian franchise to the Scottish Media Group and the disappearance of much of the distinctive identity of Grampian, not to mention many of the jobs associated with Grampian in both English and Gaelic programming.
    I certainly hope that the Independent Television Commission will be vigilant on behalf of those concerned in the north and north-east of Scotland. The spread of digital should be about greater choice, more programmes and more channels, and it must protect regional identity. I hope that digital transmission will give rise to a separate Gaelic channel—something that I know the hon. Member for Argyll and Bute (Mrs. Michie) will approve—and that is one way in which digital television will be able to enhance choice.

    ONE Pilot
    Mr. Douglas Alexander: What assessment he has made of the operation of the ONE pilot project in Paisley; and if he will make a statement.
    [118128]
    The Secretary of State for Scotland (Dr. John Reid): Early impressions are that the Clyde Coast and Renfrew ONE pilot is an effective way of helping people into work.
    Mr. Alexander: Does my right hon. Friend agree that the staff of the Employment Service and the Benefit Agency in Paisley and Johnstone are to be congratulated on that initiative? Would he concur with the view expressed by one of the personal advisers from the ONE initiative in Johnstone who told me last week that the initiative has been especially successful in assisting women returning to work in the area of the Clyde coast?
    Dr. Reid: Yes, I am more than prepared to thank the staff my hon. Friend mentioned for the enormous amount of work that they have done. I know that he has given much encouragement to and taken great interest in the initiative.

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    The ONE scheme provides a one-stop shop for job seekers, providing practical help and advice on benefits, training, work experience, housing and child care. Claimants will have their own personal adviser to help them bring all that together and to assess their job potential. It is part of what we have been doing to assist people to find appropriate work where they want it, and it is one of the reasons why we have been able to create 60,000 new jobs in Scotland, and 800,000 in the United Kingdom as a whole. Employment in Scotland is running at about 2.3 million, the highest for something like 33 years.
    Mr. Ian Bruce: I am sure that the Secretary of State will acknowledge that we need this excellent new initiative because new deal has totally failed to help the long-term unemployed. Has the right hon. Gentleman seen the figures that show that the long-term unemployed are going through a revolving door? They are not—
    Madam Speaker: Order. Do the figures refer to Paisley, which is the specific subject of the question? If the hon. Gentleman is referring to Paisley, the House would be grateful for the figures.
    Mr. Bruce: The figures for Paisley show exactly that there is a very large revolving door in Paisley.
    Madam Speaker: Would the Secretary of State like to answer on the Paisley issue, please?
    Dr. Reid: Thank you, Madam Speaker, for your helpful ruling. It may help the hon. Gentleman if I explain to him that Paisley is a town quite near to, but distinct from, Glasgow. Such information is usually useful for Conservative Members.
    The ONE scheme in Paisley is proving very successful. Youth unemployment and long-term unemployment have fallen there, and that represents what has happened across Scotland, where 77,000 people have gone through the new deal in various capacities. Youth unemployment in Scotland has been cut by up to 69 per cent. since this Government took office. Long-term unemployment has fallen by 20 per cent.

    Pensioners
    Mr. Tony Worthington: What calculation he has made of the impact of the Budget on pensioners in Scotland. [118129]
    The Secretary of State for Scotland (Dr. John Reid): Measures taken so far this Parliament mean that pensioner households will be on average £400 a year better off.
    Mr. Worthington: I very much welcome all the measures that have been taken, which include free television licences for the over 75s, and the heating allowance. However, one of the major steps forward attracted the least comment. That was the proposal for a consultation paper on granting tax credits for those pensioners who have been left out so far—the ones who have worked all their lives and have small occupational pensions. Does my right hon. Friend welcome that move
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    by the Chancellor, which ensures that those people who have served this country well will be taken care of in the future?
    Dr. Reid: Yes, I welcome that very much. As my hon. Friend points out, the most recent Budget builds step by step on what we have done for pensioners. We have increased the fuel allowance and extended the capital allowance threshold beyond which pensioners with small savings lose benefit, but we have also pledged to look at the group of pensioners who fall into the category that my hon. Friend described. They are the ones who have a little but lose a lot because they are just above the minimum income threshold for the loss of benefits.
    That group of people is very important to the Government. In allocating benefits to pensioners, we have tried to make sure that we have paid adequate attention to all pensioners. The poorest have the guaranteed minimum income, and the oldest have the free television licences, but now we want to help those who have a little but who lose a lot from the benefits system as it is constructed at present.
    Mr. Archy Kirkwood: Will the Secretary of State explain how the proposed tax credit for pensioners will work?
    Dr. Reid: That is precisely what we are discussing in the consultation process.
    Mr. David Marshall: My right hon. Friend will be aware that Glasgow contains many of the poorest constituencies in Scotland, but is he also aware that about 100,000 pensioners in the city will benefit to the tune of around £10 million from winter fuel payments alone? Will he consider that measure—and all the others introduced by this Labour Government to benefit pensioners—and contrast and compare it with all the hardship and misery caused to pensioner by the Tories when they were in power?
    Dr. Reid: Yes, indeed. I am sure that I speak for all my colleagues when I say that senior citizens who have contributed so much to creating the wealth of this country should share in a reasonable proportion of that wealth in their old age. That is why the Government restored the free eye tests, which were so disgracefully abolished by the previous Government. It is why we introduced the guaranteed minimum pension for the poorest pensioners, the free television licence for the oldest ones, as well as providing a number of other benefits, including, of course, the £150 fuel allowance for every pensioner household every year. That is particularly beneficial, because giving that benefit in that form means that it is not taxed as it would be if it were paid out weekly. It also means that those in receipt of it are not penalised by losing benefits, as they might be in some cases if it was paid out weekly. That is another step in the Budget towards giving pensioners what they deserve and are due.
    Mr. Dominic Grieve: What about the abolition of the age-related married couples allowance, which takes £500 off the income of people coming into pensionable age? How does that square with the Secretary of State's comments? Will he also comment on the fact that £2 billion has been taken from pension funds, thereby

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    driving a coach and horses through the promises that pensioners would be encouraged to save to supplement their state pension?
    Dr. Reid: As I pointed out earlier, we have to consider all the measures that have been passed during this Parliament. I have not mentioned, for instance, the savings that pensioners will make because of the introduction of the new low 10p starting rate of income tax.
    A range of other measures have been introduced, one of which the hon. Gentleman has mentioned. However, on balance, as a result of the measures taken in this Parliament pensioners are, per household, an average of £400 better off. I do not claim for a minute that that is enough; I do not claim that we have done everything that we could or would wish to do for pensioners. We have done a lot, but we are well aware that we have a lot more to do.
    Step by step, under this Government, pensioners, including the poorest and oldest, will continue to become better off. That is why we are now looking at those just above the income threshold that loses them benefits—those who have a little but lose a lot. We will continue to make sure that pensioners get what they deserve under this Government.

    Electronic Communications Bill
    Mrs. Rosemary McKenna: What assessment he has made of the impact in Scotland of the Electronic Communications Bill. [118130]
    The Minister of State, Scotland Office (Mr. Brian Wilson): The Electronic Communications Bill will further improve opportunities for development of electronic business in Scotland and the rest of the United Kingdom, to which the Government are heavily committed.
    Mrs. McKenna: Can the Minister say what benefits are derived by Scotland from the joint ministerial meetings on the knowledge economy? Can he tell us who takes part in those meetings and, more importantly, whether they understand the importance of public access to information technology?
    Mr. Wilson: The Government recognise that an enormously important part of the economy, now and in the coming decades, is based on the e-commerce revolution. It is extremely important that there should be no barriers to that; it is important that we should benefit from everything going on throughout the United Kingdom, and it is also important that we should add Scottish dimensions to what we do. The joint group is concerned to ensure that the UK legislation is enhanced and value is added within Scotland.
    We are extremely aware of the access issue. In addition to e-commerce, the university for industry will be based on the use of such technology. So everything that we can do to remove obstacles, open up opportunities and make this a real business and career option for as many people as possible will create jobs in Scotland and the rest of the UK.
    Mr. John Bercow: If the Bill is as good as it is cracked up to be, how does the hon. Gentleman
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    explain that—as in England and Wales, so in Scotland—the Federation of Small Businesses has been deeply critical of the enormous regulatory burden that will be imposed by that legislation?
    Mr. Wilson: When I see the hon. Gentleman, I think of the phrase "dot.com".
    Mr. Bercow: Was that a joke?
    Mr. Wilson: It was not a joke; it was to say simply that it is not unknown for the Federation of Small Businesses to be critical of legislation, whether Tory or Labour legislation. That is its job as a pressure group. Anything that allows electronic signatures to be admissible in court as evidence to prove authenticity of documents, smooths the way of e-commerce and adapts to current circumstances is good stuff when it comes to enhancing the technological revolution. Some small businesses will be in favour and others will have doubts. That has always been the way. We must communicate with them to persuade them why they should be in favour.

  ADVOCATE-GENERAL FOR SCOTLAND
  The Advocate-General was asked—
  ADVOCATE-GENERAL FOR SCOTLAND

    EU Directives
    Dr. Norman A. Godman: What recent requests she has received for her advice on devolved and reserved matters in relation to the European convention on human rights and European Union directives and regulations. [118151]
    The Advocate-General for Scotland (Dr. Lynda Clark): Both these issues raise a number of interesting and difficult problems that have been brought to my attention and about which I have given advice.
    Dr. Godman: There is a great deal of confusion about convention obligations and European Union law. Has my hon. and learned Friend any plans to provide guidance to Members, Members of the Scottish Parliament, peers and journalists on the extension of the convention, its application to Scots law and the differences between convention obligations and obligations under EU law?
    The Advocate-General: I am always delighted to assist any Member from any party who wishes to discuss such matters with me. It is my job to advise the Government, and it would not really be appropriate for me to send out advise to other parties.
    Sir Patrick Cormack: The hon. and learned Lady seems to operate in an extremely mysterious way. It is the one characteristic that she shares with the Almighty. She has been especially coy with the

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    House this afternoon, but as she has extended an invitation and as I am not a lawyer, may I see her and will she tell me what she really does do?
    The Advocate-General: I would be delighted to give the hon. Gentleman a private appointment at any time to discuss these matters.
    Mr. Menzies Campbell: Will the hon. and learned Lady tell the House whether she has considered the provisions of European Union law in regard to its effect on contract for roll on/roll off ferries on the Clyde? In particular, does she understand the distinction between the terms of an advertisement and the terms of a contract when it is ultimately placed? Has she considered whether it is possible to create a contract that will allow the ferries to be built in the United Kingdom, that will meet the UK's military aspirations and at the same time will not be contradictory of our commitments under EU law?
    The Advocate-General: The right hon. and learned Gentleman is well aware that as a Law Officer I would not normally, and certainly not in this case, advise him of what advice I have given. I can say that I am aware in general terms of the types of distinction to which he refers.

    Civil Service Pension Rights
    Mr. Desmond Browne: What role she plays in relation to the proof of irregular marriages in the context of inherited civil service pension rights. [118152]
    The Advocate-General for Scotland (Dr. Lynda Clark): The responsible Minister for civil service pensions is my right hon. Friend the Minister for the Cabinet Office. However, I am able to advise that in general terms the solicitor to the Advocate-General for Scotland's office advises all the United Kingdom Departments, and that would include that Department.
    Mr. Browne: I thank my hon. and learned Friend for that reply. I have provided notice of the Question as it relates to a constituent's case. Will she tell the House when my constituent, Mrs. Mavis MacDonald, can expect a reply to her request to inherit the pension rights of her deceased partner? Will it be before my correspondence file celebrates its second birthday?
    The Advocate-General: I am well aware of the effort that my hon. Friend puts into constituency matters. I am much obliged to him for providing me with specific notice of the case to which he has referred. He will not wish me to discuss in public the details of the case, but I am more than happy to advise that documents are being considered and that the solicitors of my hon. Friend's constituent are being advised about the matter. If my hon. Friend wishes chapter and verse, I am more than happy to provide that to him in private.
    Miss Anne McIntosh: Would the Advocate-General advise me whether the normal rules of
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    common law marriages would apply in a case such as that raised by the hon. Member for Kilmarnock and Loudoun (Mr. Browne)? Would same-sex marriages be recognised for the purposes of inherited civil service pension rights?
    The Advocate-General: The case referred to by my hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne) does not, so far as I am aware, raise any same-sex issues. The normal rules on cohabitation and repute are under consideration, which is part of the background to the difficulties experienced in my hon. Friend's case. The hon. Lady will know that the law in Scotland on marriage by cohabitation and repute is not always easy to interpret, and it may take some time before the proper documents are sorted out.

  LORD CHANCELLOR'S DEPARTMENT
  The Parliamentary Secretary was asked—
  LORD CHANCELLOR'S DEPARTMENT

    Gravesend Magistrates Court
    Mr. Chris Pond: What representations he has received concerning the proposed closure of Gravesend magistrates court. [118157]
    The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): I have received 23 representations from Members, justices of the peace and other local interested parties, following Kent magistrates courts committee's determination to close Gravesend magistrates court.
    Mr. Pond: I thank my hon. Friend for that reply. Virtually all the responses to consultation opposed closure of Gravesend magistrates court. Among those who responded, Kent police has estimated that it will face additional costs of around £30,000 a year, not including prisoner conveyance. Will my hon. Friend join me in thanking Elizabeth Brice, the former chairwoman of Gravesham's magistrates bench, for her 32 years of service, following her decision to stand down as a result of the decision to close? Can my hon. Friend assure my constituents that she, unlike Kent magistrates courts committee, will give careful consideration to the views expressed by the local community?
    Jane Kennedy: I am more than happy to associate myself with my hon. Friend's comments on the retirement of the former chairwoman of the Gravesham bench. Kent magistrates courts committee is responsible under statute for the efficient and effective running of the courts in its area. The Lord Chancellor's responsibility is limited to that of an appellate court in any dispute between the MCC and its paying authority over a proposed court closure. I shall pay careful attention to all the representations made during the appeal, and I pay tribute to my hon. Friend for his vigorous representations, although it is too early to say how successful he has been.

    Rural Magistrates Courts
    32. Mr. Owen Paterson: If he will make a statement on the future of rural magistrates courts. [118158]
    The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): I refer the hon. Gentleman to the answer that I gave him on 25 January 2000 at column 180W.
    Mr. Paterson: Shropshire's courts have been placed in an area coterminous with West Mercia police authority's area leading to real fears that the six petty session divisions in Shropshire may go the way of those in Hereford, where there is now only one. Going to court is traumatic enough, especially for elderly witnesses, without having to face extra costs and the difficulties of travelling long distances. Will the Minister guarantee that the Government have no covert policy to close magistrates courts in rural areas?
    Jane Kennedy: I can give the hon. Gentleman that assurance. The Shropshire magistrates courts committee has no proposals for courthouse closures or for any internal reorganisation.
    Mr. Dale Campbell-Savours: To what extent have the changes been driven by public expenditure?
    Jane Kennedy: Changes to the boundaries of MCCs are not cost driven, but are designed to meet the improved efficiencies that will arise from the coterminous nature of the new committees in relation to police authorities and the probation services.
    Mr. John Burnett: Last week it was announced that nine magistrates courts would close in Devon and Cornwall, which will deny many people justice. Does the Minister agree that possible small savings in her Department, which are far outweighed by additional costs for other departments including the police, social services and the probation service, will not lead to efficiency and will not save public money? Does she agree that she should produce guidance for MCCs on these matters, and that that guidance should be made available to the public?
    Jane Kennedy: The hon. Gentleman should draw breath for a moment and bear it in mind that any decisions on magistrates courts, their location and the services they provide are taken by local magistrates on magistrates courts committees, not by central Government. Such decisions are for local determination; any savings that might occur are for the local magistrates court committee to decide—as are the courts and their location. The central council of magistrates courts committees has produced a good practice guide for magistrates courts committees that are considering their accommodation. Both the Lord Chancellor's Department and Her Majesty's magistrates courts inspectorate endorse that guidance. There is no statutory duty to consult the public on, for example,
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    proposed courthouse closures, but magistrates courts committees are encouraged to consult more widely than required by statute; in fact, they all do.
    Mr. Barry Jones: Is my hon. Friend absolutely sure that magistrates courts committees listen to the views of the grass roots? There is some doubt about that in north Wales. Is it right that the chairman of the magistrates courts committee in north Wales should also be the chairman of the North Wales police authority?
    Jane Kennedy: Again, those issues are for local determination. It is important that the House bear in mind the fact that proposals by magistrates courts committees generally reflect the aim and expectation that services and facilities offered to all court users are brought up to the standard that we expect and require in the 21st century. Often, older courthouses lack facilities that are in keeping with modern standards.
    Mr. Nick Hawkins: Does the Minister not recognise that, however disingenuously she reads out her ministerial brief, saying "It's nothing to do with us or the Government that courthouses are closing", local people in our constituencies want to keep their courts open? It would be far better and far closer to the interests of the people served by those courts for rural courts to stay open, even though their facilities might not be of the highest standard. Undoubtedly, all those closures are happening under her Government's guidelines, which, as we are all aware, are Treasury driven. Whatever she says, there is no way of hiding the real truth from those who are suffering from such court closures.
    Jane Kennedy: Whether or not I was disingenuous is for the House to decide—the hon. Gentleman is as gracious as ever. However, most of the magistrates courts that have closed so far have been courts that magistrates courts committees no longer felt able to justify—either because the replacement of substandard facilities was needed or because they might have been satellite courts. For example, they might have been sited in local council chambers that severely lacked the necessary facilities.
    I repeat that I shall always support changes that lead to the provision of a better and more efficient service for court users.

    Family Mediation
    Mr. Gareth R. Thomas (Harrow, West): What steps have been taken to increase funding for mediation in family-related matters. [118159]
    The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): The Government are committed to encouraging the greater use of family mediation. The provision of public funding for family mediation will be fully implemented throughout England and Wales by the latter part of this year. That will provide a significant source of income for many mediation services. In 1999–2000, approximately £5 million was spent by the Legal Services Commission on publicly funded mediation.
    Mr. Thomas: Is my hon. Friend aware that magistrates courts in Middlesex—my area—have just withdrawn from

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    a scheme providing mediation in disputes with children? I understand that that is not an isolated example. Will my hon. Friend assure the House that she and her Department have a strategy to tackle that problem?
    Jane Kennedy: I certainly hope to reassure the House on that point. Mediation services receive funding under the partnership arrangements that allow probation services to spend a proportion of their budgets in conjunction with voluntary organisations that are working to achieve similar objectives. The Middlesex probation service has reviewed its partnership funding arrangements to ensure that such funding is directed to those projects that contribute most to the service's objectives. Obviously, when those reviews take place, there are occasionally changes in the funding.
    Miss Anne McIntosh: When the law is clear that it is for the parties to a marriage to bear the responsibility for saving that marriage, and when no children are involved in a divorce, why should public money be used for a mediation service to retrieve what is, in essence, a private relationship between two individuals?
    Jane Kennedy: The Government support the institution of marriage and believe that it is the best way for children to be raised. However, on the specifics of the question that the hon. Lady asks, very often mediation is funded through charities and we fund a national family mediation service through public funds. Local mediation services are not funded by central Government funding, but the fact that we fund the national service relieves the local services of some of those central costs.

    Judges (Complaints)
    Dr. Vincent Cable (Twickenham): What criteria the Lord Chancellor adopts in choosing to investigate complaints from members of the public against judges. [118160]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The Lord Chancellor can investigate complaints about the personal conduct of judges. He cannot consider complaints about judicial decisions. As a general rule he will investigate any complaint that a member of the judiciary has behaved in a way that falls short of the standards that both he and the public expect. This can include allegations of inappropriate behaviour, conflict of interest or rudeness.
    Dr. Cable: Is there not scope for a fully independent and transparent system of complaints to deal with cases such as that of my constituent Mr. Darbar, who spent several years in jail for a crime that he did not commit because of a mistake made by a judge—subsequently picked up in the Court of Appeal but for which no redress was possible. Another constituent, a Mrs. Hood, lost her pension because of a confusion over dates on the part of a judge in an industrial tribunal—again, with no redress forthcoming. If doctors can be struck off following complaints, why cannot judges be subject to the same discipline?
    Mr. Lock: I hear what the hon. Member says. The Lord Chancellor does consider complaints against judges
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    extremely seriously, but it is important to keep this matter in perspective. Last year, there were about 412 complaints relating to the personal conduct of judges, arising from approximately 250,000 sitting days, so the allegation that judges routinely make mistakes must be seen in the context that most of our judges are extremely hard-working, dedicated and professional servants of the public.
    Angela Smith: Although I accept the Minister's comments, does he not accept that if there were truly independent evaluation and monitoring of judges, it would lead to greater transparency and far greater public confidence? When I raised the subject with my hon. Friend previously and suggested that he introduce Ofjudge, he said that was a novel idea. May I suggest to him that all good ideas start off by being novel? Will he reconsider?
    Mr. Lock: I am always willing to listen to my hon. Friend's interesting, and perhaps novel, suggestions, but the independence of the judiciary from the Executive is a fundamental principle of our constitution and should be upheld, and any suggestion that the Executive should have a role in monitoring what judges do and the way that they do it would have to be very carefully considered to ensure that it did not infringe that very important principle of judicial independence.
    Mr. Geoffrey Clifton-Brown: There is a suspicion among my constituents that the inflexibility of judges' working hours leads to the postponement of an unnecessary number of cases to another day, involving increased numbers of witnesses having to travel extra days to attend court. Has the spokesman of the Lord Chancellor had any complaints in that respect? If not, will he examine that problem?
    Mr. Lock: I am always willing to accept complaints concerning specific instances where such a postponement has happened. The Lord Chancellor has made it entirely clear that the courts, like other public bodies, are there to serve the interests of the consumer, not to support the institution or to work in a way that is convenient for the professionals working in the system. It is essential that the consumers—the parties to the dispute and, very importantly, the witnesses—have the services that they are entitled to expect.
    I invite the hon. Gentleman to write to me or my right hon. and learned Friend the Lord Chancellor if he knows of any specific instances concerning unnecessary adjournments. I will ensure that they are properly investigated.

    Community Legal Service
    Mr. Eric Martlew (Carlisle): What steps have been taken at a local level to distribute information on the community legal service in England and Wales. [118161]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The Lord Chancellor, my hon. Friend the Member for Liverpool, Wavertree (Jane Kennedy) and I have attended local launches and seminars across the country to promote the community legal service and we have issued two CLS newsletters.

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    After the local elections in May, cards giving information about the CLS will be delivered to every household in a partnership area in England and Wales. That will be supported by advertising campaigns in the local media.
    Mr. Martlew: I thank my hon. Friend for that reply, and I also thank him for recently visiting my constituency to talk and to see the actions of Cumbria county council. I understand that it was a very worthwhile visit, especially the video conference with the rural areas. Is my hon. Friend sure that his Department is making the best use of information technology to get the message of this new service across to the public?
    Mr. Lock: I am very pleased that my hon. Friend asked that question. Since I went to Cumbria and saw the impressive work undertaken by the community legal service partnership there, including the innovative use of information technology, my right hon. and learned Friend the Lord Chancellor has also launched a community legal service, including the legal information advice website known as "Just Ask". This will provide valuable legal information and advice online to millions of people. I am pleased to be able to tell my hon. Friend that over 70,000 people have visited the website so far.

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

    Westminster Hall
    Mr. Owen Paterson: If she will make a statement on the cost to date of the Westminster Hall experiment. [118171]
    The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): It is not possible to give a precise estimate of the cost of Westminster Hall itself, because it is housed in a refurbished Grand Committee Room, and that refurbishment would have been done in any event. Similarly, some £71,000 was spent on professional fees, and that would have been incurred in any refurbishment. But my understanding is that expenditure of some £30,000 was incurred in furnishing the Grand Committee Room additionally for the experiment, and that the running costs are some £13,000 a month.
    Mr. Paterson: I think that that is a waste of money. I have attended debates in Westminster Hall which have been so poorly attended that there has been no atmosphere whatever, mainly because of the format. My main memories are of tourists in buses passing behind the Minister's head and bemused schoolchildren going out of the squeaky door. Could we not return to the familiar, traditional format of Committee Room 14, which would house all the Members who wished to attend the debates, a format that works and encourages rigorous debate?
    Mrs. Beckett: The "traditional format" of Committee Room 14 has been used for a great many Committees. This is a separate feature. I remind the hon. Gentleman that we have found the opportunity for some 200 extra debates over a year as a result of the Westminster Hall
    824
    operations. If the hon. Gentleman wants to say that value for money should be judged in terms of using time in debate, or indeed the number of hon. Members who attend, he is setting rather a dangerous precedent.
    Mr. Peter L. Pike: Is it not very unfortunate that Conservative Members seem very widely to feel that the Westminster Hall experiment is a waste of time? Surely, as my right hon. Friend said, it cannot be judged by the money costs? Surely the important thing to judge it by is the way it gives many hon. Members on both sides of the House the opportunity to take part in debates on a far better basis than if we were simply to restrict debates to this Chamber.
    Mrs. Beckett: I have noticed that since the Westminster Hall experiment commenced we now have the opportunity to debate about four times as many Select Committee reports as in the past, which in theory is supposed to be to the advantage of the Opposition. Moreover, because our capacity to hold Adjournment debates has increased, the demand for such debates has doubled. Indeed, many Opposition Members, including some who did not vote for the Westminster Hall experiment, make use of it in that way.
    Mr. Paul Tyler: May I endorse the last comment of the President of the Council? I have attended a number of debates in Westminster Hall—including debates initiated by Conservative Members—which have been excellent. May I draw the right hon. Lady's attention to the original recommendations of the Modernisation Committee in relation particularly to value for money in what we are doing in Westminster Hall, and remind her that the Law Commission said that it was desperate to have more opportunities for non-controversial legislation, tidying-up legislation, to be taken in a forum that would allow debate where a Division was not required? Has the right hon. Lady had any discussion with colleagues or with the other parties to see whether we could use this badly needed improvement to take some of our legislation in Westminster Hall?
    Mrs. Beckett: I have not done so since the experiment began, although I am willing to do it as we review its working. One reason for not having done so is that, as the hon. Gentleman may recall, anxiety was expressed in some parts of the House—perfectly reasonably, I thought—that the Westminster Hall experiment would simply be another way for the Government to get through more legislation. So I gave an absolute assurance that the Government would not seek to use Westminster Hall as such a forum, certainly not during the experimental period. Obviously, we would look at that again only if the House so desired.
    I accept, however, that the experiment drew on experience in Australia that provides for some uncontroversial legislation to be discussed in such a forum. Perhaps, over time, the House may want that to happen here, because we are talking not about legislation for which the Government might in some other way find time, but about legislation for which the Government—to put it frankly—never find time. I add a caveat, however. Sadly, what the Law Commission thinks is uncontroversial is not always uncontroversial to everyone else.

    Draft Bills
    Mr. John Healey: If she will make a statement on the number of bills produced in draft in (a) the 1997–98 session and (b) each subsequent session to date. [118172]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): Three draft Bills or parts of Bills were produced in Session 1997–98, six in Session 1998–99, but none so far this Session. Some Departments have, however, consulted informally on Bills in preparation and some draft Bills are expected shortly.
    Mr. Healey: I welcome my hon. Friend's declaration that more draft Bills are on the way. Does he recognise that the modernisation of our procedure is strongly backed by many inside and outside the House? Does he also agree that greater use of pre-legislative scrutiny gives greater scope for further modernisation of House procedures, including, perhaps, carrying over legislation, timetabling Bills and even introducing the concept of a voting hour?
    Mr. Tipping: My hon. Friend makes several important points. First, draft Bills have been welcomed widely across a number of communities. Secondly, Bills have been improved substantially by pre-legislative scrutiny. Finally, he is right that pre-legislative scrutiny is part of a wider package of measures on which we need to make more progress.
    Sir George Young: The Opposition very much welcome the publication of Bills in draft. However, is it not unwise to assume that, just because a Bill has been first published in draft, it will then take less time to pass through the House of Commons and the upper House; and does not the fate of the Financial Services and Markets Bill and the Freedom of Information Bill disprove that assumption? To avoid over-programming the House's time with Government Bills, will the Government be more realistic about the time required by Bills that were first considered in draft when they come before the House?
    Mr. Tipping: Clearly, Bills can be improved by pre-legislative scrutiny. The right hon. Gentleman mentioned the Freedom of Information Bill. Again, that was improved in draft, but there were major policy differences that could not be resolved. He also mentioned the Financial Services and Markets Bill. Of course, during its long preparation, the market itself changed; the stock market was demutualised and that had implications for the Bill. However, he is right to say that it would not be wise to assume that, just because a Bill is published in draft, it will have an easier passage. The converse may be true, because people have more time to think about it. Whatever body is asked to scrutinise a draft Bill must have time to do that. It involves a difficult balancing act, because programmed Bills will always need to take priority.

  PRESIDENT OF THE COUNCIL

    Appointments Commission
    Mr. Gordon Prentice: What progress she has made in identifying candidates suitable for appointment as chairman of the Appointments Commission. [118173]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): Although my right hon. Friend is not responsible for appointing the Appointments Commission, I understand that the appointments process is making good progress. My right hon. Friend the Prime Minister hopes to be in a position to make an announcement shortly.
    Mr. Prentice: So am I right in thinking that the Prime Minister appoints the chair of the Appointments Commission which, in turn, appoints Members to the upper Chamber? Is that not a bizarre state of affairs, and is not appointment very much second best to election? As we move towards the next general election, we need the Labour party and the Labour Government to nail their colours to the mast and to argue vigorously for a small, directly elected second Chamber rather than the ridiculous melange that we have been invited to accept at the moment.
    Mr. Tipping: I do not think that my hon. Friend is right. He will have an opportunity to discuss those matters when we debate the Wakeham commission on, I believe, 4 May. The Appointments Commission will have seven members, three of whom will be appointed by the main political parties. The present Prime Minister is the first Prime Minister to lose—or reduce—his powers of patronage as a result of a decision by the Appointments Commission. [HON. MEMBERS: "Ah!"] Opposition Members may scoff, but the Conservative party remains the major, dominant party in the House of Lords.
    Sir Sydney Chapman: I associate myself entirely with the remarks of the hon. Member for Pendle (Mr. Prentice), and draw the Parliamentary Secretary's attention to more modest appointments. When the commission or the Privy Council makes an appointment, will the person responsible for doing that be entirely dependent on the clerk of the Privy Council trawling the relevant Departments, or will he put in a mechanism encouraging other institutions and voluntary bodies to submit the names of those whom they believe suitable for appointment?
    Mr. Tipping: The hon. Gentleman makes important points and I look forward to his contribution in the debate on the Wakeham report on 4 May. The Government intend that appointments should be made from a wider range and different groups of people. One of the Appointments Commission's tasks will be to ensure that a wider choice of names is available. The Government have made substantial progress on the number of people from the black and ethnic communities, as well as the number of women, who have been appointed.
    Sir Patrick Cormack: How on earth can the Parliamentary Secretary say that the Prime Minister is self-effacing and abdicating when the right hon. Gentleman is the very fount and geyser of honours? When will the chairman of the Appointments Commission be appointed? The Prime Minister promised that the appointment would be made before Easter. Are we to take that to mean this week, before Orthodox Easter or next Easter? When will it happen?
    Mr. Tipping: The hon. Gentleman should not bluster so much. I accept that he is recovering from ill health, but he should listen to my answer, which is that the appointment will be made very soon.
    Mr. Robert Maclennan: There is a difference between a commission that appoints cross-party or independent peers, and the new development that the Parliamentary Secretary appears to be introducing by saying that the commission should make political appointments. Does he intend that the Prime Minister should give the commission that power?
    Mr. Tipping: I am sorry about that confusion. The Appointments Commission will look for, trawl and appoint Cross-Bench peers from many different groups. Party leaders will still submit their chosen names to the Appointments Commission, which will then make decisions about them.

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

    Modernisation
    Mrs. Anne Campbell: If she will propose that the Select Committee on Modernisation of the House of Commons review the recommendations in its sixth report (1997–98, HC 779) on current voting methods.
    [118174]
    The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The Modernisation Committee is currently reviewing that matter.
    Mrs. Campbell: I thank my right hon. Friend for her reply. Does she agree that it would be helpful if the Modernisation Committee came up with a single recommendation for electronic voting that would allow right hon. and hon. Members to mingle in the voting Lobby and reduce the time spent on multiple votes?
    Mrs. Beckett: My hon. Friend makes an interesting point. However, I am not in a position to respond because the Committee has not yet reconsidered whether there is any possibility of a single recommendation emerging. I certainly share my hon. Friend's view that a multiplicity of recommendations is less likely to lead to a clear decision.
    Mr. Ian Bruce: When looking at new forms of voting, will the Leader of the House make
    828
    absolutely certain that, whatever system is recommended, it ensures that Ministers come to vote regularly? From the voting lists, it appears that people such as the Prime Minister hardly ever come to the Chamber and cannot be lobbied by their own Members, let alone those belonging to other parties.
    Mrs. Beckett: Of course, I cannot prejudge the Committee's views. However, I certainly believe it important to have a focus in the parliamentary day, during a vote, so that Ministers can attend and Members can mingle. I am sure that Members on both sides of the House recognise the value of that.
    I have lost count of the times when I have reminded Opposition Members that, contrary to what they say, the Prime Minister attends more Prime Minister's questions, takes more questions, and is in this House more often than any of his predecessors. It is a pity that it is so hard to get the facts into their heads.

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

    Privy Council Judicial Committee
    Mr. Andrew Mackinlay: What recent representations she has received calling for reform of the judicial function of the Privy Council; and if she will make a statement. [118175]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): Apart from questions from the hon. Gentleman, no representations about the Judicial Committee have been received.
    Mr. Mackinlay: I am pleased to be the first. Will the Minister reflect on the fact that we host, largely fund and appoint members of the Judicial Committee of the Privy Council, who can and still do preside over matters of life and death, and who have given the green light to executions in other jurisdictions around the world? That contravenes our obligations under the European convention on human rights. If the Minister says, "Ah, but they are dealing only with matters of law", I remind him that the House has decided that capital punishment is both unlawful and repugnant. It cannot therefore be right that we continue to host, appoint and fund the Judicial Committee under the present arrangements. Will the Minister reconsider the matter?
    Mr. Tipping: The hon. Gentleman described himself as first—for a moment, I thought that he would say "unique". He has his own style. He has asked questions about the matter, and he well knows the answer. The Judicial Committee acts on behalf of other states. It is up to the other states to decide whether they want to change the way in which they deal with these matters.

Points of Order
3.31 pm
Mr. Tim Yeo: On a point of order, Madam Speaker. Last Thursday, the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, in answer to my oral question about the Government's recent package of help for pig farmers, told the House:
The package has three elements. They have been published, and I understand, too, that the hon. Gentleman's written questions have been answered.—[Official Report,13 April 2000; Vol. 348, C. 495]
My written question, which was tabled 10 days before the Minister's claim, had not, at that time, been answered. It was finally answered yesterday, at column 332W. The answer stated that information about three elements of the Government's package for pig farmers—eligible recipients, conditions of eligibility and time of availability—remains to be announced at an unspecified future date.
The only way to describe accurately the Minister's answer on the Floor last Thursday would involve using an unparliamentary term. Do you share my concern, Madam Speaker, that Ministers tell the House that parliamentary questions have been answered when they have not been answered and that information about Government policy, on which the survival of thousands of small businesses depends, has been published when it has not been published?
Madam Speaker: Some of the points raised by the hon. Gentleman are not points of order; they are a matter for argument. He has put his thoughts on the official record.
May I say in general reply to the hon. Gentleman that some weeks ago, hon. Members asked me to look into the fact that questions were not answered on a named day,
830
and that there was a great deal of slippage there? Hon. Members also asked me to look into the long delays in correspondence from ministers.
I can tell the House that I have done precisely that. In recent times, I have had a long discussion with the head of the civil service, the Cabinet Secretary, on those issues, and only recently, I had a meeting with the Minister for the Cabinet Office, along with her staff. Both those people are extremely sensitive to the needs of the House. I am totally convinced that they are doing everything possible to try and bring about improvements. The House can be certain that I shall continue to use my best endeavours and to monitor the situation.
I ask hon. Members to be a little tolerant on the issue, as I hope that the improved procedures that have been proposed to me will be allowed to work through, and that we shall see a better service, which the House certainly has a right to expect.
Mr. Paul Tyler: Further to that point of order, Madam Speaker. I am sure that hon. Members in all parts of the House will welcome your statement and the initiative that you have taken. In your discussions, was any reference made to a habit that seems also to be growing: the tendency to delay a reply from a ministerial source until some executive agency can be found to pass the buck to? As a result, hon. Members do not get a direct answer on the Floor of the House at all.
Madam Speaker: I had very long meetings—more than two hours—with the head of the civil service. I hope that all these matters will be looked into. I cannot go into details at this stage, but I want the House to be serviced properly by Whitehall, and that is what I am seeking to achieve.

Corporate Homicide
3.34 pm
Mr. Andrew Dismore: I beg to move,
That leave be given to bring in a Bill to create a new offence of corporate killing to replace the offence of manslaughter in certain cases where death is caused without the intention of causing death or serious injury.
My Bill has three purposes. The first is to create a new criminal offence of corporate killing. When the conduct of a company's management falls far below what can reasonably be expected, and is the cause or one of the causes of a person's death, that company must answer to the criminal courts. Secondly, if a company is convicted of corporate killing, the court should not only be able to punish the company severely, but have the power to order the company to put right the failings that were the cause of the death. Thirdly, the Bill would impose on the senior management of a company—its chairman and managing director—an overarching responsibility for the health and safety of its work force, and, equally important, for the health and safety of the general public.
Before becoming a Member of Parliament I practised as a personal injury lawyer, representing many families who had been bereaved by avoidable accidents. Most of those fatalities involved individuals—employees, motorists, pedestrians—and went unremarked in the press; but the feelings of loss and the sense of injustice suffered by the victims' families were just the same as those whom I helped who had lost loved ones in major incidents such as the Zeebrugge ferry disaster and the King's Cross fire.
Three days after that terrible tragedy at King's Cross, during my investigations on behalf of the bereaved and injured, I inspected what was left of the tube station. Nothing that I had previously experienced could have prepared me for the sights and smells of the fire's devastation. As I took statements from victims, distraught relatives, firefighters and tube staff, and as I sat through the public inquiry day after day hearing over and over again about the failures of the senior management of London Underground Ltd., it struck me as outrageous that neither the company nor any of its managers would face criminal proceedings over those 31 deaths. That was because of the inadequacies of the criminal law.
During his inquiry into the 192 deaths on the Herald of Free Enterprise, Mr. Justice Sheen said:
All concerned in management, from the members of the board of directors down … are guilty of fault. From top to bottom the body corporate was infected with the disease of sloppiness … The failure on the part of … management to give proper and clear directions was a contributory cause of the disaster.
However, the prosecution in the Zeebrugge case also collapsed owing to those same inadequacies of the criminal law—inadequacies highlighted by the more recent railway disasters: inadequacies that the Bill would rectify.
It is not just the headline-grabbing fires and rail crashes that concern me. In the last 10 years, more than 3,000 people have been killed at work, and hundreds of members of the public have met their deaths owing to corporate neglect. Only two companies have ever been successfully prosecuted for manslaughter. OLL Ltd. was convicted over the canoeing accident that killed four teenagers in Lyme Regis bay when they were swept out
832
to sea with inadequate clothing and equipment. The second case involved Jackson Transport, whose young employee, wearing only a boiler suit and with no other protective equipment, was drenched in a deadly chemical.
Those two convictions expose the absurdity of the law of corporate manslaughter as it currently stands. Corporate guilt rests entirely on proof of the individual guilt of a senior company officer. However reckless or grossly negligent the company as a whole may have been, it will escape conviction if no individual person—no "controlling mind" of the company—can be found guilty of manslaughter. The law is thus biased against small "one-man band" companies, in which it is easier to identify the individual manager or director who is to blame. Large companies escape because the accident is due not to the failure of an individual, but to the collective failure of the company's management systems. The bigger the company, the less chance there is of a successful prosecution.
I believe that only imposing duties on the most senior officers of a company will ensure that safety is given the same priority as profit. Safety awareness, and the great responsibility that it entails, should lie with those at the top—the chairman and managing director—and not with the employees, such as train drivers or ships' crews, who are always put up as the fall guys.
In 1996 the Law Commission recommended proposals for reform, including those advocated in the Bill. On 1 February this year, in its report on the work of the Health and Safety Executive, the Select Committee on the Environment, Transport and Regional Affairs recommended
that the government brings forward legislation to introduce a crime of corporate killing as soon as possible.
I know from answers that I have received to parliamentary questions that the Government have been considering the matter. After I gave notice of my Bill, I was pleased to read in The Sunday Telegraph this week that the Government expect to publish their proposals for consultation in the next few weeks.
The Bill would put the directors of companies that kill in the dock to answer for their actions and failings. If convicted, they would face not only the full rigours of the law, but the equally important power of the court to order them to put matters right for the future.
The Bill's purpose is not to bash responsible companies but to promote safety. Many companies do a good job, and look after their employees and the public properly. However, some do not, and they use loopholes in the law to escape their just desserts.
If we are to prevent further tragedies such as the Hillsborough disaster, the Clapham, Southall or Paddington train crashes and the Bradford City, King's Cross or Piper Alpha fires, tough new laws must be introduced. The Bill provides for that. Public confidence in industry and in the enforcement authorities suffers when the perpetrators of serious accidents escape prosecution on a legal technicality instead of having their culpability tested in court according to the standards that apply to a private individual on a charge of manslaughter. The Bill provides for that test, and I hope that the Government will accept it. The public expect nothing less from the Government, and I am sure that they will deliver.
Questions put and agreed to
Bill ordered to be brought in by Mr. Andrew Dismore, Mr. Martin Salter, Ms Karen Buck, Mr. Michael Clapham, Mrs. Gwyneth Dunwoody, Mr. Gordon Prentice, Mr. Andrew Miller, Mr. Lawrie Quinn, Ms Claire Ward, Mr. Iain Coleman, Mr. Stephen Pound and Siobhain McDonagh.
CORPORATE HOMICIDE
Mr. Andrew Dismore accordingly presented a Bill to create a new offence of corporate killing to replace the offence of manslaughter in certain cases where death is caused without the intention of causing death or serious injury: And the same was read the First time; and ordered to be read a Second time on Friday 5 May, and to be printed [Bill 114].

Orders of the Day

  Postal Services Bill [Money] (No. 2)
  Queen's recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the Postal Services Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred in consequence of the Act by the body to be known as the Postal Services Commission.—[Mrs. McGuire.]
  3.43 pm
  Mr. Richard Page: I am apprehensive about the money resolution. The Financial Secretary is busy today: he must tackle not only the money resolution to the Postal Services Bill, but also that to the Fur Farming (Prohibition) Bill. We can be justifiably apprehensive about granting permission for a blank cheque. In Committee, we spent a long time trying to determine the cost of the commission. We tried to glean from the Minister whether there would be some limit on the number of members. We later discovered that they would be paid £10,000 each for their work during the year. However, amendments to resist that amount of expenditure were blocked, and the Government used their majority to allow an open-ended position.
  The Government stressed the figure of £400 million which would be saved through automated credit transfer, thus causing anxiety to sub-post offices. The Government were enthusiastic about that and did not wait for the report of the performance and innovation unit on what could be put in its place and the sort of revenue that would be available to mitigate the loss.
  We shall debate new clause 1 later. We welcome it as far as it goes. We have no idea whether the commission will be part of the delivery mechanism that will follow from it. If that is the case, what sums will be involved—£20 million, £30 million or £100 million?
  The Financial Secretary has glibly and easily slid in the money resolution, which is, in effect, a blank cheque, as hon. Members will see if they care to examine it. I ask the Minister to consider whether he can impose some limits on it. We want to know whether the commission will be the vehicle to fund new clause 1.
  The Government's record on controlling the expenditure of new bodies is not good. I have only to remind the House of what has happened to the budget of the Office of Gas and Electricity Markets: it was intended to be £29.8 million, but it is now estimated that it will rocket to £64.5 million. An increase of more than 100 per cent. in one year is predicted. Given that we have a blank cheque and we do not even know the commission's estimated cost, I confess that I am exceedingly apprehensive. The Minister must put more flesh on the bones before the House will be prepared to sign the blank cheque.
  3.46 pm
  Mr. Patrick McLoughlin: We are slightly apprehensive about the money resolution, so, before the Bill completes its remaining stages in the House, the Minister should explain the unusual step of introducing it now. Money resolutions are nothing new,

  835
  but they are usually dealt with on Second Reading. As a result of changes in the previous Parliament, money resolutions are not debatable if dealt with on Second Reading—they merely go through on the nod—so the Minister should explain why the Government have used this unusual procedure.
  If, as my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said, that procedure has been used solely because of new clause 1, the Minister should explain, and possibly apologise for, the way in which the Secretary of State misled the House on Second Reading. He gave an assurance that the subject of new clause 1—which is the reason why the money resolution has been tabled—would be introduced in time to be dealt with in Committee.
  The Secretary of State for Trade and Industry (Mr. Stephen Byers):Wrong again.
  Mr. McLoughlin: As Hansard reported, the Secretary of State said that amendments would be tabled in Committee. From a sedentary position, he says that I am wrong, but he should read his own words, as I did last week.
  Mr. Byers: The hon. Gentleman is wrong because the reason for tabling the money resolution has nothing to do with the subsidy provision that we intend to introduce under new clause 1.
  Mr. McLoughlin: I am grateful to the Secretary of State for that clarification, but he does not disagree that, on Second Reading, he said that the subject of new clause 1 would be dealt with in Committee. He says that the money resolution has nothing to do with new clause 1, but it is wide-ranging and covers "any expenditure" arising from the Bill. Supplementary money resolutions are often proposed if the Government come up with new ideas. Perhaps he is telling us that the proposals in new clause 1 are not new. The Government should explain why they have introduced the money resolution just before we complete the Bill's remaining stages and why it was not introduced on Second Reading.
  3.49 pm
  Mr. Tony Baldry: Although I sat through the whole of the Committee stage on the Bill, I cannot recall the Minister explaining that there would be a need for a money resolution. It is curious that we had no mention of the new money resolution in Committee if there was a need for one on Second Reading.
  The Secretary of State said that my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) was wrong to assume that the fact that new clause 1 has within it a subsidy is the reason for the money resolution, but the procedure this afternoon is curious. Many of us will listen with interest to what the Minister has to say in justifying the money resolution at this time. One can assume only that he has been advised by lawyers that, if new clause 1 becomes part of the Bill, he will require a money resolution.
  836
  Clearly, we will discuss new clause 1 shortly, but I am surprised. Perhaps the Minister will tell me if I have it wrong, but, so far as I can recollect, at no time in Committee did we ever discuss the need for a money resolution. Indeed, at no stage did the Minister give the Committee any indication of the sums of money that it would be necessary to find from the public purse, and, hence, of the need now for a money resolution.
  3.51 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): First, I did say in Committee that there would be a need for a money resolution. The hon. Member for Banbury (Mr. Baldry) attended very—
  Mr. Baldry: Assiduously.
  Mr. Johnson: Assiduously, but perhaps the hon. Gentleman was not there on that particular occasion. However, as the hon. Member for South-West Hertfordshire (Mr. Page) will verify, I did say that there would be a need for a money resolution on Report.
  The second money resolution is necessary to ensure that it is within the scope of the Bill to make provision for payment out of money provided by Parliament of expenditure incurred by the Postal Services Commission. As we explained in Committee, it is a new initiative in postal services. It is also the first time that we have had a regulator that consists not of one person, but of a committee. I think that, following a review of utility regulation some time ago, there was all-party support for that.
  It is impossible to judge exactly how much money the commission will need, but its cost will be paid by the operators in the universal service area, which means that the Post Office will meet the full cost of that. Therefore, the cost that will be incurred as a result of the Bill will not be materially affected. Rather, it affects the financial systems and procedures.
  The Government's intention is that the commission will be a non-ministerial Government Department with its own vote, putting it on a similar footing to the utility regulators in that respect. We will discuss an amendment on similar funding for the revamped consumer body. Technical amendments have been tabled for consideration on Report to effect that change.
  As my right hon. Friend the Secretary of State said in an intervention, the necessary authorisation on the subsidy clause was provided under the first money resolution, taken after Second Reading on 15 February. That, among other matters, authorised the payment of any expenditure incurred by a Minister of the Crown or Government Department in consequence of any Act resulting from the Bill. Any scheme under that clause as drafted will require the approval of Parliament, so I urge the House to accept the second money resolution.
  Question put and agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the Postal Services Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred in consequence of the Act by the body to be known as the Postal Services Commission.

  Postal Services Bill
  As amended in the Standing Committee, considered.
  Postal Services Bill
    New Clause 1

      SUBSIDY FOR PUBLIC POST OFFICES
      '.—The Secretary of State may by order make a scheme for the making of payments for the purpose of—

      (a) assisting in the provision of public post offices or public post offices of a particular description, or

      (b) assisting in the provision of services to be provided from public post offices or public post offices of a particular description.

      (2) A scheme under this section which provides for the making of payments for a purpose falling within subsection (1)(b) shall ensure that no such payments may be made unless the person deciding whether to make the payments considers that the provision of the services concerned from public post offices or public post offices of a particular description would assist in the provision of public post offices or (as the case may be) public post offices of that description.
      (3) Payments under a scheme under this section shall be made by the Secretary of State or by another person out of money provided by the Secretary of State.
      (4) A scheme under this section shall specify—

      (a) the descriptions of payments which may be made under the scheme,

      (b) the descriptions of persons to whom such payments may be made,

      (c) the person by whom such payments may be made,

      (d) criteria to which that person is to have regard in deciding whether to make such payments, and

      (e) the amounts of such payments or the basis on which such amounts are to be calculated.

      (5) A scheme under this section may, in particular, provide for—

      (a) payments under the scheme to be made subject to conditions specified in or determined under the scheme (including conditions as to repayment),

      (b) the delegation of functions exercisable by virtue of the scheme (including the delegation of any discretion conferred by virtue of the scheme),

      (c) the modification of the functions of a body established by an enactment, or the functions of the holder of an office created by an enactment, for the purpose of enabling the person concerned to exercise any functions conferred on that person by virtue of the scheme,

      (d) the payment by the Secretary of State of fees to any person in respect of functions exercised by that person by virtue of the scheme.

      (6) The power to make a scheme under this section shall not be exercised without the consent of the Treasury.'.—[Mr. Byers.]
      Brought up, and read the First time.
      3.54 pm
      The Secretary of State for Trade and Industry (Mr. Stephen Byers): I beg to move, That the clause be read a Second time.
      Madam Speaker: With this it will be convenient to discuss the following: Amendment (a) to the proposed new clause, in line 1, leave out "may" and insert "shall".
      Amendment (b) to the proposed new clause, in line 35, at end add—
      '(7) The Secretary of State shall make an order under this section within three months of the commencement of this Act'.
      838
      Amendment No. 71, in clause 41, page 27, line 14, at end insert—
      'and—
      (c) their financial viability'.
      Government amendments Nos. 34, 42, 44 and 46.
      Mr. Byers: The hon. Member for West Derbyshire (Mr. McLoughlin) was right to say that on Second Reading I said that we wished to introduce a clause to provide the opportunity for a subsidy to be made available to the post office network. I said that I hoped that we would be able to do that in Committee, but we did not table a new clause in Committee, and I apologise to the House for the fact that we did not have an opportunity to do so.
      I took the decision—some hon. Members may criticise me for it—that a new clause providing a subsidy would be so significant that it would be better for it to be debated on Report by the whole House. More hon. Members will be able to debate the matter on Report than would have been able to debate it in Committee. I was trying to provide as many opportunities to participate in the debate to as many hon. Members as possible. That is why the new clause is being debated on Report.
      Mr. Patrick McLoughlin: I am grateful to the Secretary of State for being so open and honest with the House in saying that this debate should be an opportunity for the whole House to discuss the provision. However, as the matter was so well thought out and so much in the Department's mind, will he just remind the House when the Government tabled the new clause, so that we could consider it properly? Was it tabled in good time to allow us to consider it, or not until after last week's Opposition day debate, which put more pressure on him?
      Mr. Byers: Considerable pressure was, of course, caused by last week's half-day Opposition debate, but that pressure was perhaps not so great as that caused by the 3 million signature petition organised by the sub-postmasters, or the very effective lobby of Parliament that they conducted last Wednesday. That probably brought far more pressure to bear on the Government than did a three-hour debate on these important issues.
      As the hon. Gentleman will know, new clause 1 was tabled with all the other Government new clauses and amendments. It was prepared earlier, but, as is often the custom, the Government tabled all the new clauses and amendments in one batch. We have consistently dealt with this matter in that manner.
      I shall now deal with the substance of new clause 1.
      Mr. Peter Lilley: Is the right hon. Gentleman saying that he did not table new clause 1 before Parliament debated the matter because he thinks that parliamentary debates are so irrelevant and ineffective that Parliament should be ill informed and not consider the relevant clauses when it considers the matter—as it did last week, both in Westminster Hall and in this place?
      Mr. Byers: No. The right hon. Gentleman, perhaps deliberately, misunderstands the point that I am trying to make. I felt that it was more appropriate that the whole House should have the opportunity of debating a subsidy

      839
      for the post office network on Report, rather than my reserving the debate for hon. Members who happened to serve on the Standing Committee. Many hon. Members who are now in the Chamber did not serve on that Committee, but may wish to participate in the debate. I feel that they should have the opportunity to do so.
      Mr. Simon Burns: The Secretary of State is saying that Parliament should have the opportunity to debate this important issue. Although he may rely on that reason, he made a commitment on Second Reading. He may have decided just after Second Reading that the matter was too important for the Committee alone to deal with, but he has had plenty of time since then to table the new clause. Why did he not, as my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) said, table the new clause before last Wednesday, when the House had the opportunity to debate the matter both in Westminster Hall and on the Floor of the House? The House could have fully debated the issue twice—both in last week's debates and, today, on Report—thereby having two bites at the cherry.
      Mr. Byers: The record will show that my comment on Second Reading came in reply to a very specific question from the hon. Member for West Dorset (Mr. Letwin), who asked whether the Bill would provide for a subsidy. I answered as truthfully as I could. I said that we had hoped that we would be able to table a new clause to that effect.
      I think that the hon. Member for West Dorset would agree that last week's debates in Westminster Hall and in the House were on the broad principles of the support that should be given to the post office network, not on the detail that we are now considering on new clause 1. I think that it would be far better for the House if we were now to consider the detail of the new clause, rather than wondering whether it would have been better to deal with that detail in Committee, in Westminster Hall or in last week's Opposition day debate.
      Mr. John Bercow: Will the right hon. Gentleman give way?
      Mr. Byers: Not on that point, as I should like to make some progress. The hon. Gentleman will undoubtedly try to catch the eye of the occupant of the Chair in this important debate.
      4 pm
      New clause 1 is significant. As I said in the House on 12 April:
      The power is a safeguard, intended to keep open the option of financial assistance.—[Official Report, 12 April 2000; Vol. 348, c. 385.]
      We feel that it is appropriate to have such a safeguard, for two reasons. First, it is not every year that the House has the opportunity to debate a Bill on postal services, so it seems appropriate that we should use the opportunity to provide the Secretary of State for Trade and Industry with the power to establish the type of scheme outlined in new clause 1.
      840
      Secondly, there is concern among sub-postmasters and mistresses in rural communities and inner-city areas about the effect of moving to a system of automated credit transfer between 2003 and 2005. The Government acknowledge the concerns that exist following the adoption of that policy. It may be that, at some future date, it would be appropriate to establish such a scheme, and that is what new clause 1 seeks to do.
      Mr. David Prior: If the Secretary of State were considering buying a post office and he was told that the Government were keeping open the option of providing financial assistance at some unspecified date in the future, would that give him the confidence that he would need before going ahead?
      Mr. Byers: Yes, it would. For the first time, we will have in statute the power for the Secretary of State to make such payments. At the moment, the Post Office has a degree of social responsibility and is prepared to make a subsidy available to the post office network. It has done so in the recent past. We are giving the Post Office a new commercial freedom. Within that context, it may feel that it does not have the responsibility to meet social obligations, and that it would rather the Government, or some other agency, had that power or responsibility.
      New clause 1 supports the clear distinction that is being made between the commercial role of the Post Office in future and the social and wider role that the post office network can play. That raises the important issue of who should fund the post office network to meet those social obligations, or any new services that the Government may feel the network is suited to provide. Our vision for the post office network in the future is that it begins to broaden its role, responsibilities and functions. I know that postmasters and mistresses are keen to develop a new role for the post office network, and perhaps a subsidy could be the appropriate way of supporting such a role in the future.
      Mr. David Chidgey: Does the Secretary of State recall giving a commitment that it was the Government's intention to continue to maintain a national network of sub-post offices? Does the right hon. Gentleman recognise that many post offices—particularly in my constituency—depend on the service we are discussing, and that 30 to 40 per cent. of their work is wrapped up in it? Does he envisage a subsidy of that level to maintain the network?
      Mr. Byers: We will want to discuss with the various interested parties the nature of any scheme that might be introduced. I know that there is concern about the implications of ACT. That is why we have said clearly that pensioners and benefit recipients who now get cash over the counter at post offices will continue to have that choice—not just until 2003, or between then and 2005, but thereafter.
      It is for postmasters and mistresses to say to people that they must make it clear that they want to continue to have their benefit or pension paid in cash at the post office, and that that choice will remain. Many are doing that. There is real potential for people to maintain a high level of income and support for the post office network and the way in which benefits are paid.
      Mr. Bercow: I am grateful to the right hon. Gentleman for giving way, because he is a trifle opaque in his presentation of the argument. Who is the mysterious person referred to in new clause 1(2)? Will the Secretary of State confirm, notwithstanding what he said in the Opposition day debate last week, that the clause is purely permissive, not prescriptive, and offers no guarantee to beleaguered post offices in Stewkley, Marsh Gibbon and elsewhere in my constituency? Will he therefore tell the House now whether any regulations flowing from the new clause will be subject to the negative or the affirmative procedure?
      Mr. Byers: The hon. Gentleman is being slightly opaque in raising some of those issues. My understanding is that the regulations will be dealt with under the affirmative procedure, and I hope that I will be able to confirm that point in due course. We will be able to have a useful debate and constructive dialogue about the important issues concerned. The scheme will be permissive and there will be no obligation to introduce it. However, when the power to introduce such schemes lies on the statute book, I have no doubt that the Secretary of State will be under considerable pressure between now and 2003 to introduce one. It is appropriate that such pressure should be brought to bear, and whoever holds the office will no doubt respond positively to those developments.
      Mr. Ieuan Wyn Jones: Does the Secretary of State understand the concerns of sub-post office owners who are deciding whether to expand and invest or sell up and retire? On the one hand, they have the certainty that in 2003 they will lose a substantial proportion of what they are paid for the service they provide in making pension and Benefits Agency payments. On the other hand, they have the uncertainty about whether a subsidy will be paid. What advice would the Secretary of State give to people in that quandary?
      Mr. Byers: For the first time we are providing a power for the Secretary of State to introduce a scheme. We will want to discuss the nature of any such scheme with interested parties, including representatives of sub-postmasters and mistresses. We will debate later whether it would be appropriate to provide that any such scheme should be introduced within a particular period; I do not think that it would. However, I recognise that arguments will be made in favour of establishing a scheme, and after the Bill has received Royal Assent, we will want to work out the details of such a scheme with interested parties.
      I should stress that in the interim the Post Office will still have the power to provide support for the network, and that support is given in different ways. For example, Government support is provided to ensure that the Horizon system is put in place.
      Mr. Tony Baldry: The Secretary of State is in danger of undermining the Committee system, because hon. Members will not gaily volunteer to serve assiduously on Committees if Ministers keep the most interesting clauses for Report stage.
      842
      The right hon. Gentleman keeps referring to discussions with interested parties, but those discussions will be pointless unless people have some idea of what sums might be allocated to the schemes. The new clause specifically states that
      The power to make a scheme … shall not be exercised without the consent of the Treasury.
      Therefore, the Secretary of State will have to make a bid for a scheme under a public expenditure survey line. Will the Secretary of State confirm that the money will come from the Department of Trade and Industry PES line? When would such a bid be put in and what sums would he envisage bidding for? If he is opaque about that, the suspicion will arise that the new clause is a smokescreen to buy off sub-postmasters and mistresses.
      Mr. Byers: The hon. Gentleman shows that he has been out of ministerial office for several years, because PES lines no longer exist. We now live in the world of DEL and AME—the departmental expenditure limit and annually managed expenditure. The scheme would come under DEL, but all Government expenditure is controlled, in one way or another, by the Treasury. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) certainly knows that. That is the situation in which we exist. When a scheme such as this is being established, it is not unusual to specify in legislation that any expenditure linked with it would be subject to Treasury approval.
      Mr. David Drew: My right hon. Friend is being very generous in giving way; he appreciates how important this matter is for many hon. Members. I do not want to press him on the detail, as I know that the scheme needs proper negotiation and consultation, but it is clear that there will have to be a test of the viability of bringing sub-post offices into the scheme. I am especially interested in those offices where sub-postmasters and mistresses receive a salary because of the difficulties involved in a pro rata return. What advantage or disadvantage will the new scheme bring for those people?
      Mr. Byers: My hon. Friend has been a strong campaigner for the post office network, both in his constituency and more widely. The services offered by a post office and its role in its community will be among the key factors that we will want to take into account when considering whether a subsidy is appropriate. Such matters would need to be considered in the context of any scheme that is brought forward.
      For the benefit of the House, and in response to the earlier question from the hon. Member for Buckingham (Mr. Bercow), I can confirm that orders under new clause I will be made under the affirmative procedure. We will therefore be able to engage in the debate to which the hon. Gentleman so looks forward.
      Mr. David Heath: I welcome the fact that the Secretary of State is moving in the right direction, as he has recognised that a problem exists. He has said that he can give no time scale for the subsidy, and that he cannot say what amount of money will be involved, but can he offer a time scale for the talks leading to a subsidy? The Government must engage with sub-postmasters and mistresses, and with the Post Office,

      843
      to see what can be done—either by the Post Office or through Government subsidy in due course—to resolve the problems that those people face here and now.
      Mr. Byers: I take the hon. Gentleman's point. This is an important moment in the development of the post office network. I do not want a long period to elapse between parliamentary approval for this proposal and the finalisation of the details of the scheme.
      I would be slightly reluctant to start work on those details before the Bill receives Royal Assent, as difficulties might arise in another place if it were thought that the Government were acting before proper parliamentary approval had been given to setting up the scheme. However, I think that there will be informal opportunities to discuss the form and nature of the scheme, and we could begin that process very soon. If the Bill were to receive Royal Assent by the summer recess, that might be the time to engage formally with the National Federation of Sub-Postmasters about the details of the scheme.
      Mr. Brian Cotter: I thank the Secretary of State for giving way so frequently. We welcome the proposed subsidy, although the opacity of the proposal has aroused much concern. On Second Reading, the right hon. Gentleman said that it was likely that the Cabinet Office's performance and innovation unit would produce a report while the Bill was being considered. That report would have helped enormously this afternoon. When will it be available?
      Mr. Byers: My understanding is that the unit is still considering some details in the report. It hopes to report to the Prime Minister soon after Easter, and he will then announce his view of its work. The unit is addressing a number of key issues, and the question of access criteria is the most relevant to the Bill. I would have preferred the House to have the opportunity to look at the unit's findings. That would have been appropriate given that access criteria are provided for in the Bill, and I regret that the report is not available at present.
      I think that the report has proved to be a far more comprehensive look at the network than was originally intended. That is welcome, because this is an important moment for the post office network. There is a chance to consider a new way for it to develop. The performance and innovation unit report will provide us with the opportunity of looking in some detail at how the network will look, not simply in six months or six years, but in the foreseeable future in the 21st century.
      Mr. Bercow: I am grateful to the Secretary of State, who has been customarily generous in giving way. Does he agree that transparency is of the essence here? Given that the new clause refers to payments being made by the Secretary of State or by a person on his behalf, is there not a legitimate anxiety that, unless the access criteria are abundantly clear and specific, the new clause could be used for partisan purposes to provide much needed finance to struggling post offices in marginal constituencies that concern the right hon. Gentleman rather than going to constituencies on the basis of commercial need?
      4.15 pm
      Mr. Byers: I apologise to the hon. Gentleman, because he has already raised the issue of who this mysterious person might be. It could be a number of people, or it could be a body. It could be the Secretary of State, officials designated by the Secretary of State or an organisation such as the Countryside Agency—it depends on the nature of the scheme. Whoever it is will have the authority to make payments under the scheme if that is the way in which the scheme is developed. There is a degree of flexibility. I was going to say, "It could be you"—I did not mean you, Madam Speaker—but unless the electorate changes dramatically, I cannot see the hon. Gentleman being Secretary of State for Trade and Industry for a little while yet. However, he is young, and who knows? His chance may come.
      Mr. Gerald Kaufman: I was reflecting on the intervention of the hon. Member for Buckingham (Mr. Bercow). In view of the leak to The Mirror on Monday, I assume that he was referring to marginal Conservative constituencies, because of our prospect of winning a considerable number of them at the next election.
      Mr. Byers: I think that that is right. When I saw the leaked document, I was not sure whether it was a deliberate ploy by the Conservatives to lull Labour supporters into a false sense of security. However, as my right hon. Friend knows, Labour supporters are never lulled into a false sense of security—a false sense of insecurity, perhaps.
      I now turn to the details of new clause 1, which may answer some of right hon. and hon. Members' questions. The new clause allows the Secretary of State to establish a scheme or schemes for making payments for the purpose of
      (a) assisting in the provision of public post offices or public post offices of a particular description, or
      (b) assisting in the provision of services to be provided from public post offices or public post offices or a particular description.
      The reason for that distinction is that some post offices will, by their very nature, deserve financial support. With other post offices, the services that they provide will be worthy of public support. That touches on the point about the Post Office of the future, in which services might be provided on behalf of the Government. If we wish the Post Office to offer those services, it may be appropriate to provide a subsidy for it to do just that. The new clause allows us to make the distinction between a post office that may be deserving of financial assistance, and a particular service that is provided by a post office.
      Mr. McLoughlin: I am uneasy about subsidies that will, by their very nature, mean rules and regulations whereby some post offices will qualify while others will not. Did the Secretary of State consider the possibility of ensuring that sub-postmasters were paid the national minimum wage, which is not currently the case?
      Mr. Byers: That is a separate issue, which relates to people who have a contract of employment. I am pleased that the hon. Gentleman is now a strong supporter of the national minimum wage. He voted against it at every opportunity during its legislative passage through the

      845
      House, so I am glad that, like the right hon. Member for Kensington and Chelsea (Mr. Portillo), the shadow Chancellor of the Exchequer, he now recognises its benefits. It is a matter of regret that we do not have the hon. Member for Rutland and Melton (Mr. Duncan) with us. I understand that he is in hospital—it is unfortunate that he is not in the Chamber to take part in the debate.
      Mr. Bercow: My hon. Friend is listening.
      Mr. Byers: If he is listening to our proceedings, he will know that I recognise that he remains a strong opponent of a national minimum wage. However, I am pleased to hear that the hon. Member for West Derbyshire recognises its importance. The answer to his question is that sub-postmasters are not covered by the minimum wage provisions because they are not under a contract of employment.
      In addition to the new clause, Government amendment No. 44 makes it clear that the scheme must follow the affirmative procedure, which will allow debate to take place. There are other minor Government amendments, too, that will ensure that the scheme is effective.
      I turn briefly to the amendments in the name of the hon. Member for Weston-super-Mare (Mr. Cotter). I think that he seeks to introduce a time limit by which the scheme should be introduced. I do not think that it is appropriate to try to restrict us to three months. We need effective and proper dialogue with all interested parties to ensure that any scheme that is introduced is effective and has broad support among those who are likely to be affected by it.
      I am aware that the real concern has arisen in relation to the effects of automated credit transfer. That process will not start until January 2003. There will then be a phased approach to ACT on the part of the Benefits Agency, lasting until 2005. If there is to be a scheme, it is important that we have in place one that can meet the requirements in those circumstances. We will seek to address that possible mischief by developing a particular scheme.
      Mr. John M. Taylor: I am grateful to the Secretary of State, who has indeed been generous in giving way.
      Before we leave behind us the question of subsidy for certain post offices and the point made by my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) that there will be a disparity between those who are subsidised and those who are not, let us consider the European dimension. Is the right hon. Gentleman aware that many of us are concerned that the Post Office cannot compete as freely as we would like with, for example, German operators? If he is to introduce subsidies to the British arm of that competitive game, will he have to clear them with Brussels? Will we have a long wait while competition issues are deliberated upon?
      Mr. Byers: There are two specific matters, both of which are covered in the Bill. The first is the post office network. I would like to think that most right hon. and hon. Members recognise that the power to have a scheme that can provide a subsidy is appropriate in the circumstances. A separate issue is how we can make the Post Office more competitive in the services that it
      846
      operates. I have no doubt that the measures that we are introducing through the Bill will ensure that the Post Office becomes increasingly competitive. That is the only way in which it will survive in an increasingly competitive European postal market. That is the challenge that it will face. I have no doubt that it must become more commercially minded. It must be prepared to recognise that it will need to begin to compete in areas that are presently reserved as part of its monopoly. I have no doubt that the situation will change.
      When the Postal Services Commission begins to consider these issues, I hope that it will recognise the importance of providing competition that will raise standards so that the public have better service provision. Obviously that needs to be compatible with the universal service obligation, and I am sure that it will be. I am sure that competition will be highly effective.
      Mr. Oliver Letwin rose—
      Mr. Byers: I knew that that would have an effect.
      Mr. Burns: Will the right hon. Gentleman give way on a different point?
      Mr. Byers: If the hon. Gentleman wants to make a different point, I shall give way first to the hon. Member for West Dorset.
      Mr. Letwin: I have an entirely different point, too, and have sat patiently in the hope of hearing it answered so that I need not ask the question. Will the Secretary of State explain what the subsidy is intended to achieve? Does he intend it to cover the transition period during which there will be a lack of investment in new technology, is it intended to be a permanent subsidy, or has he not considered which of those objectives he intends to achieve?
      Mr. Byers: I had intended to discuss how the subsidy might be used when I addressed the amendment tabled by the hon. Member for Rutland and Melton. Essentially, it is intended to ensure the continued viability of a sub-post office, and it can take a number of forms. A post office may be commercially viable without subsidy, but we might none the less feel it appropriate to provide financial support because we wanted it to provide an additional service on the Government's behalf. In effect, we would pay that post office for doing that, possibly through a subsidy. A range of different reasons might apply, all of which are covered by the wide-ranging provisions of new clause 1, which will allow the Secretary of State to introduce a scheme that will meet those obligations. That is why new clause 1 distinguishes between support for a post office, which will probably have to do with its commercial viability, and subsidy for a particular service that a post office might provide.
      I said that I would give way to the hon. Member for West Chelmsford (Mr. Burns).
      Mr. Burns: As a former Chief Secretary to the Treasury, the right hon. Gentleman may understand more than most how the Treasury works. I note that new clause 1(6) says that no scheme can be
      exercised without the consent of the Treasury.

      847
      From the right hon. Gentleman's speech, we have learned that the scheme envisaged in the new clause is highly nebulous. No one, not even the right hon. Gentleman himself, knows how much the subsidy will cost the taxpayer. The Secretary of State must know that the Treasury will never give him an open-ended commitment to provide unlimited public funds. The amounts involved in his two-pronged approach to subsidy could be massive. What discussions has he held with the Treasury, and what assurances or restrictions has the Treasury given him, regarding the circumstances in which it will or will not consent to the scheme?
      Mr. Byers: The fact that we can lay a proposal for the scheme before the House is the result of many and various discussions with the Treasury. The Treasury supports the giving of a power for such a scheme to be established, but we shall have to work on the details. The hon. Gentleman is quite right to say that there should never be an open-ended cheque; that would be no way to deal with public finances, and no one would expect the Treasury to offer one. We seek targeted financial support to help with the viability of a post office or to encourage it to provide services of benefit to the Government.
      Through amendment No. 71, the hon. Member for Rutland and Melton asks that information about the viability of specific post offices should be given to the commission. That would extend the remit of the commission to providing advice to the Government on the financial viability of public post offices. I ask the House to resist the amendment because I do not feel that that is a correct role for the commission, whose central role is to regulate licensed postal markets and the operators who are licensed, and to give them a primary duty to ensure the universal provision of postal services at a uniform tariff. We should not wish the commission to be diverted from that challenging and important responsibility by having an additional responsibility to provide advice to the Secretary of State on the commercial viability of individual post offices.
      I hope that the hon. Member for Weston-super-Mare will not press his amendments to new clause 1, and that amendment No. 71 will not be pressed, either. I hope that all Members can support new clause 1. It will provide the Secretary of State with the power to introduce a scheme to provide a subsidy. Sub-postmasters and mistresses throughout the country will respond positively to the way in which the House has listened to their concerns and has noted the 3 million strong petition that was received last week. The House and the Government are prepared to listen and to respond positively; new clause 1 does precisely that. I ask the House to accept it.
      4.30 pm
      Mr. Richard Page: May I tell the House—especially the Secretary of State and the Minister—that I am sorry that my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) is not in the Chamber today? Her absence is unavoidable, as she is either collecting her husband from hospital or taking him there. The absence of my hon. Friend the Member for Rutland and Melton (Mr. Duncan) has also been mentioned; as we speak, he is undergoing the attentions of a surgeon who is removing his appendix. No one regrets his absence at this moment more than me.
      848
      As the Secretary of State has pointed out, the new clause would enable payments to be made to assist in the provision of public post offices or of the services that they offer. We welcome the measure. I can give the Secretary of State some comfort, because I shall not recommend that we vote against it—although what my hon. Friends do is up to them. However, I should be disappointed if they voted against the new clause.
      I am certain that the new clause will receive a widespread welcome; it addresses issues of long-standing concern to people throughout the United Kingdom—in inner cities as well as in rural areas. We make much of the rural problem, but the difficulties are just as acute in some inner-city areas.
      Those worries were generated by the Government's thoughtlessness in introducing the automated credit transfer system before establishing how an income for sub-post offices would be provided. The matter has been the subject of innumerable debates in the House; indeed, last Wednesday, there were debates in both Westminster Hall and in the Chamber.
      The House will remember Corporal Jones from "Dad's Army"; he was the one who rushed around, saying "Don't panic, don't panic". If the Secretary of State were a little greyer and wore a little moustache, he would look rather like Corporal Jones. Recently, he too has been rushing around saying, "Don't panic"—whether over the money for Rover, when that matter went sadly wrong; over the money for energy that was announced because the coal industry is going wrong; or over new clause 1, which was introduced because of worries in the Post Office. I am sorry to say that the new clause well merits the title of a "Corporal Jones" clause.
      Mr. Baldry: At least in yesterday's statement on energy, the House was told how much money would be involved—there will be £100 million for the coal industry. The Secretary of State has given us no indication as to whether the subsidy for the post offices is £10 million, £50 million or £100 million, or whether the whole £400 million savings from the move to ACT will be included. We have been told neither how substantial that subsidy will be, nor what will trigger it. Discussions will apparently be held with a person; we know that that person could be anyone in the world apart from my hon. Friend the Member for Buckingham (Mr. Bercow). In the light of those points, can we be satisfied as to the validity of the new clause?
      Mr. Page: My hon. Friend served on the Standing Committee, so he is well aware of all the Bill's provisions. He makes a valid point. Despite the Secretary of State's protestations, unfortunately, the new clause should have been tabled much earlier in the Bill's proceedings. We could then have taken more detailed advice and gone into greater depth on the matter. We could have held consultations—especially with the National Federation of Sub-Postmasters, and obtained more detailed information on their views.
      Mr. Bercow: Will my hon. Friend give way?
      Mr. Page: If my hon. Friend will hold his horses for 30 seconds, I will of course give way. I believe that the expression "a blank cheque" is a valid and accurate description of the new clause.
      Mr. Bercow: As my hon. Friend knows, I am of a naturally suspicious turn of mind. Given the latest demonstration from the Secretary of State of pork-barrel politics that we witnessed yesterday afternoon, does my hon. Friend agree that, whatever the merits of the proposed new subsidy, we simply cannot be certain about its impartial distribution? Is there not a danger that it could be used by a Secretary of State, if not the present incumbent, as a slush fund to bail out beleaguered Labour Members in marginal constituencies?
      Mr. Page: My hon. Friend makes his point in his usual delicate fashion. It will not have escaped the Secretary of State's notice that my hon. Friend has a few concerns in this area. I believe that those are justifiable concerns, because the new clause uses the following phraseology:
      Payments under a scheme under this section shall be made by the Secretary of State or by another person.
      It would really help if we could discover who that "another person" might be. That is another failing that results from the tabling of an amendment of this nature at so late a stage.
      Surely the Government would have had no difficulty in tabling the amendment in Committee. It could then have been debated in Committee and it would not have been above the wit and wisdom of the serried ranks of officials that the Minister and the Secretary of State have at their beck and call to devise some small amendment that would have provided an opportunity for the clause to be fully debated on the Floor of the House.
      I believe that the new clause is a panic measure. The cost is as long as a piece of string—I might mix all the metaphors and bring in the "blank cheque" introduced by my hon. Friend the Member for West Chelmsford (Mr. Burns). The only time when I felt that the Secretary of State was speaking from his political heart was when he said that the lobby of a couple of thousand postmasters, and the thought of 3 million signatures dropping into the foyer of No. 10 Downing street, helped to concentrate his mind on the matter.
      Mr. Chidgey: If I remember correctly, the hon. Gentleman said at the start of his address that he was in favour of a subsidy, although he has now described it as something rather different. Would a subsidised Post Office be part of his party's vision of a privatised Post Office?
      Mr. Page: Although it is understandable that the hon. Gentleman wants me to outline our party policy on these measures, he has been in the House long enough to know that it is a remarkably naive shadow Minister who starts to make up policy on the hoof without knowing the exact position that the party that is successful at the general election will face when it takes over and looks at the books. To place such a hostage to fortune on the record now would make me seem greener than I may already be. I certainly will not give that commitment, but I will say
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      that, in view of the mess that the Government have got themselves into, we welcome this provision in the short term until we find out what the true position will be.
      I put it to the House that the Bill is being introduced at completely and utterly the wrong time. It should not have been introduced before we knew the contents of the report by the performance and innovation unit, or before the guidelines on the social and environmental issues had been decided. We should not have been looking at this before knowing exactly the whole question of social exclusion and the problems that will face some rural and urban areas.
      Mr. Prior: Is it my hon. Friend's understanding that the subsidy is to replace the income forgone by post offices as a result of the change to automated transfers, or will it be made available for post offices that are undertaking social and community services?
      Mr. Page: My hon. Friend makes the flattering assumption that I am a Government Minister and will be able to answer. It is because we have such an opaque new clause before us that my hon. Friend asks the question. I cannot answer it; I do not know. I hope that when the Secretary of State responds he will pick up this point, that perhaps a message will come from afar and he will be able to give my hon. Friend an answer. My hon. Friend makes a legitimate and justifiable point, but I have to fail to give him a response.
      Mr. Letwin: Does my hon. Friend agree that at least one definite response can be given to my hon. Friend the Member for North Norfolk (Mr. Prior)? It is that, if the subsidy were intended to replace the entire income, given that it is ungeared and is bringing about no footfall, unlike the current system of benefit administration, it would have to exceed £400 million in order to make good the shortfall.
      Mr. Page: I do not know whether that is strictly correct, because the saving of the £400 million involves some administrative costs, such as those for printing the various benefit books. Therefore, I wonder whether the figure would run to £400 million. The calculation becomes a little more delicate and complicated, because pensioners and benefit claimants who go into the post office obtain cash and spend some of it in the shop. I know that sub-postmasters and sub-postmistresses are concerned about losing that extra revenue. I think that my hon. Friend is over-egging it with a total of £400 million, but the loss of revenue in the form of money that will not be spent in the shop is another calculation.
      Mr. Letwin: I accept my hon. Friend's well-measured adjustment of my terms. I agree that the sum need not be in excess of a total of £400 million, but does he agree that it is almost inconceivable that the Treasury would ever accede to a continuing subsidy of that order of magnitude in order to try to replace, on a permanent basis, the amount lost? Does he also agree that the Secretary of State notably refused to reply in a clear-minded way when asked whether this was intended to be a temporary, transitional subsidy or a permanent one?
      Mr. Page: One of the delights of answering interventions in my stumbling and humble fashion is that

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      doing so pulls out of order the comments that I shall make in my few, short, immortal words to the House. Therefore, I ask my hon. Friend to relax—[Interruption.] No, not to shut up; my hon. Friend is making a perfectly valid and highly intelligent point, but it is one that I should like to deal with a little later.
      Mr. McLoughlin: Will my hon. Friend give way?
      Mr. Page: When one's Deputy Chief Whip asks one to give way, one does not have much alternative.
      Mr. McLoughlin: Does not this show that the Secretary of State has, to a degree, treated the Committee and the House with contempt? Had it been possible to discuss the matter in Committee, we could more easily have put these questions to the Minister, obtained the answers and had a fuller debate when we returned to the Floor of the House. It is partly because we have not had time to look at the new clause and question the Minister in great detail that we shall be unable to have answers to many of the questions to which we want answers today.
      Mr. Page: My hon. Friend puts the point much more forcibly than I have. I simply said that I felt that it would have been better if the whole matter had come before the Committee. As I said, I am sure that a small amendment could then have been made to put it in order for it to be discussed more fully on the Floor of the House. However, the truth is that—I was not joking when I described it as a Corporal Jones clause—nothing happened until 2,000 sub-postmasters and sub-postmistresses descended on the House and on Downing street with their petition. Lo and behold, out came an opaque new clause that might provide the money to help them.
      4.45 pm
      I endorse the view that it would have been much better to discuss this issue in Committee. Outside of this rather formal setting, we could have had a much more casual and relaxed talk about how the new clause might operate. I wonder whether the Government know how it will operate. I have the horrible feeling that it was made up on the hoof and that only later will we discover exactly how it will work.
      This point has been raised, but I wonder whether there have been difficulties in the discussions between the Department of Trade and Industry and the Treasury over the scale of the financial support to be given. Has the DTI, in any shape or form, given the Treasury an idea of how much that support might be? If it has, the Secretary of State will be able to explain why the provision was not introduced when the Bill first came to the House or in the Chancellor's Budget statement. The Secretary of State makes much of annually managed expenditure—AME—but is that extra money or is it already provided for? If it is already provided for, we should know. If it is not, the new clause very much represents legislation on the hoof.
      I was going to spend some time saying that it was a disservice and a discourtesy that the provision was not considered in Committee. However, my hon. Friends—particularly my hon. Friend the Member for West Derbyshire (Mr. McLoughlin)—have already made that
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      point. When the Committee discussed the guidelines on social and environmental matters, I stressed several times how important it was that we knew what would be in them, so that we could help to frame the legislation. However, there was a rush to legislate and the country's requirements were deemed to be just something else to worry about.
      The new clause has raised considerable expectations among those who run sub-post offices and their consumers. I hope that those expectations will not be disappointed, but the Government do not have a good reputation on that. They have a good reputation for spinning a good story, but, once the mists have dissipated, we find that real improvements have not been secured. It is up Ministers to ensure that they are and that those expectations are not disappointed.
      Mr. Roger Gale: Does my hon. Friend think that this late offer, with no sign of how long it will last, will repair the damage that has been done to the potential sale of sub-post offices to new owners? Will it prevent the closure of sub-post offices that is taking place at the moment?
      Mr. Page: I am afraid that it will not. We must remember that £2 billion of privately owned money is in sub-post offices.
      The Minister for Competitiveness (Mr. Alan Johnson): The figure is £1 billion.
      Mr. Page: The figure has obviously depreciated considerably since I last heard it, but the hon. Member for Weston-super-Mare (Mr. Cotter) has also touched on this issue. Until the Government put more flesh on new clause 1, no one will want to consider buying or exchanging a sub-post office, unless they are remarkably rich or remarkably brave.
      As the Secretary of State pointed out, nestling among the Government new clause and amendments is our amendment, No. 71, which would introduce the concept of financial viability. Had we known that new clause 1 was to be tabled at such a late stage, and had we known about its contents, we might have redrafted our amendment. The future of the post office network has been a concern of right hon. and hon. Members on both sides of the House for many years, as my hon. Friend the Member for North Thanet (Mr. Gale) said. Post offices' survival is critical to the well-being of people not only in rural areas but in inner cities. That is why Ministers of successive Governments have been called to the Dispatch Box many times over the years, and never more frequently than in the past few months, when there have been debates on the subject not only on the Floor of the House but, last week, in Westminster Hall. There is no reason for me to apologise for going over the ground again.
      When I first read new clause 1, I thought that my hon. Friend the Member for Rutland and Melton and I might have to apologise for having charged the Government last week with lacking a coherent structure for the future of sub-post offices. When I read the new clause again, I realised that although, as my hon. Friends have pointed out, it makes welcome gestures towards the support of public post offices, it is remarkably lacking in substance and the House cannot assess the merits of the scheme in

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      detail. Nothing that the Secretary of State said at the Dispatch Box has given us further insight into how the scheme will work.
      As my hon. Friends have pointed out on several occasions, the Secretary of State will take the powers necessary to subsidise those post offices and support the services that they provide. He—or, perhaps in future, she—will be able to prescribe what payments will be made for those purposes, to whom they will be made and the criteria to be adopted in making them. The amounts have yet to be determined. The right hon. Gentleman may delegate those roles to a subordinate body.
      My hon. Friend the Member for Buckingham (Mr. Bercow), who has left the Chamber for a moment—no doubt he has gone to recharge his batteries—pointed out that those provisions might be a substantial source of party political bias. I hope that the Secretary of State will ensure that there is a proper arms-length method for applying those criteria and making payments. Hon. Members on both sides of the House must be satisfied on that point because the wheel will turn, the Conservative party will be back in government and the Secretary of State will be on this side of the Chamber with his nose pressed against the window of government. He will want to be sure that he has put in place a system that is seen to be fair, open and accountable. As I said, it would have been sensible to establish the scheme in Committee, rather than on Report.
      I genuinely want to try to help the Secretary of State to fulfil his good intentions. Ever since his unfortunate experience with BMW and the Rover car company, I have thought of him as sharing the view of the famous playwright, Eugene Ionescu, that one can predict the future only after it has happened. The Secretary of State tends to take action when he should be planning ahead.
      My hon. Friend the Member for Rutland and Melton and I tabled amendment No. 71, which would require the Postal Services Commission to advise the Secretary of State on the financial viability of public post offices serving communities throughout the country. It is pointless devising schemes to subsidise the network if accurate information is not available to the Secretary of State about the financial state of the post offices in our cities, towns and villages.
      I had to smile slightly a moment ago when the right hon. Gentleman distanced the role of the commission from all this. Having read the Bill and taken part in the debates, I believe that the commission and, to a lesser extent, the council will have a pivotal role in deciding which post offices provide a vital service and should be kept in place. The amendment would place an explicit requirement on the Postal Services Commission to collect financial information and provide advice to the Secretary of State on its findings. That would be done after the commission had consulted the Consumer Council for Postal Services.
      I fully expect that other bodies, such as the National Federation of Sub-Postmasters and the Countryside Alliance, will make representations to the Secretary of State before he comes to any decision about the scale of assistance that he is prepared to offer. I hope that he will answer the point made by my hon. Friend the Member for Solihull (Mr. Taylor) when he asked whether EU approval was necessary. The Secretary of State has rather fallen foul of EU approval on various announcements that he has made recently.
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      It would give encouragement and hope to sub-postmasters and postmistresses if they knew that the money was definitely coming and would not be subjected to the machinations of another organisation. That would go some way towards mitigating the concern of my hon. Friend the Member for North Thanet about the viability of sub-post offices.
      The Secretary of State will certainly need information about financial viability if he and the House are to take a well-judged view on the future of the post office network. Collecting the information should cause no difficulty to the Postal Services Commission, which will collect plenty of information anyway. It has a duty to collect information if required, and it can do so of its own accord.
      I hope that the concerns of those who provide and use postal services are truly to the front of the Government's mind, and that the Minister will have second thoughts about a sensible amendment that will help him to achieve the objectives which I am sure he seeks.
      As a matter of principle, it is fair to put it on the record—this may help the hon. Member for Eastleigh (Mr. Chidgey), who asked whether the Conservative party was in favour of subsidies—that we share the view of the National Federation of Sub-Postmasters in its desire for income, not subsidies, for post offices. The new clause is needed only because the Government are proceeding with their disastrous policy switch to ACT, which threatens the survival of thousands of sub-post offices across Britain. As we know, the 3 million signatures on the petition were not calling for subsidy.
      I shall put on record the reaction of the National Federation of Sub-Postmasters to new clause 1. It stated:
      subpostmasters want to have a commercial living in viable and vibrant post offices. The prospect of existing on a subsidy therefore will not be a very pleasant one for them. We are however encouraged that the Government are looking for ways of supporting a network of post offices and if matters get to such a point then clearly subsidies, particularly temporary ones, may help to get the network through a very difficult phase.
      The statement continues:
      We would set our face completely against local authorities giving subsidies because we think that we would rapidly lose control over the network as different local authorities will most certainly deal differently when faced with the need to subsidise and we must not forget that different local authorities may be under different political control. We cannot therefore work up any enthusiasm for that prospect.
      We would say the answer to the network is investment, not subsidy, allowing us time to get through this difficult period and out the other end. As they say, give a man a fish and he will eat for a day, give him a fishing rod and teach him to fish and he will eat for a lifetime.
      Do the Government intend subsidies to be paid by local authorities? Will they give sub-postmasters that fishing rod, so that they can have financial viability and independence?
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      On Second Reading, the Secretary of State said:
      We should not jump to the conclusion that we should always look for a subsidy from central Government. Other public organisations such as local authorities may want to invest if they think it is appropriate to provide a subsidy but, as we are introducing a Bill that we would like to think will be on the statute book for a good number of years, it is sensible to cover all possibilities.—[Official Report, 15 February 2000: Vol. 344, c. 805.]

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      In the event of subsidies' being paid, how will the Government ensure equity, so that one post office is not disadvantaged by another's receipt of subsidy? I believe that that balance—that equity—is most important.
      Although at the outset I welcomed the new clause in principle, it is not apparent why a new clause drafted in such general and unspecific terms was not included in the Bill at the start. It would have been preferable for us to be able to examine it more closely in Committee, and to hear from the Secretary of State or the Minister the details that lay behind it. Is it, in fact, such a last-minute panic measure that Ministers do not know what the back-up will be, and how the new clause will work?
      Perhaps the belated appearance of the new clause is due to a disagreement between the Treasury and the DTI about the scale and terms of the financial support that will be offered to the post office network. Perhaps, like my hon. Friend the Member for Aylesbury (Mr. Lidington), I am unduly suspicious, but the Minister has still not given a good explanation of why the provision was not announced on Second Reading—or, indeed, of why the Chancellor of the Exchequer did not mention it in his Budget statement. The sums involved are surely of a size to merit some attention in a Budget statement.
      The new clause will have raised considerable expectations throughout the country among those running sub-post offices. It will also have raised expectations among customers hoping that their post offices will be saved. I hope that those expectations will not be disappointed. It is one thing to enter into broad, vague, nebulous commitments of the kind envisaged in the new clause; it is a quantum leap to carry them into positive effect.
      Once the mist engendered by this exercise has dispersed, those people will want to see real results. They will want to see post offices that have been threatened with closure saved, and new ones opening. It is up to Ministers to ensure that, if public money is used for this purpose, such benefits occur. If they do not occur, and are not seen to occur, the House and the country will know that this has been little more than a public-relations exercise.
      Mr. Drew: Unlike Conservative Members who have given the new clause a curmudgeonly welcome, I give it, along with the Government amendments grouped with it, a warm welcome. This is an important initiative and, if the Government are accused of having listened, so much the better. There has been a major campaign, led—dare I say—by the Western Daily Press in my area, and taken up by many other newspapers and media outlets. It has touched a raw nerve. We all know about the problems from which sub-post offices suffer. There is a wonderful irony in being lectured by the Opposition. They accuse us of precipitate action yet they failed to tackle the problems. They had 18 years in which to act, but they did not intend to pursue the policy that the new clause outlines. It is mildly amusing that they will vote in favour of it—or, at least, not against it—while Conservative Front-Bench Members maintain that they support privatisation. I do not know how they resolve that contradiction.
      Mr. Lilley: In welcoming the new clause as a major step forward, does not the hon. Gentleman tacitly admit
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      that Government policy of compelling people to have benefits paid into bank accounts instead of a post office potentially threatens the post office network, thus making the subsidy necessary? Without the policy, the new clause would be neither necessary nor a major initiative.
      Mr. Drew: We have held that debate so often in the past, I hoped that the right hon. Gentleman would have got it right by now. There is no compulsion; people from the Prime Minister down have the right to choose the way in which they wish to draw their benefits. That will remain the case. If we changed that, it would not stop the decline in the sub-post office network. The new clause gets to the root of the problems. We need some form of subvention, for which the details need to be worked out. The Government are pledged to do that, and we should therefore welcome the new clause and consider its implementation.
      I agreed with the hon. Member for South-West Hertfordshire (Mr. Page) that having the performance and innovation unit report would help. It would tease out some of the details that we require. The report is a major piece of work for which we have waited for some months. The longer we wait, the more detail it will hopefully contain. It will then better be able to show the way in which new clause 1 can be implemented.
      Mr. Letwin: Like me, the hon. Gentleman has participated in many debates on the Bill. Does he support permanent subsidies to sub-post offices as a way forward in principle?
      Mr. Drew: If the hon. Gentleman will allow me to advance my thoughts, I shall explain my approach. I do not oppose the idea that the Government should provide more income to help the sub-post office network, which clearly needs additional income. I do not mind whether the money is a subsidy or in a different form. The campaigns and speeches of hon. Members from all parties have alerted us to the problem, and the new clause presents a method of dealing with it. I hope that I can explain that briefly.
      Mr. Peter Bottomley: The question of payment—subsidy or not—arises because decisions between Departments have resulted in the withdrawal of £400 million from the sub-post office network. How much of that sum should be replaced by payments under new clause 1?
      Mr. Drew: I cannot give a categorical answer about the money because that is up to the Government Front Bench, but I hope that we will think ahead about the extent to which we can help individual sub-post offices while maintaining the overall network.
      I believe that the Minister for Competitiveness agreed with the view that I expressed in an Opposition day debate last week. We must strike a balance between the amount that we grant individual sub-post offices to help them through temporary difficulties or to find methods to build for the future and the way in which we help the whole network. My answer is to increase the speed of the evolution of smart cards. I do not believe that that will be achieved entirely by the public sector, but it might be done by the public and private sectors in harness. I should like that to happen.

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      The Opposition have created difficulties for us. There is nothing wrong with that in some respects, but they have sold their view that our policy is ACT or nothing, and that has made it more difficult for us to present our case to the sub-postmasters and mistresses. Some of us have always believed that ACT should be considered in addition to the obvious answer: the evolution of the smart card. My right hon. Friend the Secretary of State can speak for himself, but we heard clarification on that matter during the debate initiated by the Opposition last week.
      Mr. Letwin: Will the hon. Gentleman give way?
      Mr. Drew: If the hon. Gentleman will please excuse me, I must continue.
      The nub of the debate is the degree to which the Government can support investment in the smart card as we would want it to be and the way in which they can help individual sub-post offices. We must decide how best to use our money and how to influence the sub-post office structure to keep the universal service obligation. I have already said that I wish that I knew how the official Opposition would keep it if they followed their route of privatisation. We must keep the entrepreneurial spirit of individual post offices alive while giving support through the pay structure and the other ways in which payments are made already.
      Such matters are complicated, but a considerable number of community sub-post offices already rely—not exclusively, but to a large extent—on a subsidy or a salary payment. That is what I was trying to get at in my question to my right hon. Friend the Secretary of State. We can enhance and extend that system, but our proposals must be clear. The discussions need to be based on that fact and taken forward from there. The detail will emerge from the consultations and negotiations, but, as well as providing stability and value for money, the system must be fair and transparent. All those issues are important. They must be talked through with the various organisations that will have both a part to play and a view on the proposals.
      I welcome new clause 1. We should recognise that structures will change, but that is not the only way forward and in no way do I wish to denigrate the many thousands of businesses that make up the sub-post offices network. Some people or businesses already own a succession of sub-post offices, which may provide stability, but I want to see the community enterprise idea alive and well. That may be a way to retain services in villages and suburban areas, but it may also allow us to reintroduce them. That is happening in villages in my constituency. The village shop in Whiteshill has close links with the sub-post office and Coaley provides an example of how services—the most important of which is the postal service—could be reintroduced. If a village shop can work in harness with the sub-post office, there is much more chance of the service being retained.
      New clause 1 represents an important new dimension to the discussion and the proposals cannot be introduced soon enough because we are losing sub-post offices. That is nothing new and there are no quick fixes. If there were, I presume that the previous Government would have produced some, but they failed lamentably. It is important to guarantee the universal service obligation, which is what the Bill is largely about. We have put on record the
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      fact that we want a network of sub-post offices, for now and the future, and the proposals constitute the way in which that should be done.
      It is important to strike a balance in the debate. Some of us have watched it assiduously and have made suggestions and it is good that the Government have listened not only to the campaign outside, but to what hon. Members on both sides of the House have said. That is why new clause 1 should be welcomed unreservedly. Rather than go on the defensive, we should begin to enhance the chances of our sub-post offices so that they have a genuine future.
      Mr. Cotter: I am sorry to hear that the hon. Member for Rutland and Melton (Mr. Duncan) is unwell and I am sure that we all wish him well. The hon. Member for South-West Hertfordshire (Mr. Page) made up for the hon. Gentleman's absence—he spoke for two, given the time that he waxed lyrical. I thank the Secretary of State for introducing new clause 1, which represents a welcome gesture for sub-post offices.
      As the hon. Member for Stroud (Mr. Drew) has said, we have had many debates on the matter. I could rehearse all the arguments, but I shall not do so because they are on record. There is still a serious issue about sub-post offices. I am glad that the Secretary of State accepts that the performance and innovation unit report is key. I hope that it will advance the debate quickly, once we have it.
      5.15 pm
      I congratulate the Secretary of State on the open way in which he was so opaque. His opacity and openness have been the striking part of the debate so far. He achieved a delicate balance, and he did it extremely well. In tabling the amendments, the Liberal Democrats are endeavouring to strengthen the new clause. We welcome what the Government have come forward with, but we need a much clearer answer from the Secretary of State. It has been a rather rushed job. The decision had to be made to come forward with something, but we need the detail.
      Confidence is the clear and concerning issue for those small businesses, the sub-post offices. Without confidence, customers will find other routes, as they are doing, to meet their needs, but, most particularly, sub-postmasters and mistresses do not feel that they can invest in something that will be viable and there in the long term.
      The new clause leaves an area of uncertainty. More precisely, we had the feeling that the introduction of the subsidy could not start before 2003, or at least it seems that it could not. Our amendment would oblige the Secretary of State to make an order under the section within three months of the commencement of the Act.
      We ask just for an announcement. We do not necessarily expect such a scheme to start within three months of the commencement of the Act, but it is not unreasonable to look for an announcement, which could reassure people. No doubt an indication of the date would be part of it. I do not wish to labour the point, but that is very important because, unless people feel that something

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      significant will happen, and unless something is done in good time, it will be a case of shutting the stable door after the horse has bolted.
      Mr. Letwin: I wonder whether the hon. Gentleman believes that the confidence that he seeks to engender would be brought about if sub-postmasters believed that their future depended exclusively on subsidy.
      Mr. Cotter: No, I do not, but we are saying that the Secretary of State should come forward with an announcement soon after the commencement of the Act because clarity would come from that. Other things would be coming forward, particularly the performance and innovation unit report; we are all waiting for that great thing to come from above. I hope that, when it does so, all sorts of other things will become apparent and reassure people, but we wait with bated breath to see what will come forward. I am bating my breath all the time, in fact.
      Mr. Graham Brady rose—
      Mr. Cotter: I will bate my breath again and allow the hon. Gentleman to intervene.
      Mr. Brady: What specific level of subsidy and what criteria for the application of that subsidy would the hon. Gentleman like to see in that announcement, which must be made within three months under his proposal?
      Mr. Cotter: I am delighted that the hon. Gentleman has asked that question. It is precisely the question that I wish to ask the Secretary of State in a moment. We all await the answer with great hope.
      I hope that, following my point about confidence, the Secretary of State will consider the matter very seriously. Sub-post offices are closing at the rate of about 500 per year, so we need something to stop that.
      The Secretary of State could also acknowledge that—as has been said in so many debates—many sub-postmasters and mistresses are abandoning their sub-post offices because of their concerns about new technology. The matter of the pace at which new technology is introduced will have to be clarified. Many people with a certain age profile are very concerned about the introduction of new technology and feel that they should stop operating a sub-post office before they have to face up to that technology. As the Minister has said, high-tech training is needed. However, reassurances are also necessary.
      Mr. Prior: Could the hon. Gentleman give us some idea of the size of subsidy that he and other Liberal Democrat Members would like to be provided to sub-post offices, given that their loss of income is predicted to be £400 million annually?
      Mr. Cotter: That is a time-wasting question. Clearly, Liberal Democrat Members do not have information on the costs and nature of the problems. We cannot possibly answer that type of question. I am sure that Conservative Members could not answer that type of question. I could
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      ask the hon. Gentleman the same question. Later in the debate, I might ask a Conservative Member whether he or she would like to come up with such a figure. The question is ridiculous. We are not in government, and therefore have no idea of the financial problem in terms of pounds, shillings and pence.
      I shall not speak much longer, so that the Secretary of State will have bags of time to deal with the issue. Our time for this debate has already been eaten into. I am sure that all hon. Members are looking forward to learning from the Secretary of State whether a lump sum will be paid, at a specific time, to sub-post offices, or whether sub-post offices will receive a minimum income guarantee. If there is such a guarantee, for how many years will it operate? Is the subsidy intended to be a long-term solution, or only a short-term means of plugging a hole?
      Hon. Members have mentioned the Postal Services Commission, the regulator and the consumer council. We should like to know whether the commission will be able to make an input into the subsidy. It will certainly have a significant job in identifying the requirements. We are worried not only that we shall not be told the figures today, but that the Treasury will, as usual, be left holding the purse strings.
      Although it is all very well for Conservative Members to make soundbites about subsidy and encouraging people to run post offices, those are only soundbites. Conservative Members are in an extremely weak position on the issue, because they are proposing privatisation. They are on the back foot on the issue.
      Mr. Page: The hon. Gentleman has stunned me into making an intervention. May I delicately point out to him that, with the exception of a few hundred Crown post offices, sub-post offices are already privately owned, and that it is a little difficult to privatise something that is already privately owned?
      Mr. Cotter: I am sure that the hon. Gentleman will recollect the proposals made, in 1994, by the previous Government, that the whole post office service should be divided into 11 regions—very much as the rail service has been divided, so that no division knows what the other divisions are doing. Sub-post offices could go just as branch lines went. I am sure that the hon. Gentleman will want to address the issue later, when he tries to convince us that there is no problem with the Conservative party.
      Today, we have to have some answers from the Secretary of State. I very much look forward to hearing what he has to say to provide a little more clarity and confidence, and to provide our sub-postmasters with a little more security for the future.
      Mr. Lilley: I agree with the hon. Member for Stroud (Mr. Drew) that new clause 1 is a major provision. The new clause changes the Bill's character and exposes the flaw in the Government's policy on sub-post offices. It should have been included in the original Bill. The need for it was foreseeable, and foreseen by many people, when the Government's policy on forcing people to have payments made through the banks was announced.
      The failure to foresee that need and to make any precautionary moves was characteristic of this Secretary of State, whose head is always so deeply buried in the

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      sands of wishful thinking that he makes ostriches appear far seeing by comparison. We have a Secretary of State whose hallmark is not foreseeing the inevitable. He could not see that there was a possibility—for which he should have had contingency plans—that BMW might close Longbridge. Almost every car buyer in the country took that into account when they bought cars. I bought a Rover last October, and I was asked whether I had taken into account that Rovers might not be made in a year or two. I was patriotic enough to go ahead and buy one. However, I could foresee what might happen, even if the Secretary of State could not.
      Likewise, everyone could foresee the need for subsidies if one took away the main revenue stream from post offices. I have told the House previously that, when I was Secretary of State, I was given advice that, if we were to make compulsory the payment of benefits through bank accounts, it would lead to the collapse of the post office network, and that the only way to prevent that collapse would be to introduce a subsidy for post offices. The only problem was that that subsidy would use up and absorb the bulk of the savings that one intended to make by introducing the policy.
      Ministers have refused several times to confirm that they were given similar guidance, but I am sure that they were. Anyway, they have now tacitly admitted—by introducing the clause—the first two elements of that syllogism; that their steps to remove the DSS contract from post offices will put at risk the post office network, and that the only way to ensure that the network does not collapse is to introduce subsidies. Hence the power that the Government propose to take in the clause.
      The tragedy is that the Government have not seen through the absurdity of their policy; namely that it will not save the money that they think it will. They should rethink their policy, start again from stage 1, and ensure the viability of the post office network by paying it to provide a service, rather than subsidising it to do other things than those that the Government require.
      Mr. Letwin: Does my right hon. Friend agree that we anticipate, in the near future, some Secretary of State—possibly the present one—coming before the House to tell us about the subsidies that will need to be paid also to the banks?
      Mr. Lilley: That is a good point to which I shall come in due course. The clause makes provision for such subsidies; rightly so, given the path upon which the Government have embarked.
      The Opposition can at the very most give the clause a very reluctant and conditional welcome. We do not believe that the post office network ought to survive and exist on subsidy. We do not believe that it is necessary to embark upon a path that will make that essential. We agree with the National Federation of Sub-Postmasters, whose members do not want to live off subsidies—certainly not permanent ones, and preferably not even temporary ones—and want to restore a system where they are paid by the Government to deliver a service to the Government and to those whom the Government need to provide with benefits near the places where they live.
      Mr. Gale: I wanted to intervene after my right hon. Friend's first sentence, but I thought that it would be
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      discourteous so to do. I share his view that this clause is anathema in its content simply because we do not believe in subsidies. However, we are engaged in damage control, and it is not my job to make the case for the Liberal Democrats that they so signally failed to make for themselves. The new clause says not "shall" but "may", and states:
      The power to make a scheme … shall not be exercised without the consent of the Treasury.
      First, the Secretary of State does not have to act. Secondly, the Treasury could say no. How does that help sub-post offices?
      5.30 pm
      Mr. Lilley: My hon. Friend makes a powerful point that leads me to ask how the Government got into this mess. As I have mentioned before, I have come across this issue in previous incarnations as Secretary of State for Trade and Industry and as Secretary of State for Social Security. In this context, my experience as former Treasury Minister is even more valuable. As a Treasury Minister, I wanted to see savings made, but I learned in seven years at the Treasury—four as parliamentary private secretary to the Chancellor and three as a Treasury Minister—that the Treasury has a structural weakness. It is inherently prone to seek savings in one Department even though that may result in costs in another that more than offset the savings.
      That approach is even adopted consciously and willingly and has been enshrined in a doctrine by a distinguished Treasury mandarin, Nick Monk. He said that the doctrine should be, "Take any savings from any source when possible." The Treasury does so, because even if there are offsetting costs in another Department, it hopes to be able to cap that spending or force that Department to find other savings to offset the extra costs in turn. That is a weakness of Treasury spending controls and I have always thought so. I thought so when I was a Treasury Minister and when I was Secretary of State for Social Security, which is why I resisted the proposals before us. The result of the policy of trying to make savings by eliminating the £400 million contract for the DSS to pay Post Office Counters Ltd. to deliver benefits through post offices would inevitably be a rise in the costs of the DTI as it introduced subsidies to uphold the post office network throughout the country.
      The Treasury was able to proceed with that policy—and it has always eyed the possibility of a saving of £400 million and tried it out on previous Secretaries of State, including the predecessors of the present incumbents at both Departments—only because it had installed two fresh-faced, wet-behind-the-ears former Chief Secretaries to the Treasury as the Secretaries of State in the relevant Departments. It was a necessary precondition that the DSS and the DTI be in the hands of former Chief Secretaries who had not yet learned how their Departments interacted and how the consequence of savings in one would be increased costs in the other.
      As soon as a problem emerged with the Horizon project, the Treasury seized the opportunity and told its old boys to go into action to clobber the contract with Post Office Counters Ltd. and impose payment of benefits through banks, as it had often wanted to do before. The problem with that policy is that it removes from the post office network a third of the income of sub-post offices.

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      The underlying problem that the Government have is that, if they remove that income, they will render many sub-post offices—probably a third of the network—non-viable. Indeed, many sub-post offices receive more than half of their income from the DSS contract.
      There are only two solutions to the problem. One is to provide alternative sources of revenue for the sub-post offices and the other is to provide a subsidy. Today, the Government are taking the first step towards subsidies. However, Ministers will have been given permission to introduce new clause 1 only with extreme reluctance on the part of the Treasury. It had hoped to get away without a subsidy clause and that is why it was not in the original Bill. The Secretary of State was forbidden from including a subsidy clause at that stage—if he even asked to do so—and it was only when uproar began to grow in the sub-post offices that he had to announce on Second Reading that he was considering introducing such a clause. He did not dare announce it before the two debates last week, for fear that those protesting would have realised that the new clause was permissive rather than prescriptive because it uses the word "may" rather than the word "shall".
      Mr. Letwin: Is not another reason why the Secretary of State might not have wanted to present the new clause to the 2,000 sub-postmasters is that they want not subsidies but a viable future?
      Mr. Lilley: My hon. Friend is right. That is central to the Opposition's case about the fallacy of what the Government are doing.
      Initially, the Secretary of State would have met stalwart resistance from the Treasury, as I am sure he would confirm. The Treasury would have opposed the introduction of any power enabling the right hon. Gentleman to subsidise the post office network. It is almost certain that the right hon. Gentleman would have had to enter into an agreement with the Treasury that the proposal was being introduced only for cosmetic reasons, to placate the sub-postmasters, sub-postmistresses, pensioners, young mothers and disabled people who were frightened that the post office network would collapse without subsidy.
      The Secretary of State is sniggering in a complacent and self-satisfied manner. I hope that the Government's freedom of information legislation will mean that we will be able to learn the terms of the agreement with the Treasury that has enabled him to introduce the new clause.
      The right hon. Gentleman may be sniggering now because he thinks that the Freedom of Information Bill is also a cosmetic exercise and that he will not have to reveal the terms of that agreement. However, I rather think that he will. Advice to Ministers may be precluded from the Freedom of Information Bill, but agreements between Ministers are not. If he were candid, he could tell the House today the nature of his agreement with the Treasury—or at least whether such an agreement exists, even if it remains secret.
      Mr. Letwin: If my right hon. Friend pursues this line of inquiry, is he not worried that the Secretary of State
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      will bring forward further measures in another place to amend this Bill to prevent the Freedom of Information Bill applying to it?
      Mr. Lilley: I would not put it past the Secretary of State to wish to do that, but I am confident that he would find the option outside the terms of the long title of the Bill. However, the Freedom of Information Bill has not completed its passage through the House and the Government may try and amend that instead.
      Mr. Bercow: The clause is imprecise and does not specify the sums that would be available, or the circumstances in which they would be allocated. Does my right hon. Friend agree that that means that the Secretary of State has no defence on grounds of commercial confidentiality?
      Mr. Lilley: I am certain that that is the case. It is alarming for Parliament to agree a clause such as new clause 1. It is open ended and not specific, yet it gives the Secretary of State enormous powers. The Secretary of State can delegate those powers to other people, of unknown provenance, and they enable money to be allocated in ways that we have no guarantee would be fair, equitable or above board.
      I suspect that the Secretary of State has got away with all that because he has promised not to use the provision. Therefore, the House faces a dilemma. We do not want the clause to be exercised or subsidies used to support the post office network. The network should be paid for providing a service, not subsidised in lieu of that. However, the Government took the first false step and we need a mechanism for subsidising the network until a Conservative Government can get back in office and restore it in a more sensible and fundamental way.
      Mr. Prior: If we were looking at a one-off, measurable change that reflected a change in technology, I could understand the argument for a subsidy of a given amount and for a given amount of time. However, as I understand it, we are looking at a permanent diminution of income, amounting to perhaps 50 per cent. of the revenue of a sub-post office. How can that possibly be rectified by anything in new clause 1?
      Mr. Lilley: My hon. Friend is absolutely right. The Government have created a black hole and are now creating a rather circumscribed mechanism—conditional and tentative—for filling it up. As I shall show in due course, even if they filled up every cubic inch of that black hole, they would still leave the network in difficulties. If they replaced every penny of revenues that the post offices and sub-post offices currently receive from the Department of Social Security contract with a subsidy, the sub-post offices would still lack the necessary footfall—that is, the trade generated by pensioners, young mothers, disabled people and others who collect their benefit and spend a little of it in the sub-post offices, which thereby generates additional income over and above the fees paid by the DSS for the task of distributing its benefits.

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      The value of that trade must be significant. I believe that my hon. Friend the Member for West Dorset (Mr. Letwin) will be discussing that issue. If so, I shall leave it to him.
      Mr. Letwin indicated assent.
      Mr. Lilley: As we do not want to hold up the House unnecessarily by repetition, I shall leave that interesting issue to my hon. Friend.
      My hon. Friend the Member for North Norfolk (Mr. Prior) questioned whether it is a permanent black hole. The alternative to subsidy is other sources of revenue. If the post offices can generate alternative revenues to replace the DSS fee, they might be able to restore viability. The question is whether they can do that. Is it realistic to suppose that they will be able to generate enough revenues to replace a third of their income by 2003–05, when this calamity will hit them? I think that that is manifestly impossible, as doing so would require a rate of growth in other revenues that would be extraordinary and unprecedented, and the Government have given no indication of where it would come from.
      The Government have indicated that they are going ahead with the truncated Horizon project, implying that that has the potential to generate massive revenues. When we originally introduced the Pathway-Horizon project to automate the delivery of benefits, we saw one of the virtues of computerising all the sub-post offices as enabling them to build on that computer link to deliver other services. However, we never imagined that that was more than a by-product. The Government have cut away the core, central purpose of the project—the delivery of benefits—and left the by-product on a stand-alone basis.
      It is a very costly project—the Secretary of State's estimate is £800 million to £900 million; so not until it has generated £800 million or £900 million worth of revenues will it be able to contribute a penny to filling the black hole created by the absence of the DSS contract. When will that be? When will that project have repaid £800 million and started filling the black hole that is created by the removal of the DSS fee?
      I asked the Minister for Competitiveness that question in last Wednesday's debate in Westminster Hall, but he did not answer it. Apparently, it is the tradition in Westminster Hall not to answer questions from other people. It is not supposed to be a controversial, adversarial place in which people ask difficult questions, and I was out of order in doing so. Perhaps he will answer the question today. When will that project generate a penny of extra revenues? Of course, the Government say, "We are subsidising part of the contract and £500 million will come from Treasury machinations and will not be expected to come from the Post Office." It will still have to come from the taxpayer, so it is an alternative form of subsidy. Only £400 million will have to be paid off by sub-post offices to pay for the contract. It is a funny business to enter into a scheme that is designed to save money and then conceal the fact that it will cost money by subsidising half of the scheme.
      5.45 pm
      In any event, the Horizon project so far is primarily an internal accounting and management tool for sub-post offices. The existing functionality is designed—doubtless
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      it is useful—to improve the management of sub-post offices and to bring some centralised accounting and other functions to them. As yet, the functionality does not exist. It has not been written and it is not in place to engage in commercial business, particularly banking business, in which the Prime Minister and the Secretary of State have asked us to put much faith.
      Mr. Drew: I think that the right hon. Gentleman is talking historically. I have talked to Post Office Counters Ltd., and I understand that it has a pilot project up and running, which means that it can do business with the banks. The issue now is negotiating rates, which is to be expected, but it is important to get it on the record that the scheme is feasible.
      Mr. Lilley: Indeed, mechanisms and relationships exist between the existing sub-post office network and the banks, but that is not through the Horizon project. The Government will go out to tender later this year to seek companies that are willing to write the software and to produce a package that will enable post offices to receive and transmit money automatically from the banks, and carry out the banking function of Lloyds, National Westminster, Barclays and HSBC. They will act as a local link, and basically fulfil the Secretary of State's pledge that everybody having by compulsion had his or her money paid into a bank account, can have it transmitted to the local post office, from which he or she can draw it out. That system is not yet up and running. Indeed, it is not even out to tender.
      I visited a post office in the constituency of the hon. Member for Stroud before he temporarily became its Member of Parliament. The early stage Horizon project is operating there, and 300 other post offices a week are coming online. It is essentially performing an internal management function. For the record, it does so using a smart card rather than a swipe card. The original project was designed for smart cards rather than swipe cards, but that is an aside.
      It is unlikely that Horizon will enable extra revenues to be generated in the time scale that is being forced upon it by the Government through the abolition during 2003–05 of the Post Office contract. Subsidy is inevitable if the Government are to protect and preserve a national network of sub-post offices. However, will the subsidy necessarily go to post offices? The new clause allows the Secretary of State to make by order a scheme
      for the making of payments for the purpose of assisting in the provision of public post offices … or assisting in the provision of services to be provided from public post offices.
      That would enable the Government to subsidise the provision of banking services from sub-post offices, which would effectively subsidise the banks.
      The Government propose to transfer the cost of distributing benefits from sub-post offices to banks. They have provided some misleading figures suggesting that it costs, on average, 49p per transaction to deliver a payment by the order book system through sub-post offices, but allegedly only 1p through the banks automated clearing system. The automated clearing system will charge the Government 1p for transmitting money from the Benefits Agency to a local bank. However, that is not the same as the cost of withdrawing money from a bank account or running a bank account. As I mentioned last week, the

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      Government—at least, another Department of this unjoined-up Government—have helpfully issued a report on the competitiveness of the banking sector. Members who have read as far as page 283 will have found appendix D4—
      Mr. Bercow: Hear, hear.
      Mr. Lilley: My hon. Friend, like all my hon. Friends, has of course done so—[Interruption.] He has committed it to memory, as we may all be sure. Anyone who has read that far will know that the average cost of withdrawing money by cheque is £1.09 and that the average cost of drawing money from a hole-in-the-wall machine is more than 30p. The Government expect the banks to absorb the costs that will be incurred when people draw their benefits from the banks.
      Banks, of course, will not bear the cost. Customers of banks always bear the costs of banks, and they, including benefit claimants, will do so. The Treasury proposes to transfer the costs from the taxpayer, who meets the costs of using the sub-post office system, to the customers of banks, who will meet the costs of using the banking system. Banks are not philanthropic organisations. They do not exist to deal with the problems of the general public, or even the problems of the Government—unless they are compelled to do so. Even if they are so compelled, they will be reluctant to take on people who represent an unremunerated cost.
      If banks are unable to levy any charge on those who withdraw money from hole-in-the-wall machines or by cheque, they will be reluctant to accept as customers pensioners, disabled people and others who depend on benefit. The Government will be able to persuade the banks willingly to take on those people only if they are prepared to subsidise the banking system. When the Minister for Competitiveness winds up—[Interruption.) Apparently the Secretary of State will wind up: the big guns are before us, or at least the temporary pop guns.
      In his wind-up, will the Secretary of State confirm that the new clause will permit subsidies that will effectively subsidise the banking system so that it may transmit money through sub-post offices? Only by that mechanism will the Government persuade the banks to take on such customers, let alone enable those customers subsequently to withdraw money from sub-post offices.
      Mr. Letwin: May I press my right hon. Friend a little further on his ingenious exegesis of new clause 1(1)? Is he suggesting that it would give powers to the Secretary of State to make payments to the sub-post offices in order that they should make payments to the banks for the service of providing cash tills, or that the same route should be followed for the purpose of paying the banks for providing the connection so that sub-post offices may deliver money across the counter? Finally, is he suggesting that they might be able to make payments to the banks to subsidise them for taking on customers whom they do not want?
      Mr. Lilley: My reading of subsection (1)(b) is that the Secretary of State is taking powers that will enable him to subsidise the provision of services provided from
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      public post offices, but that he need not pay the subsidy direct to the post offices. He could subsidise the banks for providing that onward transmission to the sub-post offices. The new clause is phrased in a way that would allow him to do that, and it may be necessary for him to do so if the scheme is to be viable and he is not to end up with bankrupt post offices, with pensioners and others being refused bank accounts.
      A whole array of questions remain unanswered about how the Government propose to deal with the problems of people who do not have, do not want or are not legally permitted to have bank accounts. That is a separate issue, and I appreciate that you, Mr. Deputy Speaker, would urge me to return to it on another day if I attempted to deal with it at length. I shall not try your patience. I have demonstrated that the Government have taken a route that may necessitate subsidising banks as well as directly subsidising sub-post offices.
      What is the alternative to the mess that the Government are in? We could provide post offices with an income, not a subsidy. The Department of Social Security has always felt—rightly—that if the sub-post office did not exist, we would have to create it. The DSS, unlike banks, deals with people who are often immobile, who may not own cars and who cannot easily travel long distances to pick up their money. Those people want to be able to collect their money from a reasonably close outlet—namely, the sub-post office. Banks, by contrast, want people to be rich, have cars and be mobile. Banks expect people to go to a bank in town or use the internet or some other means. Hence, banks are closing branches.
      Bank branches have always been fewer in number than the branch network of the Post Office. The sub-post office has been unique in dealing with the most vulnerable, immobile and often disabled people who need us to get money to them. That does not mean that we should not seek the most efficient and cost-effective ways of getting money to people. We must pay the sub-post office network to exist as an outlet in most of the parishes of this country, but if we can cut unnecessary costs in getting the money to the sub-post offices, we can make significant savings for the taxpayer.
      As I recall, half the cost of the annual £400 million contract between the Benefits Agency and Post Office Counters Ltd. went on the latter's costs for warehousing, storing, printing and distributing order books, which are the most inefficient and insecure means of distributing money known to man. That is why we began a project to automate that element of delivery, so that money could go electronically to the post offices and be delivered to benefit recipients who would hold a benefit payment card. That would have cut out £140 million of fraud a year, which would have gone a long way to paying for the change.
      That is a big task, but not unprecedentedly so. A similar project was successfully introduced in Ireland, which, for historic reasons, has a network of sub-post offices and a benefits system rather like ours. The people who introduced the system in Ireland were in fact contracted as part of the consortium to introduce it in the UK. Parts of the scheme are complicated, such as the so-called CAPS programme—the customer automatic payment system—that the Benefits Agency has been developing in-house. Although that was the most complicated part of the scheme, I am told that it is not what has gone wrong with it. Commercial add-ons are being retained.

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      Problems allegedly arose at some stage of the contract. It would be astonishing if that were not so. No major computer project anywhere in the world has not had problems of some sort. However, problems must be managed. It is the responsibility of Departments and, ultimately, of Ministers to sort them out: to simplify the system, if need be; to remove unnecessary complexities; and to deal with the apparent management quagmire that—rather than any technically insurmountable difficulties—lay at the heart of the matter. Ministers did not do that; indeed, they denied that there were any problems serious enough to delay the completion of the project by 2001. They told the House repeatedly that the project would be finished on time.
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      The then Secretary of State for Trade and Industry, now the Secretary of State for Northern Ireland—doubtless he was sent to Ireland to find out how things really work—told the Select Committee that he was confident that the project would be satisfactorily completed. The Government were subsequently condemned by the Select Committee for being less than candid—a pretty damning criticism. Their defence was that it was commercially difficult for them to tell the truth. That might be described as the BMW defence, which, paradoxically, the present Secretary of State for Trade and Industry uses to excuse his predecessors for not having told the House the truth.
      It would be interesting to hear from you, Mr. Deputy Speaker, or from Madam Speaker, whether it is acceptable for Ministers to say that, in future, they will deceive the House if they believe that it would be commercially inconvenient not to do so. Will we be able to accuse Ministers of misleading the House, of telling lies, or of being less than candid for commercial reasons? After all, that is what they said they did and it is what the Select Committee accused them of doing.
      Ministers should have sorted out the problems that arose, rather than pretending that they did not exist. They could have introduced a newer project to deal with the problems of automation so that the money got through to the sub-post offices and savings were made during the interim process, thus ensuring that we had a network of sub-post offices that were paid an income for performing a valuable social service—the provision of benefits in their communities to those people who cannot be expected to travel long distances to collect them.
      Mr. Bercow: As the debate progresses, it seems increasingly clear that the new clause represents a bale-out for the Secretary of State, rather than support for the post office network. Given that point, does my right hon. Friend agree that it would be helpful to know the exact nature and scope of the Treasury's day-to-day involvement with the proposed subsidy scheme, and in what circumstances it would be open to the Treasury to stop or restrict the application of the scheme?
      Mr. Lilley: That would indeed be helpful. Of course, the new clause includes the bare-faced assertion that the Treasury has the right to prevent its implementation—there are no caveats in that provision. It would be interesting to know the modus operandi that was agreed between the Secretary of State and the Treasury.
      I am grateful to the hon. Member for Stroud for endorsing the idea of a benefits payment card—a smart card to ensure the payment of benefits through a post
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      office. I am glad that he supports the Opposition on that. I hope that he persuades Ministers to go back to that scheme.
      Will the subsidy be worth while? We should subsidise sub-post offices only if the money is available and if the cost of the subsidy does not exceed the savings that were expected under the policy that made its introduction necessary in the first place. It is unlikely that the net savings—after giving the post office network enough subsidy to maintain it—will be significant; they could even disappear entirely.
      Is the money available to make such subsidies? From the Prime Minister's response the other day, we got the impression that there is as much money as necessary to bale out the Government from the problems that they have created through their policy. In Westminster Hall last Wednesday, I asked the Minister whether those who were required to have their payments made through banks after 2003—pensioners and everybody else—would be subject to the same terms as those who currently volunteer to have such payments made through a bank. The payments are made monthly, four weeks in arrears.
      The Minister looked distinctly fraught when I asked that question and he did not answer it. He was well aware that if millions of pensioners had to wait for four weeks to receive their pensions, instead of collecting it weekly, the poorer pensioners would experience a large gap in their cash flow. That is why the bulk of low-income pensioners, who depend primarily on the state pension, do not opt for payment through the bank, but collect their money weekly from a sub-post office.
      Mr. Desmond Swayne: My constituents have pointed out that the forms are not clear. Because of their design, many elderly people do not realise that they have a choice—they think that once they have opted for the ACT system, there is no way back.
      Mr. Lilley: When that point was put to the Minister of State, Department of Social Security, he said, in effect, that no one would be stupid enough voluntarily to opt for monthly payment by ACT through a bank, four weeks in advance, if they primarily depended on the basic pension. Some people may have been misled, as my hon. Friend suggested, but the Minister thinks that they are stupid if they take that course.
      The Minister for Competitiveness did not answer my question last week; he obviously realised—as I could see from his expression—what a huge problem there would be if we suddenly required all pensioners to receive their payments monthly and up to a month late. There would be a gap of about four weeks when they would be without income.
      When my right hon. Friend the Leader of the Opposition raised the issue of post offices at Prime Minister's questions last week, the Prime Minister, who had clearly been alerted to the problem during the two hours between the Westminster Hall debate and Question Time, gratuitously blurted out that he wanted to make it clear that pensioners would be entitled to receive their benefits not just in cash from the post office, but weekly rather than monthly. A bit of policy had been made on the hoof; the Prime Minister committed the Government to making pensions payments weekly, rather than four-weekly in arrears. In future, people can receive those payments through the post office.

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      I tabled a written question about what would happen if such weekly payments were extended to all the pensioners who currently have their pensions paid monthly, three or four weeks in arrears. The answer was that, by advancing everybody's payments by three weeks, there would a cashflow effect on the Treasury of £550 million. The Prime Minister has made a commitment that could cost the taxpayer up to £550 million in the year of its introduction—it would be a one-off cost, resulting from advancing the payments of those who, because they do not need continuity of payment, currently delay their payments and have them made monthly through a bank.
      The actual amount would depend on how many people exercise that right; however, as it is an attractive one, we might assume that many people would choose it and that it would cost the Treasury a large amount. One has to wonder whether the Prime Minister had discussed that matter with the Secretary of State for Social Security during those two hours. Was he aware of the cost? When I tabled the question to the Department of Social Security, officials from the Department telephoned me to clarify the issue, so I had to explain to them how the system worked. They then confirmed in their answer that it would indeed cost £550 million. My estimate had been £600 million, but it was pretty close to the mark.
      The Prime Minister, endeavouring to avoid a difficult headline, has committed the Treasury to paying up to £550 million in a one-off payment to get the Government out of a hole that they have created by a policy intended to save a couple of hundred million pounds a year at most. We have already heard how the Government have committed themselves to writing off £500 million of Post Office obligations to meet half the cost of the Horizon project. Therefore, a policy designed, notionally, to save money is already costing upwards of £1 billion before it has saved a penny, and before payment of any of the subsidies introduced by today's measure.
      The policy is a disaster—a disaster that was waiting to happen. It has happened because two newly arrived former Treasury Ministers did the Treasury's bidding without working out what the implications were for their Departments—the Department of Social Security and the Department of Trade and Industry. Now, the only way that the Government can bail themselves out is to introduce an open-ended subsidy by means of the new clause.
      We need some answers from Ministers today. Is that subsidy intended to be permanent or temporary? Will it be discretionary or automatic if, as a result of post offices closures, the access criteria are not fulfilled? Will the subsidy be to banks or just to post offices? Will it be a large subsidy—and, if so, how large—or small and insignificant? Above all, will it be sufficient to keep the post office network alive and vibrant, or will it be insufficient to do more than to slow its inevitable collapse, which the Government set in train when they announced that people would have to have their benefits paid, in the first instance, direct into bank accounts?
      I hope that the Government will think again about the need for the new clause.
      Mr. Mike Wood: I may not speak as briefly as did the right hon. Member for Hitchin and
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      Harpenden (Mr. Lilley), but I shall speak in support of the new clause, because I accept that the automated credit transfer proposals will place under threat the core work of many sub-post offices. It seems to me that the Government are right to proceed with their plans, as, to coin a phrase, doing nothing is not an option. If the experience of the previous Government does not show that, nothing does.
      The Conservatives said that they would not vote against the new clause but then spoke for a considerable time, and with considerable force, about its failings. They seem to forget that in 18 years, while Conservative Governments did nothing, thousands of sub-post offices went out of business. Therefore, doing nothing is not an option, and in the face of that history—in the face of the continuing closures of sub-post offices—it would not be sensible for the Government to retreat from this plan. Extra uncertainty will help nobody—certainly not sub-post offices in my area.
      The Horizon project—to be completed by next spring, in spite of what the right hon. Member for Hitchin and Harpenden said—will open up new areas of business potential for sub-post offices. Of course there is a cost, but no one could argue that it will not open up that potential.
      We look to the tripartite working party set up by the Government with the National Federation of Sub-Postmasters and the Post Office to find new work for sub-post offices—not just to re-arrange what is already there, or to make available to sub-post offices the work that is currently available only to Crown post offices. The potential of the network is woefully under-used. Surely, with the will of all the parties, extra work can be found.
      6.15 pm
      If we are to talk about subsidy for the community benefits of post offices and the community contribution that they make, the subsidy will need to be considerable. In my area, at least, many sub-postmasters and sub-postmistresses spend much of their time on the wrong side of the counter, as it were, helping pensioners with problems not directly related to their business, reading things for them because their eyesight is not terribly good, and taking people on one side when they have problems. If we suggest that there should be a subsidy to compensate for that dimension of the work, the subsidy will undoubtedly be considerable.
      I stress to Ministers the scale of the threat that ACT can pose to sub-post offices, not only in rural areas and inner cities, but in areas such as my constituency, which is neither rural nor in an inner city. At least two of the 25 post offices there depend on the payment of benefits over the counter for more than 75 per cent. of their work. As always, averages hide the full extent of the story, but almost all the business of some post offices—not only rural or inner city ones—comes from the payment of benefits over the counter.
      Therefore I hope that in his final remarks, the Secretary of State will give two assurances to postmasters and postmistresses such as those that I have mentioned, not only in my constituency but throughout the country, whose business depends on the payment of benefits.
      First, I hope that my right hon. Friend will give an assurance that any subsidy offered by the Government to cover the transitional period as ACT is bedded in will not

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      be restricted to rural offices or to those in inner cities, but will apply throughout the country, and that offices will be treated on a case-by-case basis. Secondly, I hope that he will assure us that if all the efforts of all concerned, not just in the tripartite group but throughout the industry, to find alternative sources of income have not been successful by any objective criteria by, let us say, the end of 2001, consideration will be given to postponing the introduction of ACT until enough progress has been made to ensure that the changes, inevitable though they are, will not be introduced until we are sure that they will strengthen the post office network.
      If the Secretary of State gave those two assurances at this stage, there would be a collective sigh of relief throughout the network, and there would be much greater willingness to work with the Government to revitalise the sub-post office network, which has for so long been lamentably ignored and left out of proper consideration. If he does so, we shall be well placed to push the changes through.
      Mr. Baldry: I am pleased to be able to contribute to this debate, as I was one of just four Conservative Members who sat on the Standing Committee considering the Bill.
      First, may I say how sorry I am that my hon. Friend the Member for Rutland and Melton (Mr. Duncan) is not here today. He led for the Opposition in Committee and did an excellent job, being vigorous in cross-examining Ministers on the Bill's shortcomings. It is a cause for great sadness that he is today in hospital with, I understand, a ruptured appendix. Indeed, he appears literally to have bust a gut in his opposition to this measure.
      The debate may well take a little time, not least because there is absolutely no reason why the new clause should not have come before the Standing Committee. The Secretary of State today seems to have introduced an interesting new constitutional convention: if Ministers are particularly interested in a new clause they do not have it discussed by the Standing Committee, but reserve it for Report and Third Reading. That undermines the whole purpose of Standing Committees, which is to scrutinise, rationally and deliberatively, measures brought forward by the Government, doing so line by line and clause by clause.
      On the face of it, the Secretary of State is today telling the House "We always intended to bring forward this clause. We deliberately did not put it before the Standing Committee, because we thought it should be scrutinised by the House as a whole." The House as a whole will not have known that, but I question whether that is the truth and accords with the facts.
      As one of those who sat on the Standing Committee, I know that much of the Committee's time was taken up with the concern about maintaining the integrity of the post office network in general and sub-post offices in particular. I suspect that during that time we visited practically every post office in my constituency, and the post offices in the constituencies of other hon. Members. I understand that the Minister himself was dispatched by his private office to visit rural post offices in north Wales.
      At no time during the Committee's deliberations did the Minister tell us "Don't worry chaps. There is no problem. We shall sort it out, and come Report and Third Reading we have a wizard wheeze: we shall come up with
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      a new clause which will provide for a subsidy, so you can curtail these discussions." I for one would have been very grateful for that, because as well as being one of only four Conservative Members on the Committee, I was one of only three Conservative Members on the Trade and Industry Select Committee. The records of the House will show that on many days I was in both places at the same time, often on the Select Committee having to cross-examine the Secretary of State and others about their total incompetence in handling the Rover fiasco. So I would have been very grateful if we could have short-circuited proceedings in the Standing Committee.
      If the Minister for Competitiveness—for that is his title—could have told us "Much of this discussion can be curtailed, because we shall bring forward a new clause on Report", I suspect that many of us would have said that we would look at it, and the Standing Committee procedures could have been much shorter, but we never had a scintilla of a hint of that.
      Moreover, the Minister for Competitiveness—because he clearly recognised that he was under considerable pressure from colleagues on his own side of the House, like the hon. Member for Batley and Spen (Mr. Wood), who urged him to consider delaying the introduction of automated credit transfer—decided to send out a "Dear Colleague" letter. We all know "Dear Colleague" letters; they are letters that Ministers send to every hon. Member, so that they cannot be accused of being partial, but they are really meant to give succour to their own Back Benchers and be sent to constituents who are raising problems. We had one today on pensions. It included charts, and I was surprised that it even included a video programme, on what the Government were supposedly doing for pensioners.
      We had a "Dear Colleague" letter on the Post Office network. There was not a scintilla of a shadow of a suggestion of a subsidy in the letter and not even a hint that the Government might table a new clause on Report. Indeed, the Minister said:
      The Government has put its money where its mouth is.
      That is not a term I would use as a Minister, but this is new Labour, new jargon. There was not a whisper or a hint of a subsidy.
      That must cause the House to consider the vigour with which the Government are advancing the new clause today. Having heard the Secretary of State, one must have more than a suspicion that what really happened was this. Ministers hoped that they could brazen it all out, that by the time the Bill went through Committee the sub-postmasters and sub-postmistresses would have been bought off, and that the Minister for Competitiveness could visit sufficient sub-post offices throughout the country and reassure them that there was no problem. But, of course, the Government could not do that, because the sub-postmasters and sub-postmistresses knew that there was a problem, and they would not let up. What is more, customers of sub-post offices around the country were determined that their voice would be heard.
      In every village in my constituency, and I am sure in all the constituencies of my right hon. and hon. Friends, people signed petitions. The petition of 3 million that was delivered to Downing street last week was but the tip of an iceberg, only part of all the petitions that had been signed. Many were produced through local newspapers

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      and regional newspapers, such as the Western Morning News I suspect that huge numbers of people signed petitions.
      I am sure that if we could see the minutes of Cabinet meetings held a couple of weeks ago, we would find that the Secretary of State for Trade and Industry presented a paper to his Cabinet colleagues explaining that they were in some difficulty, that they were coming up to Report and Third Reading and that there was about to be a substantial lobby of Parliament by sub-postmasters and sub-postmistresses. What was more, local elections were coming up. In the local elections on 4 May the Labour party will defend many district council seats in rural areas and other parts of the country. I am sure that the Secretary of State is conscious that it is not particularly popular at present.
      So the Secretary of State prevailed upon his Cabinet colleagues to allow him to table a new clause. I have no doubt that minutes went between the Department of Trade and Industry and the Treasury, with the Treasury saying "Of course, you can do that, provided it makes no commitment whatsoever and makes it absolutely clear that no subsidy will be introduced without express Treasury permission."
      When one looks at what the Secretary of State said last week in response to the lobby by sub-postmasters and sub-postmistresses, one sees that his line to begin with was very robust:
      Next week we will table a new clause to the Postal Services Bill when it is debated on Report. It will enable me to set up a financial scheme to ensure that essential services can still be delivered through a nationwide network of local post offices. Our key target is a viable future for the network. We want to ensure that the Bill covers all possibilities.
      I pause there. Clearly there seems to be a recognition of the fact that what the Government are doing in the Bill may well mean that unless they take some action there will not be a nationwide network of local post offices.
      The Secretary of State then said "It may"—that is the crucial word—
      well be that in future, because of changes that are being introduced. financial assistance should be offered to the network.—[Official Report, 12 April 2000; Vol. 348, c. 385.]
      There is no guarantee from this clause that anything at all will happen as a consequence. There is no guarantee that the Treasury will put its hands in its pockets to the extent of one penny as a consequence of this new clause. It may well be that all that we are seeing in this debate is an almighty con of sub-postmasters and sub-postmistresses, who may think that as a consequence of the new clause there will be a rescue—some help—offered to them, but who in reality will discover that none whatsoever is forthcoming.
      We support the National Federation of Sub-Postmasters in its desire for income, not subsidies, for sub-post offices. The clause is needed only because the Government are proceeding with their disastrous policy of switching to ACT, which threatens the survival of thousands of sub-post offices across Britain. Of course, the NFSP is not unaware of the fact that the new clause offers sub-postmasters no guarantee in the future. At the very best, it may offer them only an unspecified subsidy.
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      6.30 pm
      Colin Baker, the federation's general secretary, yesterday said:
      sub-postmasters want to have a commercial living in viable and vibrant post offices. The prospect of existing on a subsidy therefore will not be a very pleasant one for them … We would say the answer to the network is investment, not subsidy allowing us time to get through this difficult period and out the other end. As they say, give a man a fish and he will eat for a day, give him a fishing rod and teach him to fish and he will eat for a lifetime.
      Several colleagues have made the point that sub-postmasters want some certainty. My hon. Friend the Member for North Norfolk (Mr. Prior) made the pertinent point that sub-post offices are private businesses and that those who run them need to have an idea of what lies ahead. The Government's new clause gives them absolutely no idea of what will happen in the future, and the Secretary of State has provided no figures on the extent of the subsidy or the conditions under which it might be introduced. To whom will the subsidy be paid, how will it be paid and in what circumstances will it be paid? Will it be paid to all post offices, will it be paid on the basis of transactions or will it be paid to some post offices when they fall below a certain threshold? There has not been a scintilla of substance in anything that the Secretary of State has said on any of those matters.
      Neither has the Secretary of State provided any vision of how he sees the post office network developing. That is a pity. If he had simply read The Guardian the other day, he would have seen sound advice in an editorial. It observed:
      Rural post offices must be kept open. They are the arteries of country living and of the rural economy. It is very sad that the government has only been forced into devising a strategy for survival because it failed to see the obvious consequences of its decision to pay benefits directly into bank accounts instead of over PO counters by 2003. Many sub-post offices rely on money from this source for 40 per cent. of their incomes. But at least the government is at last thinking about a long-term solution, under pressure from public opinion, including this week's 3,000 strong demonstration of sub-postmasters in London and the outcry against Barclays' decision to close outlying branches. This problem will not be solved by leaving it to market forces. Companies and banks will not rush in to fill the rural gap because the profits are simply not there. Nor can a single post office do much because it is only one spoke in a solution that must involve the underlying strength of post offices: the fact that they are a network and there are 19,000 of them. The seeds of survival are waiting to be planted.
      The Secretary of State has given no clues about the long-term survival prospects of post offices. He has merely said that if certain unspecified conditions arise, he may introduce an unspecified and unknown subsidy to help some unspecified and unknown post offices in the future. We did not hear in Committee and have not heard in this debate any suggestion of how the Government might turn around their mindset and stop thinking of sub-post offices as part of an old economy. In fact, they can be part of the infrastructure of a new economy.
      We are moving increasingly into the age of the internet and of online shopping and communication. When that happens, goods will still have to be delivered. Vibrant post offices are ideal collection points and new technology can do much to assist the rural post office network. One hopes that the Government will turn their mind to thinking positively about how we can enhance the post office network rather than closing it.
      We must not forget just how essential sub-post offices are to the life of England as a whole. I suspect that my constituency is not unusual, because practically every

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      parish council in it has written to me expressing concerns about the Government's proposals. I shall share with the House the thoughts of some parish councils on their concerns about the threat to the rural post office network.
      Bodicote parish council says:
      We believe that the loss of this business is likely to have a deleterious effect on smaller Post Offices, particularly in local areas and may well threaten their livelihood. We believe that closure of these smaller Post Offices would in turn have a retrograde effect on local communities … Our Post Office currently stocks a range of basic items; this is the only place in our village where such things can be bought—the alternative is to travel to the supermarket in the next town.
      We believe our local Post Office plays a vital role in the local community, not least as the only focal point in our village apart from public houses. We wish to urge the Government to make a commitment to maintain the existing network.
      Middleton Stoney parish council says that it is concerned
      at the potentially adverse effect on rural post offices of the proposed changeover to payment of benefits by ACT. Many rural post offices depend on the revenue from such payments and there can be little doubt that such a change would cause many such post offices to fail.
      At a time when the banks are intent on closing branches, the concurrent loss of rural post offices would cause considerable hardship, particularly to the more elderly rural population who are often ill served by public transport. Many could face a situation where they have no local access to either post office or bank.
      New clause 1 refers to a scheme, but clearly not all sub-post offices will be affected in the same way. The hon. Member for Batley and Spen expressed disquiet about the Government's proposals and said that there were at least two post offices in his constituency where more than 75 per cent. of their business comes from paying benefits and making other social security payments. Such post offices will be hit early by the changeover to ACT. When the Secretary of State responds, will he tell us whether any scheme that the Government intend to introduce will be graded so that it responds to the sub-post offices that run into difficulties earlier than the others? Alternatively, will the Government seek national coverage and wait until the position nationally gets desperate? That will inevitably mean that a few sub-post offices will go to the wall before the Government have introduced any scheme if, indeed, they genuinely intend to do so.
      The users of sub-post offices are, by definition, often the most vulnerable in our community. As Milcombe parish council says, the proposal envisaged by the Government
      will hit the most vulnerable members of the community, i.e. senior citizens, those on benefits, single/young parents unable to travel, disabled, those without their own vehicles living in villages without public transport. The majority of these people do not have bank accounts and have no access to the nearest town. Remember also that banks in rural areas have also been closed down.
      Mr. Holloway, the sub-postmaster at Steeple Aston, sent me a cogent letter summing up the views of all of those postmasters involved:
      The nearest bank to our village is twelve miles distance and with limited public transport, banks are largely unavailable to a large section of our community. Most of these people are elderly, disabled, poor or disadvantaged in other ways and rely on their local Post Office and village shop. Modern technology is beyond them and of little help.
      He continues:
      if we lose the Post Office or if the income generated from it is greatly reduced, the viability of the shop comes into question. Secondly, if people go into town to obtain their money, costing them
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      nearly £3.00 return bus fare, or for the luckier few, a similar amount for petrol and parking, then they will shop in town (while they wait several hours for the return bus) again, affecting the income of the shop.
      My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) made a telling point about that. The general footfall of business resulting from the fact that post offices presently pay benefits is crucial to many businesses. Post offices want customers, not subsidies, and if customers stop coming for whatever reason, they will lose the post office business and the business of the village shop.
      Mr. Holloway says:
      If we lose the Post Office, it is more than likely that the shop will be forced to close. If that happens the heart of the village will be lost. Steeple Aston is "still" a village community. The shop supports most of the activities, by acting as the ticket office for many events, a collection point for information on activities, advertises events and activities and promotes many clubs and village organisations.
      The shop also acts as a meeting point, many villagers meet at the shop, by arrangement, or largely by chance, which helps them keep in touch. Many of the older villagers find it an important social focal point, without it they will be largely isolated.
      We keep a look out for the old and infirm, if someone fails to come to the shop, we arrange for a neighbour to call and check on them. We also act for the Health Centre (a couple of villages away) by handling the issue of repeat prescriptions, for people on regular medication, if the prescriptions are not collected, we can again check on the well being of the recipient.
      It is difficult to put a value on these services, but without them the quality of life in our village will be greatly reduced.
      The huge number of people throughout the country who have signed petitions makes it clear that the people of the United Kingdom have no doubt about the value of post offices and sub-post offices in villages as well as in towns and on the edge of towns.
      We could accept—or at least have greater confidence in—the Government's commitment to maintaining the integrity of the post office network if the Secretary of State was not quite so opaque. The new clause is not a simple amendment, but contains a number of subsections and paragraphs, ending with a damning conclusion that nothing will happen without the express permission of the Treasury.
      Under those circumstances, no one can have any confidence that any money will be forthcoming. Whatever acronyms are used for sorting out the public spending round, such as DELs—or even Delboys—nothing will happen unless the Department of Trade and Industry makes a bid for funds from the Treasury. The Secretary of State has made no commitment today that might demonstrate that he is prepared to do even that. Indeed, as Hansard will show, remarks do not contain a single sentence that might give the House an indication of the precedent conditions on which such a scheme may be introduced. There has been no indication whether a scheme will be introduced based on the number of post offices being closed or the viability of failing post offices.
      Imagine someone coming to one of our constituency surgeries on Friday or Saturday saying, "You were in the House and heard the Secretary of State first-hand. I am running a village post office and want to know whether I should sell it or invest to expand. Can you explain the circumstances in which I might be entitled to a subsidy to run my business?"
      None of us in such a position would be any the wiser, as the Secretary of State has given the House no information giving us confidence that money for any

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      particular sub-post office would be forthcoming, and he has not mentioned the terms or circumstances of such a grant.
      6.45 pm
      Of course, the fact that we have got this far is greatly to the credit of people throughout the country, including many Members of Parliament, parish councils, post offices and communities involved in the campaign to save village post offices. At the last moment, the Government have been willing to make a nominal concession, even though they were not prepared to make any concessions in Committee. The Secretary of State in his reply must give the House better guarantees than he did when opening the debate, and reassure us that the subsidy will be genuinely forthcoming and is not simply a sop to get the Bill through Report and Third Reading or, more significantly, to get the Government through the haemorrhaging of Labour support in the local government elections on 4 May.
      The Government Whip, the hon. Member for Plymouth, Devonport (Mr. Jamieson) may laugh, but like my colleagues, I have spent the greater part of the past two weeks knocking on doors in my constituency. When one has been a Member of Parliament for as long as I have, one has walked the streets many times before. I can tell the hon. Gentleman that he need not look forward to waking up on 5 May.
      Announcing a subsidy would be pitiful if it were simply a sop to get the Labour party through a massive loss of seats in local elections in rural areas on 5 May. On the other hand, it could be a genuine attempt to address what the Government now accept as a real problem resulting from the introduction of automated credit transfer, which would undermine the long-term viability of the rural post office network. The Secretary of State owes it to the House and the rural post office network to give Parliament and the country much more information about how the new clause will operate than he has done so far.
      Of course, had the new clause been introduced in Standing Committee—as it should have been—we could have spent some time cross-examining the Secretary of State or the Minister for Competitiveness; we could have tabled parliamentary questions and fleshed matters out. Introducing what the Secretary of State himself admits is one of the most important clauses in the Bill on Report is a discourtesy to the House—although that is neither here nor there—and, much more importantly, avoids proper scrutiny, giving the impression that the new clause is not a matter of substance, but a sop. By such means, the Government hope to convince people that they are doing something for rural post offices when, in truth, they have little intention of doing anything to protect the integrity of the rural post office network.
      Mr. Howard Flight: As my hon. Friend the Member for Banbury (Mr. Baldry) has just pointed out, the debate has exposed the fact that new clause 1 is of no value in addressing the problem. Whether it is con or sop, it fails to make explicit specific sums of money, periods of time or circumstances, and therefore will not help a retiring sub-postmaster sell his post office and will make no difference to his position. I hope that
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      the Government are not deliberately intending to mislead the public and sub-postmasters in presenting the new clause purely as a piece of window-dressing. Whether or not that is their intention, the new clause does not solve the problem.
      The whole House, I believe, thinks it essential for post offices to develop new business corridors. Recently, I had a long conversation with a sub-postmaster in my constituency, who spoke enthusiastically about Horizon and how he would sell people tickets for theatres, travel and so on. The closure of branches by clearing banks provides a great opportunity for the post office network to do the grassroots job of banks and to pick up banking business. I shall focus on the latter point. Sub-post offices are a network in the banking business, serving the underprivileged community whom the Government like to call the socially excluded. Massive effort has been expended by the Government in focusing on the socially excluded and the fact that they do not have banking services; we have also heard lots of humbug, talk and waffle about credit unions.
      The network of sub-post offices is the ideal network to provide banking services for the socially excluded. Its banking business should be supported, and the proposed version of ACT should not be introduced. I have a vision of the post office network of the future providing banking services to people who currently do not have them, in the more depressed areas of Liverpool and other rundown cities. The future of the sub-post office is not just a rural issue but an urban one.
      A huge opportunity is being lost, and I urge the Government to think again and to postpone the introduction of ACT. They should plug in their social exclusion unit, which is advising them that the 20 per cent. of the community who do not have bank accounts should have them. Those people will not get accounts from the clearing banks, which are closing their branches. The Government should work with sub-postmasters—that splendid body of self-employed small business men—under the umbrella of what is in essence a public sector body. They are just the job to provide what is missing in banking services for our community.
      Why waste the time of the House? Why try to mislead postmasters with the empty promise of new clause 1, which will not stop the collapse of the sub-post office network? It is at best honestly intended, and at worst purely a con, but it will not make post offices saleable when postmasters retire. The Government must think again, delay ACT and think constructively about how the sub-post office network can be rebuilt in the future.
      Mr. Prior: At the beginning of the debate, my hon. Friend the Member for South-West Hertfordshire (Mr. Page) described new clause 1 as the Corporal Jones clause. That was an accurate description. The new clause has been forced on the Government at short notice in response to 3 million names on a petition, pressure from the Opposition, the forthcoming local elections, and a realisation that the introduction of ACT would have a dramatic impact on many thousands of sub-post offices around the country.

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      This evening we have heard that up to 75 per cent. of the income of a sub-post office can come from the payment of benefits and pensions. In my constituency, the level of income from that activity can be well over 50 per cent. It can be a great deal more when one takes into account the footfall impact if there is a village shop alongside or within the post office.
      The most objectionable aspect of new clause 1 is the thought behind it—the assumption that commercial activity can be replaced by Government handouts. It is assumed that the entrepreneurs—the decent men and women who run sub-post offices—will be happy with handouts from the Government on an entirely discretionary basis.
      Mr. Letwin: Was it not remarkable that when we asked the Secretary of State whether he intended a temporary subvention to enable viability on a commercial basis thereafter, or a permanent discretionary subvention, he produced what can best be described as extremely elegant waffle?
      Mr. Prior: My hon. Friend is too kind. It was cosmetic flannel. The new clause is designed as a sop, as my hon. Friend the Member for Banbury (Mr. Baldry) said, to enable the Government to get through a few difficult weeks. It will become increasingly apparent to sub-postmasters and mistresses as time goes by that, under the new clause, they will be exchanging a commercial business and an income stream for which they have worked diligently over many years for handouts from the Government. No one who has been in receipt of handouts from the Government will consider that a reasonable swap.
      I do not believe that the savings of £400 million a year identified by the Treasury will be realised. As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said, there is a maxim in the Treasury that savings in one Department must take into account the extra costs in another. It is clear from new clause 1 that there will be costs in other Departments to offset those savings.
      Post offices will not be able to replace the loss of income with Government subsidies, and the post office network will be increasingly vulnerable. The new clause is wholly unsatisfactory, a fact that the Opposition view with a great deal of suspicion. As time goes by, sub-postmasters and mistresses across the country will realise that they have been sold a pup by the Government. I hope that the Government will think again carefully about delaying for a long time the introduction of ACT.
      Mr. Brady: I am pleased to have an opportunity to speak briefly in the debate on new clause 1, especially as I want to flag up the importance of the sub-post office network, not just in rural areas, which have been alluded to at length, but—
      Mr. David Jamieson(Lord Commissioner to the Treasury)indicated assent.
      Mr. Brady: I see that I have some support from someone on the Government Front Bench, for which I am grateful. As I was about to say, the network is also important in urban and suburban areas.
      Mr. John M. Taylor: On the point that my hon. Friend is developing—the assumption that we are speaking of a rural problem, whereas in fact it is an urban problem—will he speculate whether those who do not have a bank account and are unlikely to have one are predominantly in rural or urban areas?
      Mr. Brady: I suspect that they are in both but that there is a large concentration of those people, whom the Government sometimes choose to refer to as the socially excluded, in the urban areas and in suburban areas. In parts of my constituency, some fairly large council estates at present have the benefit of some local shops and post offices, which are being placed under threat by the Government. I am sure that that is the case also for many Labour Members. There is widespread concern that the facilities that are currently available for people in those circumstances may be removed.
      Mr. Letwin: Will my hon. Friend allow me to say that the right hon. Member for Birkenhead (Mr. Field) who is, alas, unable to be in his place, but who is the chairman of the all-party group of which I am the secretary, specifically asked me to mention in the House that he believes that it would be a disaster if measures were taken exclusively for the rural areas, because as my hon. Friend said, it is classically in the urban areas where a great part of the problem lies?
      Mr. Brady: I am grateful to my hon. Friend for making that point, and for the opportunity to pay tribute to the right hon. Member for Birkenhead (Mr. Field), who speaks a great deal of sense on many matters, and who shares my determination to defend the excellent grammar schools that we have in some parts of the north-west—another issue on which I have considerable sympathy with the right hon. Gentleman.
      The hon. Member for Weston-super-Mare (Mr. Cotter) paid a rather bizarre compliment to the Secretary of State, by suggesting that he had been both open and opaque in his presentation. Presumably that was intended to be at least half a compliment, but the only translation that I could come up with was that the hon. Gentleman was accusing the Secretary of State of being transparently evasive in what he is doing.
      Mr. Taylor: Would it not be more appropriate to say that the right hon. Gentleman was incandescently obscure?
      Mr. Brady: I am grateful to my hon. Friend. No doubt the creativity of our hon. Friends could produce many other variants.
      New clause 1 provides no certainty whatever. It sets out no ground rules for determining whether there should be a subsidy, when there should be one, or how it should be applied. Important issues arise for sub-post offices in urban and suburban areas, where the market circumstances may be rather different from those of isolated rural sub-post offices. There are conceivably many instances when a town, village or community in an urban or suburban setting might have more than one post office. It is quite possible that both, or all, those post offices would be threatened, because they might all depend heavily on the income that they currently derive from the payment of pensions and other benefits.

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      New clause 1 contains no criteria or ground rules suggesting how the Government would conclude whether one, both or all the post offices in question would be supported. Presumably, if their principal objective is to preserve a community service, the logic can extend only to support for one post office, because that would achieve the aim of securing the service on whose protection they wish to spend public money; but how are they to decide the way in which the subsidy is granted? Should they divide it between the post offices in an attempt to protect them all, and in so doing perhaps risk losing them all? The Secretary of State has been utterly opaque, and I can only assume that he has been deliberately opaque.
      Mr. Swayne: May I suggest a reason for that opacity? Last Wednesday most Labour Members had a very disagreeable day. Anyone who was downstairs in the canteen and saw them buying tea for their constituents in order to salve their consciences will realise that new clause 1 is an emergency measure tabled by the Secretary of State to deal with the consequences of that disagreeable day, and that its lack of clarity results from the fact that none of it has been thought out.
      Mr. Brady: I am always delighted to hear that members of the public have received some benefit from their Labour representatives. Even if it only runs to a cup of tea, that is a considerable improvement on what might otherwise be on offer—although, in this instance, the cup of tea seems inadequate compensation for the loss of a vital public service.
      I hope that when he responds the Minister will put some flesh on the bones of new clause 1 by informing us of at least some of the criteria that are intended to apply to the distribution of subsidy to the post office sector as a whole, and to the distinction between different types of post office. I assume that the Secretary of State hopes to retain the public service benefit; what "map" has he in mind, in terms of the density, or distribution, of sub-post offices? What would the Government regard as the minimum requirement? How far does the Secretary of State think it reasonable for a pensioner or recipient of other benefit—perhaps a disabled person—to have to travel? What travelling time does he consider appropriate?
      As in other contexts, some Members may be more concerned with the interests of large rural areas. As only a small part of my constituency is rural, I tend to turn my mind to the suburbs. It may take a person living in a suburb or city just as long to travel to a sub-post office as it takes someone in a rural area to traverse what is, in absolute terms, a greater distance. I should like to hear what criteria the Secretary of State would consider necessary to trigger, or justify, subsidy in such circumstances.
      Mr. Bercow: I am sorry to pursue my hobby-horse again, but does my hon. Friend agree that it is vital in terms of confidence for us to have information confirming that the criteria are specific and precise and lend themselves readily to objective assessment, so that we can be assured that decisions will not be made—either by the Secretary of State or by his agents—according to arbitrary fiat or political preference?
      Mr. Brady: I entirely agree. It is important both for steps to be taken to ensure that the subsidy—if there is
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      any—is distributed fairly, and for a clear rubric to be set out explaining how it will be distributed and in what circumstances. Sub-post offices and those who depend on them must have some guarantee that new clause 1 will actually deliver.
      The fairness and clarity called for by my hon. Friend are particularly important in view of the disproportionate effect that the proposals may have on certain social and demographic groups. According to recent newspaper reports, the Labour party has now decided that it has no intention of targeting the elderly, because it does not think they are likely to vote Labour in the future.
      Mr. Bercow: And it thinks that they are all racists.
      Mr. Brady: Indeed.
      Admittedly, I hope that most people who have achieved a certain age will have the wisdom not to vote for the Labour party; but given that Labour has said in internal strategy documents that it has no intention of appealing to the pensioner vote, we are forced to ask again what exactly is the purpose of new clause 1.
      If any substance were given to the new clause—if the Government acted to protect sub-post offices—many pensioners would benefit. As my hon. Friend suggested, it would be entirely wrong for the funds, if there are any, to be distributed according to party advantage. That surely would not happen under the present Government, but I venture to make another suggestion.
      The new clause was introduced at a late stage. It is a panic measure, tabled in response to a large petition, a lobby of Parliament and the sudden realisation that this was a matter of great public concern. Given that the whole project was conceived as a response to obvious public dissatisfaction and worry about the closure of post offices, we must be left with the suspicion that if the new clause is adopted, and if the Treasury ever agrees to provide funds to back it up, what decisions are made may well depend on who is prepared to shout loudest and make the biggest row about the possible loss of post office services in their communities.
      Let me now say something about the concern caused by the Government's general policy of moving towards a subsidised system of provision.
      Mr. Bercow: Before my hon. Friend embarks on his new point—which I await with beads of sweat on my brow, and with eager anticipation—let me ask him this. Does he agree that, in view of the Secretary of State's opacity, and the uncertainty about the final form of the scheme, it is important that the regulations—subject to the affirmative procedure—should also be subject to a minimum consultation period of three months?
      Mr. Brady: My hon. Friend makes a wise point. I was not, of course, going to comment on the beads of sweat that are apparent on his brow. It is indeed important that there should be proper consultation and an appropriate period for consideration of the detail of any proposals that the Secretary of State may present at some point in the future. Those who have a legitimate interest or anxiety, whether they run sub-post offices or depend on their services, should be able to express their views before the affirmative resolution procedure is implemented. We can hope for a truly fair, clear and reasonable system only if that happens.

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      Even if all those criteria are fulfilled, we are left in an unfortunate position. The Secretary of State claims that his objective is to encourage greater commercialisation of the Post Office and greater entrepreneurship in sub-post offices, yet all his actions and proposals will achieve the opposite. Far from encouraging entrepreneurship or persuading sub-post offices to explore methods of maximising their income by providing services, the Secretary of State will lead them to dependence on public subsidy. By following that unfortunate path, he may achieve the reverse of his intentions, discourage entrepreneurial endeavour and proper commercial activity in sub-post offices and push them towards a model of employment status, or even the status of a nationalised service.
      It is bizarre that some Liberal Democrat and some Labour Members have tried to link the new clause with privatising the Royal Mail. That argument is entirely bogus because, as my hon. Friend the Member for South West Hertfordshire (Mr. Page) pointed out, sub-post offices are already predominantly in the private sector. New clause 1 is far from being a proposal for privatisation of post office services; indeed, it is a proposal for the potential nationalisation of part of the network.
      New clause 1 would discourage entrepreneurial activity, commercialisation of the network and the independent small businesses that have served communities so well for many years. I repeat the caveat that we do not know whether new clause 1 will be accepted. However, if it is to have substance and revenue to support it, or if it is to be effected meaningfully, it will encourage a state, nationalised post office service. If that happens, the fears of my hon. Friend the Member for Buckingham (Mr. Bercow) will be realised. We are considering a planned economy and the ability of Ministers and their officials to decide how to provide services by determining the number of post offices, their location and the sort of communities they should serve.
      The problem is of the Government's making. The Government have put in train changes in the payment system for pensions and benefits that will cost the sub-post offices an enormous sum. As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said, the Government's proposals do not have the benefit of a saving to the Exchequer. The tabling of new clause 1 is an admission that an administrative development, which will cause real suffering and difficulty for many people, has no true financial benefit.
      7.15 pm
      Mr. Stephen Day: That is modernisation.
      Mr. Brady: People are beginning to understand that modernisation sometimes causes genuine problems. It damages their communities and the provision of public services. It may be an attractive buzz word for those on the Treasury Bench, but it means nothing and provides no benefits for ordinary people.
      I hope that the Secretary of State will make some concrete commitments. If he stands by new clause 1 and has genuinely acted in good faith by tabling it to try to rectify some of the problems that the Government are creating for sub-post offices, we need to know how its provisions will be implemented.
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      What are the financial implications? We want to know not only the cost but how the subsidy will be distributed between different sub-post offices, and on what criteria. Will the subsidy go to rural, suburban or, urban areas? What priority will be given to ensuring that the elderly have their post office services protected? What priority will be given to ensuring the provision of sufficient post office services in areas of deprivation, or places with large populations, which depend on benefit payments through post offices? We can have confidence in new clause 1 and the Secretary of State's good faith in trying to save post offices from Government attack only if he can provide concrete assurances and make genuine commitments this evening.
      Mr. Eric Forth: I want to explore the key word of the debate—opacity—in the context of new clause 1, and link it to a potent point that my hon. Friend the Member for Banbury (Mr. Baldry) made. He pointed out that, through accident or incompetence—it does not matter which at this stage—we are in an invidious position. We have been presented with a comprehensive new clause—which, according to the Secretary of State, forms the core of the Bill—not in Committee, where it could be properly scrutinised and amended, but on Report when there is an element of time pressure. That speaks volumes for the way in which the Government go about their business. Their actions, taken in a panic and at the last minute, are ill thought out and poorly understood—and that applies to the Secretary of State's actions, let alone to those of anyone else. In the limited time available, we must attempt to discover from the Secretary of State what lies behind the new clause.
      New clause 1 is shot through with incongruity and phrases that mean little if anything to me. We want to ascertain whether they mean anything to the Secretary of State. Our old friends "may" and "shall" are the subject of other amendments in the group. The new clause would provide that the Secretary of State "may", if he sees fit, implement its provisions. It contains no guarantee for the sub-post office network. We are therefore considering a discretionary matter. The provisions may or may not be effected, depending on the whim of the Secretary of State of the day. The current Secretary of State's successor may be in place more quickly than even he can imagine. Does he feel that he can commit his successors to such a provision?
      The use of the word "may" is significant. I hope that the Secretary of State can reassure us and the sub-post office network that "may" will be replaced with "shall". That will at least make clear the intention of new clause 1, and show that the provision is not discretionary. I hope that the right hon. Gentleman will comment on that when he winds up.
      Difficulties arise with paragraphs (a) and (b) of subsection (1). They make an interesting distinction between
      assisting in the provision of public post offices
      and
      assisting in the provision of services to be provided from public post offices …
      On the face of it, that may seem to make the most comprehensive provision of all. If that is the intention, it deserves our limited support. However, subsection (1)

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      could contain an important distinction that may cause much confusion and uncertainty as to whether the Secretary of State truly intends to assist
      in the provision of public post offices …
      Does that not imply the possibility of new sub-post offices being provided, were they to be deemed necessary?
      We want to know about that because until now, the process has been seen as one of irreversible decline. If the Secretary of State can tell us that there may be circumstances in which a new sub-post office could be brought into being by the provision, some rural areas in particular might take encouragement from it. That needs to be clarified.
      There is also doubt about who would implement the proposal as the new clause provides that that may be done either by the Secretary of State or by someone else on his behalf. That is an important distinction. Were it to be the Secretary of State and were he prepared to give undertakings to the House now, that, too, might be somewhat reassuring, but if we were told that he at least had in mind the possibility that some other person or agency would deliver the mechanisms—the new clause would allow that—we would already be at one remove from what has been said during these proceedings. Whatever reassurance he may be able to give us, how could he guarantee that his agent or agency, or any other person acting on his behalf, would have the same commitment to doing what we have been told would be done? That is always supposing that we get some commitment from him; we have had none yet.
      The new clause appears to describe the scheme in detail, but it turns out that that is not the case at all. The scheme
      shall specify …the descriptions of payments …
      which is fair enough, and
      the descriptions of persons to whom such payments may be made…
      We can all imagine that they would be sub-postmasters or someone of that kind. It shall also specify
      the person by whom such payments may be made …
      which refers back to the possibility that that may be someone other than the Secretary of State—but we then come to the matter of criteria, which has already been touched on in this short debate.
      My hon. Friend the Member for Buckingham (Mr. Bercow) made a plea in an intervention. He said that to be meaningful, the criteria should be clear, concise and well understood. One can see what he means. However, he will recall that my hon. Friend the Member for Banbury pointed out in his excellent contribution that in many ways, sub-post offices perform a social service in their community and often provide support, advice and help to their customers. How could one express that in the criteria to which the "person" would have regard in deciding whether payments had to be made? The matter seems straightforward on one level. However, on another, if the Secretary of State ever accepts that sub-post offices have a crucial social and community function to perform, how will he factor that into the criteria so that payments will be made under the scheme? These matters are not trivial; they are of the greatest importance.
      If we were told that the Secretary of State had no intention of paying any regard to social matters, that would give rise to suspicion that what appears, on the face
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      of it, to be a comprehensive scheme was cobbled together late in the day without sufficient thought. No one—least of all, regrettably, our excellent sub-postmasters and sub-postmistresses up and down the country—should imagine that the proposal is the solution to their problems. Would that it were otherwise. If we had had a proper chance to examine the new clause, we might have been able to make more progress in that regard.
      Subsection (5)(a) refers to "conditions as to repayment". That strikes me as an important and potentially sinister provision. For the first time, there is a reference to repayment being made, which clearly implies that it is in the Secretary of State's mind that any moneys paid to sub-post offices under the new clause may have to be repaid in some circumstances. We must know an awful lot more about what "repayment" means before we can give our approval to the new clause. It could mean any number of different things, and repayment could take many different forms. We need to know what "conditions as to repayment" could mean before we can feel reassured by the new clause.
      Mr. Bercow: My right hon. Friend is very experienced in these matters and he is right to smell a rat. Is not his suspicion reinforced when he reads subsection (6), about which there has been considerable commentary? It refers to the requirement for
      the consent of the Treasury.
      Does not it appear that the Chancellor has agreed to the proposal only on the basis that it might never happen? If it does, the cost will be recouped, as usual, in the old stealthy Labour way.
      Mr. Forth: That, of course, suggests itself not only to my hon. Friend, but to most of us who have taken even a brief moment to study the new clause. I shall come to subsection (6), but time is pressing and I do not want to delay the House unnecessarily. I simply say that we have all spotted the Treasury's grubby hand on the throat of the new clause—it cannot be concealed. We need to know what the Secretary of State thinks his relationship with the Chancellor is, what guarantees he has or has not received from the Chancellor, and whether he thinks that the payments that he envisages being made will be both adequate and guaranteed. If they will be neither, the measure is worthless.
      Mr. John M. Taylor: Is not the proper interpretation of our constitutional affairs that a Government are collectively responsible? There are no separate Ministers in that sense; all are part of an entity. Is it not therefore curious and extremely offensive that one part of the Government has to seek the permission of another?
      Mr. Forth: My hon. Friend, who has enormous experience of those matters, knows that what he says is literally true, but I fear that the entity that matters in this regard is that referred to in subsection (6)—Her Majesty's Treasury and the Chancellor. We need to hear a lot more from the Secretary of State about his relationship with the Chancellor, with specific reference to what the Secretary of State will no doubt claim are the reassurances in the new clause.
      Mr. Bercow rose—
      Mr. Forth: I give way for the last time.
      Mr. Bercow: Does not my right hon. Friend agree that it is important, not least for the self-respect of the House, that we should be assured that we are not debating the matter in a vacuum? Would it not therefore be helpful to know whether the details of the scheme and the extent of the Treasury veto over them have already been determined, but, for political convenience, will be rolled out later, or whether the Government simply have not got round to thinking them out at all?
      Mr. Forth: That remains to be seen. The debate may or may not be taking place in a vacuum, but our great fear is that the new clause is vacuous.
      Mr. Brady: Will my right hon. Friend give way?
      Mr. Forth: Yes, but then I must conclude.
      Mr. Brady: I am most grateful to my right hon. Friend. Does he agree that it would be more convenient for the House, and that a lot of difficulties in the Government would be avoided, if the power to make the decision were given straight to the Treasury instead of the Secretary of State? We could cut out the middle man.
      Mr. Forth: My hon. Friend has stumbled on an important answer. Subsection (3) refers to "another person"; obviously, that is the Chancellor. We may not need an answer from the Secretary of State; my hon. Friend has given it to us, which is very helpful.
      My final question to the Secretary of State relates to subsection (5)(c), which contains a typically opaque reference to
      the modification of the functions of a body established by an enactment …
      What on earth can that mean? Either it means nothing at all—the parliamentary draftsman must have been suffering from his now customary flu—or it is a sinister provision, the meaning of which has been completely, cleverly and subtly hidden by the parliamentary draftsman and sanctioned by the Secretary of State. We need to know what it means.
      The new clause will not do, unless the Secretary of State is prepared and able to give detailed, specific and reassuring explanations and guarantees that it contains much more than any of us has hitherto been able to identify.
      7.30 pm
      Mr. Letwin: I find myself in the unusual position of joining my hon. Friend the Member for South West Hertfordshire (Mr. Page) on an unaccustomed Front-Bench team. It is all the more unusual because I have a certain fellow feeling for the Minister for Competitiveness—in the past little while, we have both spent a large part of our waking hours thinking about post offices. The difference between us is that I dream about them, whereas I suspect that he wakes up having had nightmares about them.
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      New clause 1 has been introduced by the Secretary of State with all the appearance of a matter of settled policy. It would be fine if it were. As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) eloquently mentioned, all hon. Members on both sides of the House attach huge importance—I do not exempt the Minister—to the post office and sub-post office network. That is common ground. If the new clause were an example of a clear-minded and settled policy to deal rationally with the future of our sub-post office network, we would all be happier.
      What has come out in this debate often comes out in debates, even on Report, and I share the sentiments of many of my hon. Friends in decrying the fact that the new clause has been introduced only on Report: there is a great lack of clarity of purpose. As my hon. Friends the Members for Altrincham and Sale, West (Mr. Brady) and for North Norfolk (Mr. Prior) pointed out, when the Secretary of State was pressed and pressed again to state whether the new clause is a single, simple measure to enable sub-post offices to do what I think we all want them to do—invest in the technology that will give them a viable future alongside ACT—or whether the measure will permit the continued subsidisation of sub-post offices as a substitute for a viable future, the Secretary of State refused point blank to answer the question in a fashion that would have satisfied the House.
      I suspect that the Secretary of State refused to answer for the reason to which many of my hon. Friends have drawn attention, not least my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) because the new clause is not a matter of settled policy. It is something that the Secretary of State introduced at a late hour to solve the problem of having to face 18,000 birthday cards, 2,000 sub-postmasters and 3 million signatures. That is not the way in which to conduct public policy on any matter, let alone a matter that is as important to the nation as the maintenance of the sub-post office network.
      As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) pointed out, many of us predicted months ago that introducing ACT without a proper pause for reflection and without taking time to introduce alongside it the proper technology, which would enable sub-post offices to engage in activities that keep their footfall and revenues aloft, would result in subsidies. When I first mentioned that in the House, the Secretary of State looked as if someone had said something that was rather impolite. Apparently, it was far from his thoughts that he would end up spending the money that the Secretary of State for Social Security was ostensibly saving but, some months later, what do we have? We have a new clause with the vaguest and widest possible permissive powers to administer subsidies and to make up for some unknown deficiency, through the administration of an unknown quantity of grant. Our predictions were wholly fulfilled.
      The ingenious interpretation of subsection (1) by my right hon. Friend the Member for Hitchin and Harpenden, which showed that, at least on a prima facie reading, the new clause could be used to subsidise banks as well as sub-post offices, points us in the direction of something that, either by the means in the new clause or by other means, we will in due course see. The Government will need not only to keep the sub-post offices alive, but to subsidise the banks.

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      From the beginning of the saga, the Department of Social Security never properly considered whether the banks could willingly take on as customers a very large number of people currently in receipt of benefit and pension. That deficiency will have to be paid for through taxpayers' money. If the Secretary of State thinks that that is an impolite thing to say, I challenge him to come back and to admit to the House, in due course, when he or another of his colleagues introduces a positive proposal to subsidise the banks, that we were right, just as our predictions earlier that sub-post offices would need to be subsidised have proved to be right.
      What do we have here? We have what is becoming a familiar and important theme of the Government. First, action is taken which, although not necessarily ill-intentioned, is ill-thought through. Secondly, a major industry or service is adversely affected. Thirdly, a Government who came to power telling us that they had learned the lessons of free market economics engage in solving, or in attempting—usually unsuccessfully—to solve, the problem through increased subsidy. We have seen it in agriculture, in the car industry and in the coal industry; now we see it in sub-post offices. It is a lamentable rhythm, but it is beginning to become extremely familiar.
      In the case of sub-post offices, it is highly ironic because the only reason for the adverse effect on sub-post offices is that the Secretary of State for Social Security thought that he was going to please his former master, the Chancellor of the Exchequer, by saving £400 million. That £400 million is an extremely mysterious entity. No one knows how much of it is due to payments that go to the sub-post offices, how much is due to payments that go to Post Office Counters and how much is absorbed in internal administration. However, let me take a guess that, at present, at least half of it goes to sub-post offices by one means or another.
      Let us imagine that everyone who would come in to collect a benefit or a pension—who, in that case, will not spend, on the Secretary of State's figures, roughly 50p of taxpayers' money on having that benefit or pension available for collection at the post office—is also not going to spend at least as much again in gross profit contribution: he or she is not going to buy things in the post office. I do not know whether that is the right or the wrong number. The Secretary of State undoubtedly knows, but he has long since forsworn any effort to tell us.
      As my hon. Friend the Member for Altrincham and Sale, West and my right hon. Friend the Member for Hitchin and Harpenden said, we need to know the answer. Let me speculate that the answer that I have given is approximately correct: £200 million will be directly lost by the sub-post offices, and about another £200 million will be lost through lack of customers. What, then, would the subsidy need to be wholly to replace that lost revenue? Amusingly, it would be £400 million. That is why we believe that, if the Secretary of State is continuously to re-subsidise the post offices to the point that they were at before the Secretary of State for Social Security began his attack on them, he will need to spend about £400 million a year of taxpayers' money.
      The Secretary of State has not said so. He has not said a word about how much he will spend. He has not said whether it will be a large or small amount, but we are
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      justified in assuming that the cost of the injudicious measures of the Secretary of State for Social Security will be enormous.
      During the debate, two problems have emerged in relation to that enormous sum of money. First—my hon. Friend the Member for Altrincham and Sale, West made the point clearly—when subsidies are administered on a continuing basis, they create subsidy dependence. They divert the attention of the business man—in this case, the sub-postmaster or postmistress—from running the business and towards maximising subsidy.
      That is a danger to the sub-post office and to any industry that suffers from it. It is a danger about which we thought the Government had learned because, before they came to power, they preached the virtues of a market that was not subsidised. However, it turns out that, when it comes to sub-post offices, the Government's knee-jerk reaction is to create the very subsidy dependence that we all suffered from for so long and so deleteriously.
      As my hon. Friend the Member for North Norfolk said eloquently, another reason why we should worry about continuing subsidy is that the subsidies themselves are vulnerable. As many of my hon. Friends pointed out, the new clause is permissive. It will go on being permissive because subsidies are never given as a matter of contract. Governments always, under all regimes, take great care to ensure that no one can ever claim a subsidy as a right. Therefore, subsidies are necessarily tenuous.
      In the terms of new clause 1, the subsidy is described as "a scheme". It is indeed a scheme. It is a scheme to avoid a principal problem, and it is a scheme that could be as quickly undone as it has been established. Every sub-postmaster the length and breadth of the country will know that. Consequently, they will know that they are constantly under the threat of the subsidy being removed. Therefore, their attention will be focused in the wrong place, and their livings will be precarious. That is in no way a satisfactory result for sub-post offices; nor is it the result that they have been seeking. Sub-post offices have been seeking long-term commercial viability—not a subsidised or precarious existence, but a well-founded existence.
      There is, however, a way. That is why Opposition Members have not been arguing against new clause 1, but have merely been drawing attention—as my right hon. Friend the Member for Bromley and Chislehurst did notably—to its drafting deficiencies.
      Mr. Alan Johnson: Where is he?
      Mr. Letwin: I am sorry that my right hon. Friend has departed the Chamber, but he lent much eloquence to us when he was here. He certainly drew attention to the lack of drafting. We have complained about that, and about many other matters.
      We do not wish, however, utterly to oppose the new clause because it contains a better possibility—the germ of a decent idea. Rather than a continuing subsidy, there should be a pause—a delay and a reflection. In that time, the Secretary of State could use the powers provided in the new clause and by other means to install in sub-post offices proper technology, parallel—although perhaps different in character—to that which my right hon. Friend

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      the Member for Hitchin and Harpenden tried to install when he was Secretary of State, but which the new Government disrupted.
      Mr. Johnson: No.
      Mr. Letwin: Yes, the Government did disrupt it. I know that the Minister thinks that they did not, but he has forgotten that the previous Secretary of State for Trade and Industry was very clear in his statements that the project would be delivered, after which it was cancelled. I do not know why it was cancelled. I am sure that it was not Ministers' fault, and that they did not go round to destroy the computer. However, the fact is that, under this Administration, that project failed. It had not failed before. It did not seem to be failing, but when it did fail, the future of sub-post offices was put under threat.
      There is now a chance that, if the Secretary of State uses new clause 1 not in the wrong way but in the right way—not to go on subsidising post offices permanently, but to inject, once for all, sufficient funds to provide them with the technology to enable them to go on providing benefits and many other services—post offices will keep their footfall and, therefore, their financial viability. If the new clause is used in that way, of course we would welcome it.
      It is a sorry thing, however, when a Secretary of State—who is perhaps one of the more intelligent members of the Government—comes to the House with a new clause that is ostensibly derived from public policy and not merely a sticking plaster to deal with a political problem, but cannot answer the fundamental question: "Is this something that you intend to use as a means of permanently and unsatisfactorily subsidising sub-post offices into a gentle oblivion? Or is it a bold manoeuvre to try to give them, once for all, the modern technology that they need?" Why cannot he answer the question? He cannot answer because he has not decided.
      In the past few weeks, to my certain knowledge, Ministers have had no fewer than six occasions in the House on which to announce their answer, and six times they have failed to announce it. That is why the new clause has been drafted in a manner that is—as many of my hon. Friends have said, using a polite word—opaque.
      Mr. Bercow: Risible.
      Mr. Letwin: Perhaps. However, the new clause's problem is not its opacity of drafting, but that the mind behind it is intentionally opaque because it has not yet been made up. It is a mind unmade. That is no way in which to introduce legislation.
      I hope that, as a consequences of this debate, Ministers will go back to that dreadful place that they are forced to inhabit, think to themselves a little harder, and be able—perhaps in their Lordships' House—to include provisions in the new clause that tell us whether it is a devastating and disastrous piece of permanent subsidy or a perfectly sensible move to do what we have all been asking for for many months now.
      Mr. Byers: This has been a debate of some interest, and I shall try to address the issues raised in it by right. hon. and hon. Members. It is worth reinforcing the point now, however, that new clause 1 simply gives the
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      Secretary of State for Trade and Industry the power to establish a scheme. The new clause is not about the details of that scheme or the form that it might take. It is purely about including in the Postal Services Bill a power for the Secretary of State to establish a scheme.
      7.45 pm
      I can understand the concerns that hon. Members have expressed about the details—such as whether the scheme will be temporary, whether it will be operated by means of a lump sum, and whether it will be a continuing obligation. The House will be able to consider all those details. New clause 1 makes it clear that the matter will be dealt with by the affirmative process. Therefore, there will be a debate, and there can be a vote on the scheme when it is introduced by the Secretary of State—if there is a decision to introduce such a scheme.
      As I have consistently made clear, the provision is permissive; it is a matter of "may", not "shall". It is permissive because we do not know what the future will bring. I hope that the Postal Services Bill will receive Royal Assent and be on the statute book for many years. As I said on 12 April, when speaking on the issue, it is right that we should have a safeguard in the Bill providing the Secretary of State with a power to introduce a scheme. That is exactly what new clause 1 does.
      My hon. Friend the Member for Batley and Spen (Mr. Wood) raised the issue of whether the scheme could be tailored, dealing with post offices individually. Yes, it can. I think that the scheme will be able to do that, so that there will be some flexibility and some targeting of support. However—to reassure the hon. Member for Buckingham (Mr. Bercow)—it will not be adapted, evolved or produced in a way that is politically partisan in any particular form. It will be based on the support that needs to be given to individual post offices, either for a post office itself as an entity, or for the continuation of certain services offered by a particular post office that the Government wish to support.
      The right hon. Member for Bromley and Chislehurst (Mr. Forth) raised the issue of repayment. I appreciate the concerns that he expressed on the issue, and it is a shame that he has not stayed to hear me try to answer his questions. Nevertheless, I shall try to reply to the relevant points that he raised. As he missed my opening speech, he missed some of the reasons that I gave for the new clause. He then asked questions about some of those reasons. However, he did raise the important issue of repayment. Other hon. Members, too, may be concerned about the circumstances in which repayment of a subsidy or financial support may be appropriate. The matter should be considered very much within the context of provision of services.
      Many of us hope, looking forward to a vision of post offices in the future, that post offices will offer services that go way beyond the services that they currently offer. Although more diverse services may be offered, some of those services may be offered at a loss to sub-post offices. I think that most people would say that, in those circumstances, if they are services that the Government wish to support, and if they are offered on behalf of the Government, it is appropriate for the Government to make a financial contribution towards the cost of offering them. Therefore, effectively a contract will be reached between the Government and the individual post office.

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      I believe that "subsidy" is a pretty poor description of that arrangement, as it is not a subsidy, but payment given for a service offered by the sub-post office. Because of the way in which the parliamentary draftsman has arranged the clause, the arrangement is called a subsidy. However, we will be paying for a service that the individual post office can offer.
      If we pay for that service, but for some reason the service is not offered—if there is effectively a breach of the contract—repayment would be appropriate, as the Government would not be receiving the service that we paid for. In those circumstances, a power to seek repayment of the subsidy is an appropriate one for the Secretary of State to have.
      Mr. Bercow: I understand the scenario that the Secretary of State has just depicted, and his explanation is helpful. However, under the regulations, could a sub-post office face a demand for repayment if it were granted a subsidy for one service, but made a modest profit on another service? Would the Treasury use the profit on the latter service as justification for demanding repayment of the subsidy paid for the former service?
      Mr. Byers: We are talking about support for a particular service, and the arrangement would involve the finance coming from the Government to provide that service. Provided that that service is delivered, the sub-post office will have delivered on its side of the agreement, and there will be no question of money being clawed back because of a profit that the post office may be making somewhere else. That is why new clause 1 makes the distinction between the entity of a post office as opposed to a particular service that the Government may wish to offer financial support towards.
      Mr. Brady: Is the Secretary of State guaranteeing that the measure will in no circumstances be used to allow this to be a loans scheme, under which payments would be expected to be repaid?
      Mr. Byers: I am pleased to be able to confirm to the hon. Gentleman that nothing in new clause 1 would lead to that outcome.
      On the matter of Treasury consent, whether hon. Members feel comfortable with it or not, we all know how government works. Individual Departments do not have their own budgets, and government works because of funds provided by the Treasury. There are many examples of legislation passed by this Government, and by the previous Government, where Treasury consent has been required before a particular scheme has been funded. That is not unique—it is a common arrangement.
      The hon. Member for West Dorset (Mr. Letwin) referred to a continuing subsidy for the network. Clearly, he is unaware of the way in which the post office network operates, as there is effectively a subsidy at the moment. Rural post offices get up to eight times as much as urban post offices per transaction from the Post Office. There is a recycling of finance within the network at present and, effectively, many rural post offices are subsidised in this way.
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      I agree with the hon. Gentleman that we do not want post offices to rely heavily on subsidies for the services that they offer. That is why it is important to ensure that people do not automatically assume that the power within the new clause will be implemented for every single post office. Hopefully, we are talking about exceptional circumstances. We want to use the new Horizon project and the diverse range of services that can be offered following the computerisation of the network to allow new customers to come into the post office network.
      We want the network to diversify into new Government services, so that problems over footfall can be addressed by the new customers. If we can get that diversity, any loss as a result of the introduction of ACT can be more than accommodated in terms of the new customers using the post office network.
      As a result of the Government's commitment that any individual pensioner or benefit recipient who still wants to have his or her pension or benefit paid in cash at a post office will be able to do so, a lot of the scare stories about a large loss of customers should come to nought. Post offices will be able to convince pensioners or benefit recipients that they should remain as they are and continue to have their cash paid at the post office.
      The hon. Member for Weston-super-Mare (Mr. Cotter) said that, last year, there had been about 500 closures. That is not the case. There were fewer than 400 closures last year, and that is not the highest number that we have seen. In 1984–85, 389 sub-post offices closed. The number of closures last year was below that figure.
      Mr. Cotter: The Secretary of State may be correct, but there were 392 closures in the first nine months of this year, with the expectation that there would be about 500 for the year. The right hon. Gentleman can correct me if I am wrong.
      Mr. Byers: The hon. Gentleman is wrong. The figure for 1999–2000 is 383. The way in which the figures are calculated is that we have the figures for last year, which will be updated. However, it is incumbent on all of us not to talk the post office network down. There are many thriving small businesses in the post office network, and they should be congratulated. It is important that people do not get an overall view that the post office network in total is experiencing difficulties, although I accept that some sub-post offices are.
      The right hon. Member for Hitchin and Harpenden (Mr. Lilley) asked whether the power in new clause 1 allows the Government to subsidise banks. It does not. It allows for services to be subsidised, provided that they would benefit public post offices. It is worth reminding the House that many banks are already providing customers with access to their accounts through the post office network. The Alliance and Leicester, Lloyds TSB, the Co-operative Bank and Barclays provide access to their accounts through the post office network, and do so without any financial support. The Post Office is in fact making a profit from those schemes.
      Mr. Letwin: Will the new clause allow the Secretary of State to subsidise a bank for providing a service through a post office?
      Mr. Byers: It will allow the Government to support a service, provided that it benefits the Post Office. That is

      897
      clear. It may be that the right hon. Member for Hitchin and Harpenden was not as clear as he could have been—some might say that he was opaque—in talking about a subsidy to the banks. New clause 1 does not give the Secretary of State that power. We are providing subsidy support for a service that will be of benefit to the Post Office.
      The principle is so important. Many post offices will welcome the fact that the Government, with foresight, are providing in the Bill a power for the Secretary of State to establish a scheme that can provide a subsidy. No one wants the post office network to rely on subsidies coming in year after year, but there will be occasions when the needs of a community will require the Government to make a financial contribution and to give support. New clause 1 gives that power to the Secretary of State.
      The new clause is highly appropriate, and will be welcomed by postmasters and postmistresses up and down the country. It is not a replacement for new services—Horizon and computerisation will provide that, and we are spending £500 million to achieve that objective. Diversity into new Government services will bring new customers into the post office network. If need be, there should be a scheme in place to provide a subsidy. New clause 1 does precisely that, and I commend it to the House.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.
      8 pm

    New Clause 2

      RECOVERY OF COSTS OF THE COUNCIL ETC.
      ' The Secretary of State may give directions to the Commission as to—

      (a) the inclusion in any licence of conditions requiring the payment of sums relating to the expenses of the Council or of the Secretary of State in relation to the establishment of the Council,

      (b) the exercise of any power of the Commission to determine anything falling to be determined under such conditions:.—[Mr. Alan Johnson.]

      Brought up, and read the First time.
      Mr. Alan Johnson: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss Government amendments Nos. 35, 45 and 48.
      Mr. Johnson: We turn to more prosaic matters. New clause 2 will enable the Secretary of State to require the Postal Services Commission to include a condition in any licence that part of the annual fee will be for the expenses of the Consumer Council for Postal Services—the replacement for the Post Office Users National Council—or the start-up costs in relation to that body. New clause 2 will also enable the Secretary of State to direct the commission on any matter that falls to be determined under such a licence condition.
      It is now judged as proper that those being regulated should pay for all aspects of regulation, including the costs of the consumer body. It would not be sensible to give the consumer council its own licensing and
      898
      fee-raising powers. It is more efficient for a single body to collect all the necessary funds and to pay over the money required for the consumer council.
      The establishment of the council will cause the Secretary of State to incur start-up costs above those normally associated with supervising the consumer council—which are budgeted for in the normal way—and it is appropriate that some, at least, of these should be recovered.
      Government amendments Nos. 35, 45 and 48 are technical amendments that provide that the Postal Services Commission will have its own vote, like any other non-ministerial Government department. That will put it on a similar footing with the other utility regulators, and the amendments will, I hope, address the concerns raised in Committee by the hon. Member for Rutland and Melton (Mr. Duncan)—to whom we send our best wishes for a speedy recovery, although perhaps not speedy enough to participate in this Report stage—with regard to the provisions in schedule 1(12) for the Secretary of State to pay the expenses of the commission.
      Government amendment No. 35 will delete clause 43(6), which would be otiose in the wake of Government amendment No. 45. There is no need for the provision for the commission to recover expenses from the Secretary of State, because the commission will, as a non-ministerial Government department, have its own vote. Funding of activities and any transfers between departments will be dealt with as with any other Government expenditure. Government amendment No. 45 provides that there shall be paid out of money provided by Parliament any expenditure incurred by the commission in consequence of this legislation. Government amendment No. 48 will delete schedule 1(12), because those provisions are no longer required, given the proposal effected through Government amendment No. 45.
      Before I commend these technical amendments to the House, it might be helpful if I remind right hon. and hon. Members of our intention that the cost of operating a licensing regime, and the regulation of that regime, will be met through licence fees. Any expenses of the commission that were not related to those activities will need to be covered through moneys voted by Parliament.
      Mr. Page: I start by thanking my hon. Friend the Member for West Dorset (Mr. Letwin) for his guest appearance at the Dispatch Box, as I was not allowed to wind up the previous debate for the Opposition. The Minister, if I may say so, sounds dreadful. It is obvious that the curse of the Postal Services Bill has struck him, although not as severely as it has struck my hon. Friend the Member for Rutland and Melton (Mr. Duncan). I hope that the Minister is restored to health soon and is a little more sympathetic to some of our amendments when they re-emerge in the other place.
      I am not able to welcome new clause 2 with even the cautious optimism that I expressed on new clause 1. The Bill already makes provision in clauses 12 and 13 for those applying for licences to the commission to be subject to paying a reasonable fee upon application and to pay further sums when a licence is granted or during its operation, or indeed both. Unfortunately, it is still not clear what level of payments may be anticipated under those arrangements. Now licence holders face the prospect of paying towards the costs incurred by the Consumer Council for Postal Services or the expenses of the Secretary of State in establishing the council.

      899
      The truth is that the costs of the council will eventually be borne by consumers of postal services, but the Government prefer to disguise the impact of their regulatory requirements behind the payments to be made by licence holders. In the short term, it will be the poor old Royal Mail that will have to divvy up and provide the money to underpin financially the whole shooting match.
      As the Minister has said, new clause 2 provides that the Secretary of State may give direction to the commission as to the inclusion of conditions in a licence requiring the payment of sums relating to the expenses of the council or incurred in setting up the council. Once again, we are being asked for a blank cheque. It might not be all that big a blank cheque, but we have already been asked to approve the money resolution today, and we have no idea what sums of money will be involved.
      Neither do we know how much money will be involved under new clause 1. My hon. Friends pointed out on several occasions during the debate on that clause, which took some four hours—an indication of the level of concern and worry that they were feeling—that it was open ended and they would like some clue about the likely liabilities. However, we had no pointers from the Government. The same applies here, although at a lower level, and when we tried to get some limits set for both the commission and the council in Committee, we were brutally beaten down by the massed ranks of the Government.
      What safeguards will exist to limit expenditure? Will we see a similar situation to that of the Office of Gas and Electricity Markets, which was formed following the merger of the Office of Gas Supply and the Office of Electricity Regulation? It bears repetition that Ofgem's budget has leaped from the £29.8 million spent by the predecessor authorities to an expected expenditure this year of £64.5 million, which is an increase of more than 100 per cent. As we keep saying, the extra expenditure will eventually feed its way through to the consumer—and it could turn out to be merely for extra bureaucracy. Once again, the Secretary of State will pull the strings and, as the costs work through the system, the extra money will have to found by the consumer.
      Mr. Johnson: I thank the hon. Member for South-West Hertfordshire (Mr. Page) for his sympathy for my voice: if it does not last out, I shall complete this speech in semaphore.
      In Committee, the hon. Gentleman made great play about the level of payments. The point that I made then, I shall repeat now. Yes, it will be what he called "poor old Royal Mail" or the Post Office that will have to pay the cost of the regulator and of the CCPS. That is because the Post Office is likely to be—in fact, it is inconceivable that it will not be—the only licence holder.
      The principle that the regulated pay for the regulation is well established. Indeed, it was established in the Electricity Act 1989, the Water Industries Act 1991 and the Gas Act 1986, as amended by the Gas Act 1995, all of which legislation was passed under the previous Government. I ask the hon. Gentleman to bear in mind that, unlike all those other industries, the Post Office will operate in a privileged position because it will have a limited monopoly. The regulator will not regulate the
      900
      whole of the industry, as in telecommunications, gas and water, but only that part of the postal industry related to the universal service obligation and the reserved areas. It is right that those costs should be paid by the Post Office or any other licensed operator in the future.
      I shall try to be helpful on costs. I have not had time to consult the Hansard reports of the Committee stage, but I did give some figures under the considerable hostile pressure of the Opposition. I have said that the cost of the commission is expected to be no more than £5 million and the cost of the consumer council is expected to be around £3 million. That is an increase on the cost of the present consumer body, the Post Office Users National Council, which costs about £1 million a year. However, although POUNC does a fine job on a shoestring, the new Consumer Council for Postal Services will invigorate the approach to consumer issues.
      The arrangements are no different from those in place for the other regulatory bodies. We have given examples of the costs, and I remind the hon. Gentleman that clause 60 requires that both the commission and the council publish a forward work plan every year. That plan will include details of their projected costs, thus aiding transparency and scrutiny.
      The projected costs are very modest, and it is right that the regulated should pay for regulation. I hope that the House will accept new clause 2 and the associated technical amendments.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 3

      APPLICATION OF CUSTOMS AND EXCISE ENACTMENTS TO CERTAIN POSTAL PACKETS
      '.—(1) Subject as follows, the enactments for the time being in force in relation to customs or excise shall apply in relation to goods contained in postal packets to which this section applies which are brought into or sent out of the United Kingdom by post from or to any place outside the United Kingdom as they apply in relation to goods otherwise imported, exported or removed into or out of the United Kingdom from or to any such place.
      (2) The Treasury, on the recommendation of the Commissioners of Customs and Excise and the Secretary of State, may make regulations for—

      (a) specifying the postal packets to which this section applies,

      (b) making modifications or exceptions in the application of the enactments mentioned in subsection (1) to such packets,

      (c) enabling persons engaged in the business of a postal operator to perform for the purposes of those enactments and otherwise all or any of the duties of the importer, exporter or person removing the goods,

      (d) carrying into effect any arrangement with the government or postal administration of any other country with respect to foreign postal packets,

      (e) securing the observance of the enactments mentioned in subsection (1),

      (f) without prejudice to any liability of any person under those enactments, punishing any contravention of the regulations.

      (3) Duties (whether of customs or excise) charged on imported goods or other charges payable in respect of postal packets to which this section applies (whether payable to a postal operator or to any other foreign administration) may be recovered by the postal operator concerned as a civil debt due to him.
      (4) In any proceedings for the recovery of any charges payable as mentioned in subsection (3), a certificate of the postal operator concerned of the amount of the charges shall be evidence (and, in Scotland, sufficient evidence) of that fact.
      (5) In this section "foreign postal packet" means any postal packet either posted in the United Kingdom and sent to a place outside the United Kingdom, or posted in a place outside the United Kingdom and sent to a place within the United Kingdom, or in transit through the United Kingdom to a place outside the United Kingdom.'.—[Mr. Alan Johnson.]
      Brought up, and read the First time.
      Mr. Alan Johnson: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 4—Power to detain postal packets containing contraband.
      New clause 6—Meaning of "reasonable excuse"—
      'In sections 81 and 82 "reasonable excuse" includes intentionally delaying or opening a postal packet in the course of its transmission by post—

      (a) pursuant to a request from any constable or the Commissioners of Customs and Excise, or

      (b) if a person reasonably suspects that the postal packet contains goods which may be illegal.'.

      Government amendments Nos. 36 to 41, 43 and 52.
      Mr. Johnson: These amendments bring up to date the Customs and Excise powers contained in sections 16 and 17 of the Post Office Act 1953. They are intended to maintain the powers of Customs and Excise with regard to mail being imported and exported from the UK. The powers have been updated to reflect the modern postal services environment.
      New clause 3 maintains the neutrality of Customs provisions while permitting application to all postal operators under the new regime. It replaces section 16 of the 1953 Act, which applies customs legislation to postal packets, and provides a power, similar to the one in the 1953 Act, for the Treasury to make regulations specifying how the legislation should apply. It also allows duties and charges applied through this clause to be recovered by the postal operator concerned.
      New clause 4 replaces section 17 of the 1953 Act. It permits postal operators to detain, and forward to Customs and Excise commissioners, any postal packet they suspect contains goods on which duty has not been paid, or the import or export of which is prohibited or restricted. Under the new clause, Customs and Excise commissioners may open and examine any postal packet forwarded to them in the presence of the addressee, or, in specified circumstances, in the addressee's absence. If the commissioners find any goods that are prohibited or on which duty has been not peen paid, they may take proceedings in relation to them. If, upon opening, the commissioners do not find any such goods, they must forward or deliver the package to the addressee.
      The Government believe that it is vital that Customs and Excise is allowed to continue its important work in policing the post and that it continues to have appropriate powers. The amendments simply ensure that it will continue to have the powers that it needs to carry out its functions and duties in respect of the import and export of postal packets.
      902
      Amendments Nos. 36, 37 and 38 provide that the Customs and Excise powers included in new clauses 3 and 4 are not bound by the provisions in clause 93 that relate to the inviolability of mail. Therefore, Customs powers will continue to be exempt, as they are now. The procedures in the Bill reflect exactly what has been in force for the past 47 years. These amendments replace the references to sections 16 and 17 of the 1953 Act in the current draft of the Bill with references to the new clauses.
      8.15 pm
      Amendments Nos. 39, 40, 41, 43 and 52 relate to how the power of the Treasury to make regulations under new clause 3 is exercisable—by statutory instrument, in the same way as other powers in the Bill under clause 109. This power will be subject to the negative resolution procedure in the House of Commons.
      I commend the new clause to the House.
      Mr. Page: For a brief moment, I wondered whether to embark on a war of attrition to see whether the Minister would keep going all evening or retire hurt—in which case he might end up in the same recovery bay as my hon. Friend the Member for Rutland and Melton (Mr. Duncan).
      New clause 3 seems straightforward enough—it will place on postal operators the obligation of meeting the dues on postal packets imported into, or exported from, the United Kingdom. In addition, they will be required to put into effect any arrangements reached with the Governments or postal operators of other countries with respect to foreign postal packets.
      It is characteristic of this Government that operators will be able to recover any duties charged by Customs and Excise on imported goods as a civil debt. The Government seem almost obsessed with transferring administrative responsibilities to the private sector without meeting the costs involved. There is a huge temptation for me to speak about the problems facing small businesses; however, that would not be in order.
      The clause contains nothing to compensate postal operators for the costs incurred in meeting their obligations—no doubt their customers will pay more to cover those expenses. That is a convenient arrangement for the Government. They claim to be the friend of business, but in fact they are for ever adding to the burdens faced by business organisations.
      New clause 6 was first moved in Committee, and the Minister gave several commitments that he would consider it again. Obviously, if he is prepared to accept it now, I should be delighted. I would sit down and waste no more time, but I see that he is shaking his head and so I must go into some detail. No doubt his severe cold is restraining his natural generosity of spirit, but I feel honour bound to repeat some of the points made in Committee. [Interruption.] The hon. Member for Stroud (Mr. Drew) groans from a sedentary position, but the problem is not with me—it is with the Minister, who indicated in Committee that, after a bit of redrafting, the new clause could be greeted with enthusiasm. That redrafting has not materialised, so new clause 6 is making a reappearance.
      Mr. Bercow: I look forward with enthusiasm to hearing the arguments for new clause 6 for the first time,

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      as I did not have the inestimable privilege of being a member of the Standing Committee considering the Bill. I therefore did not hear my hon. Friend's eloquent advocacy in the first instance.
      Mr. Page: My hon. Friend encourages me to go even further. I was merely going to touch briefly on the salient points, but I now feel constrained to go into the arguments in greater depth. The Minister may be starting to feel that he should have pushed a little harder on new clause 6, thus saving both of us time at the Dispatch Box.
      The new clause is the same as that tabled in Committee. Again, it refers to our old friend "reasonable". I am sorry that the hon. Member for Weston-super-Mare (Mr. Cotter) is not here, because he also has an enthusiasm for "reasonable". I had hoped that he would be here to reinforce my argument. I would have welcomed his support on such an issue, but we will have to plod on without him and make the best of it.
      The Bill does not provide a clear definition of what might constitute a breach of duty, and thus an offence, by any person engaged in the business of a postal operator if, without reasonable excuse, he intentionally delays or opens a postal packet in the course of its transmission. Similarly, a person other than a postal operator who, without reasonable excuse, intentionally delays or opens a postal packet in the course of its transmission will also be guilty of an offence. A person opening a postal packet that is incorrectly delivered to him with the intention of acting to mother's detriment and without reasonable excuse is also guilty of an offence. The purpose of the new clause is to draw out exactly how the Minister intends the various provisions to operate. Unless the new clause is accepted, the Bill remains unclear.
      Sections 58 and 68 of the Post Office Act 1953 make it an offence, punishable by a fine and imprisonment for employees of the Post Office wilfully to delay or omit to deliver packets and messages, and for any person to solicit or endeavour to procure another person to commit such an offence. The problem is that the Bill offers no guidance as to what is a reasonable excuse. It is possible, if not probable, that the definition of that term will depend on decisions in court. Barristers and solicitors would no doubt welcome this source of employment. However, we should ensure that the legislation is as clear and transparent as possible so that people do not have to go to the courts for an interpretation. I believe that it is our duty to make the legislation as clear and transparent as possible. To push a measure through because it is convenient and easy is not the right option.
      In Committee, we asked whether the wording of our new clause would permit trade unions in pursuit of industrial or political objectives to attempt to delay the transmission of postal packets. My hon. Friend the Member for Buckingham (Mr. Bercow) will be delighted to know that I suggested that the Minister would remember from his previous employment that the then Union of Post Office Workers attempted to stop the handling of mail to South Africa because it disagreed with the South African Government's politics at the time. Would that reason constitute a reasonable excuse?
      904
      The advantage of our new clause is that it would make requests from the police and Customs and Excise for delays to the transmission of postal packets or for the opening of them a sufficient defence for the offences listed in the Bill. The new clause would also offer a complete defence with regard to postal packets that contained goods in defiance of the law.
      The Minister said in Committee that he would be prepared to consider the new clause. He has not done so—I am sure that that is an oversight, caused by his temporary illness. He has not been able to focus on the matter in the way in which he should have done. I mean no criticism in saying that. In the spirit of friendship, which is part of my natural wont as I go through life, I am fully prepared to admit that the drafting of the clause is not perfect. It could be honed and polished to a greater sophistication.
      Mr. Bercow: I suppose that I ought to come clean—there is another reason for my concern about this matter. Fourteen years ago, as my hon. Friend is probably unaware, I was threatened with the non-distribution of my internal mail when I was a member of Lambeth borough council on the ground that the public service union concerned deprecated my political views. Does my hon. Friend agree that that should certainly not be a basis for non-distribution of mail?
      Mr. Page: My hon. Friend is right that I had no idea that he was threatened by the draconian sanction of not receiving his mail through the internal postal system of the council on which he served. I am not sure whether the internal system was being run by the Post Office at the time, and whether there was a responsibility that would come under the aegis of the Bill.
      As I was about to say before my hon. Friend's intervention, I am prepared to accept that the new clause could be better presented, and I would be delighted to hear that the Minister is prepared to undertake that work.
      Mr. Alan Johnson: The hon. Gentleman is quite right—we debated the new clause in Committee, and I would have been delighted to come to Report with the required amendment, because we need one. Unfortunately, it has not proved possible to accept new clause 6 at this stage, partly because of the complex new issue of what defines "reasonable excuse". We have solved the problem that we set out to solve, which was that since the time of Queen Anne, under successive Post Office Acts it has been an offence wilfully to delay the mail. Wilful delay of the mail carried no excuse—there were no criteria as to whether that action could have proved reasonable. Therefore, an awful lot of problems occurred with wilful delay of the mail. Indeed, in the very incident to which the hon. Gentleman referred, when the Union of Post Office Workers took industrial action against the despicable regime of apartheid in South Africa, a judge at the time ruled that the wilful delay provision, which was originally put in place to deal with highwaymen, would be used as a reason why the union should not have the right to go on strike. I see that the hon. Member for Buckingham (Mr. Bercow) agrees with that.

      905
      There were problems with the phrase "wilful delay", and the phrase "reasonable excuse" was believed to be a way around them. I apologise for not having the amendment ready at this stage. We will have to do it in another place, and I very much hope that it will meet all the concerns that have been raised.
      New clause 6 does not solve the problem. As we discussed in Committee, it would create enormous problems if people could open mail if they reasonably suspected that a postal packet contained goods that may be illegal. The inviolability of mail is a major part of the Bill and one can imagine the problems in a court of law if people could breach that inviolability because they suspected that a packet might contain something illegal, for whatever spurious reasons. I understand that the hon. Member for South-West Hertfordshire (Mr. Page) is trying to resolve a difficulty that we want to resolve.
      Mr. Bercow: I understand where the Minister is coming from. The new clause is as much as anything a probing motion. It is entirely reasonable for him to cavil at the idea that someone might tamper with mail on the basis of suspicion, but would he agree that demonstrable reason to believe might be a justification?
      8.30 pm
      Mr. Johnson: That is one of the matters that we are examining. We must do so in the context of other legislation that is passing through the House and the universal declaration of human rights. Complications are coming from other areas. However, the hon. Gentleman has raised a valid point, which we shall explore with the aim of dealing with it by introducing an amendment in another place.
      Mr. Brady: I seek clarification of one point that has arisen during this short exchange. Will the Minister make it clear that when the Government bring forward their amendment or new clause, it will not be considered reasonable for a trade union or any other body to decide on political grounds whether mail should be allowed to go to one country or another or one company or another, however despicable the regime might be? Does the Minister agree that it is unacceptable for trade unions or other bodies to interfere with the mail?
      Mr. Johnson: I think that that issue was dealt with in a piece of legislation in 1981. The action to which reference has been made took place in 1978, and I do not regard it as being part of the Bill. Perhaps employment relations legislation is the right area in which to raise it.
      I hope that the hon. Member for South-West Hertfordshire will feel able to withdraw the new clause on the basis of my comments.
      Mr. Page: In the spirit of co-operation, and bearing in mind the Minister's poor health, I shall not press him any further at this stage. However, I look forward to him introducing—this will be the third time of asking—a suitable amendment in another place that will address a serious problem. The amendment should be inserted in the Bill, rather than leaving the matter to the courts to try to find a solution.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 4

      POWER TO DETAIN POSTAL PACKETS CONTAINING CONTRABAND
      '.—(1) A postal operator may—

      (a) detain any postal packet if he suspects that it may contain relevant goods,

      (b) forward any packet so detained to the Commissioners of Customs and Excise.

      (2) In this section "relevant goods" means—

      (a) any goods chargeable with any duty charged on imported goods (whether a customs or an excise duty) which has not been paid or secured, or,

      (b) any goods in the course of importation, exportation or removal into or out of the United Kingdom contrary to any prohibition or restriction for the time being in force by virtue of any enactment.

      (3) Subsection (1) is without prejudice to section (Application of customs and excise enactments to certain postal packets).
      (4) The Commissioners may open and examine any postal packet forwarded to them under this section—

      (a) in the presence of the person to whom the packet is addressed, or

      (b) where the address on the packet is outside the United Kingdom or where subsection (5) applies, in the absence of that person.

      (5) This subsection applies where—

      (a) the Commissioners have—

      (i) left at the address on the packet notice requiring the attendance of the person concerned, or

      (ii) forwarded such notice by post to that address, and

      (b) the addressee fails to attend.

      (6) If the Commissioners find any relevant goods on opening and examining a postal packet under this section, they may detain the packet and its contents for the purpose of taking proceedings in relation to them.
      (7) If the Commissioners do not find any relevant goods on opening and examining a postal packet under this section, they shall—

      (a) deliver the packet to the addressee upon his paying any postage and other sums chargeable on it, or

      (b) if he is absent, forward the packet to him by post.'.—[Mr. Byers.]

      Brought up, read the First and Second time, and added to the Bill.

    New Clause 5

      TAX
      '. Schedule (Transfer to the Post Office company: tax) (taxation provisions in relation to the transfer to the Post Office company) shall have effect.'.—[Mr. Byers.]
      Brought up, and read the First time.
      Mr. Byers: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: Government new schedule 1—Transfer to the Post Office Company: Tax—
      Government amendments Nos. 49 to 51 and 54.
      Mr. Byers: This is a group of technical amendments that make the transfer of property rights and liabilities from the Post Office to the Post Office Company tax neutral.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    Clause 7

      EXCEPTIONS FROM SECTION 6
      Mr. Page: I beg to move amendment No. 60, in page 4, line 36, leave out "£1" and insert "50p".
      Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 61, in page 4, line 38, leave out "350" and insert "150".
      No. 62, in clause 13, page 9, line 9, at end insert—
      '(2A) The provisions of a licence to be held by a universal service provider shall—

      (a) require—

      (i) the keeping of separate accounts for each of the postal services which may not be provided unless the licence is held and any other postal services, and

      (ii) the accounts for any other postal services clearly to distinguish between services which are part of a universal postal service and services which are not; and

      (b) prohibit cross-subsidies between the postal services which may not be provided unless the licence is held and any other postal services which are not part of a universal postal service.'.

      No. 64, in clause 15, page 10, line 11, leave out "may" and insert "shall".
      No. 65, in page 10, line 11, after second "Commission", insert "every three years".
      No. 66, in page 10, line 14, leave out—
      ', which are specified in the reference and'.
      No. 67, in page 10, line 15, after "of', insert "a universal".
      No. 68, in page 10, line 15, leave out "services" and insert "service".
      No. 69, in page 10, line 43, at end insert—
      'except for references under subsection (1) above.'
      No. 72, in clause 43, page 28, line 13, at end insert—
      '(1A) In performing its duty under subsection (1)(a) the Commission shall compare annually the efficiency and economy in the provision of postal services by licence holders with the provision (in the United Kingdom and elsewhere) of postal services and other delivery services.'.
      No. 73, in clause 44, page 29, line 2, at end insert—
      '( ) a report on the findings which arise from the performance by the Commission of its duties under section 43(1)(a).'
      Mr. Page: Since the publication of the Government's White Paper on the future of the Post Office last summer, on Second Reading and in Committee, Ministers have advanced the argument that the present Administration wish to press ahead with liberalisation. They want to open up the area within which the Post Office's current monopoly operates.1 and my right hon. and hon. Friends share that ambition. Now is the Minister's opportunity to take a step towards opening up the Post Office and liberalising its operation.
      Unfortunately, the wish to go down the path of liberalisation is not shared by some of those right hon. and hon. Members who sit behind the Minister or by some of their trade union allies. It took only a suggestion in the
      908
      White Paper last year that the price of letters falling within the Post Office monopoly might be halved from £1 to 50p to cause those shadowy union figures who exercise so much influence over new Labour, as they did over old Labour, to become alarmed.
      When the Government placed an advertisement in The Sunday Times for the post of chairman of the proposed Postal Services Commission in mid-September, they clearly specified the need for greater competition in the postal services market. The first major step towards liberalisation was to be taken with the reduction from £1 to 50p of letters falling within the monopoly on 1 April 2000.
      I want to give the Government every credit for their stout defence against the forces that were mobilised against that change. Having laid their statutory instrument before the House to introduce it, Ministers held out for at least two or three weeks before doing a U-turn. Old Labour pulled the strings and the Government did what they almost always do when faced with opposition within their ranks: they rolled over and surrendered.
      It is pointless for the Minister to say by way of explanation that the Government were persuaded to back-track because of their plans based on the report of the Select Committee on Trade and Industry last September. The entire House has tremendous respect for that Committee. I do not believe that the Government should be involved in consultation on the appointment of members of the Postal Services Commission. It is more than a bit rich for Ministers to regard the Select Committee as an authority whose advice must be followed on the scope of the Post Office monopoly when, in their view, it is not well qualified to take a view on the composition of the members of the commission, which will be responsible for determining the limit once the Bill is enacted.
      The Government have already made the case for reducing the limit to 50p, but they have had a temporary moment of weakness. I hope that my amendment will encourage them to return to their previous position. The Government rightly recognised last summer and autumn that the Post Office would inevitably be exposed to greater competition in its current monopoly area. As night follows day, international competition will grow and pressures will build. The Government were conscious that the sooner the process of adjusting to greater competition began, the better the prospects for the Post Office, and I endorse that view.
      I invite the Government to have the courage of their own convictions and not to leave the decision to reduce the limit to the Postal Services Commission. Promoting competition must be more than a slogan, a soundbite or mere spin. When the Government say something, they must mean it and stick by it, but we must doubt whether that will be so. They paid lip service to competition for only as long as the occupants of smoke-filled back rooms did not kick up any fuss. They should kick the habit, give up smoking and bring the Post Office into the real world and the clean, fresh air of competition.
      Mr. Bercow: Does my hon. Friend agree that his salutary amendment puts the Minister for Competitiveness under the spotlight and to the test? We shall listen with interest to the Minister's reply. The Secretary of State has made consistent pro-competition noises and has made

      909
      considerable progress in his political career not by submitting to, but by taking on, the trade unions. I fear, however, that the suspicion lurks that the Minister for Competitiveness, whose background is in organised labour, may be a little unsound and may have sought to dissuade the Secretary of State from his previous intention. Must we not be assured that the Minister is on-side?
      Mr. Page: There is greater joy in heaven over the prodigal that returns than over the person who remained constant all the time. I have always felt it very unfair that the person in the parable who played the game and did all the work got no credit when the rogue and the vagabond who squandered the family inheritance was welcomed back and the fatted calf was killed for him. Nevertheless, I am of a generous nature, as I keep telling the House, although no one believes me. If the Minister were to announce that he had forsaken his old ways and was coming back to the paths of righteousness and competition, I should be the first to pay tribute to his conversion.
      Our raft of amendments flows towards the same point—increased competition. Amendment No. 61 would reduce the weight from 350 g to 150 g. The arguments in favour of reducing the weight limit over which the Post Office retains a, monopoly are just as cogent as those for reducing the price at which the monopoly is effective. The Government argued for that only last year, but, as on price, they have retreated in the face of their trade union allies. I have to assume that that explains the unusually coy terms in which the Minister referred to the proposals in the 1999 White Paper and the abortive statutory instrument subsequently laid before a Standing Committee on 9 March.
      I realise that that point is embarrassing for Ministers, who are understandably sensitive. I do not want to highlight it too greatly, but, as Oscar Wilde, I think, once said, there is a good deal to be said for blushing if one can do it at the proper time. The Minister should occasionally blush when he thinks over the saga of embarrassment within his Department.
      If it was right to argue last year for a reduction in the weight limit, it remains right today. The longer the Post Office is shielded from serious competition within its monopoly area, the greater its difficulties will be when it has to face rival operators in the previously protected areas. That competition cannot be avoided for ever. It will come, no matter what the Government may say or do to try to prevent it.
      We have seen what happened as regards job losses and plant closures as a result of the Department of Trade and Industry's failure to anticipate what was happening in areas such as the Rover car company. When the Post Office suddenly starts to shed jobs because it has been exposed to market competition, we shall no doubt hear the Government trying to shield themselves by saying that wicked foreigners are not playing by the rules. They will say that the Postal Services Commission acted on its own precipitately to reduce the price and weight limits. The miracle cure of a task force will be wheeled out yet again to save the day.
      910
      8.45 pm
      All that can be avoided if the Government accept the logic of their own arguments. The arguments that I have made were all previously advanced by the Government and would allow the Post office progressively to be exposed to further competition. It can adjust successfully to meet that competition and the Government would do well to give it that opportunity right now.
      Amendment No. 62 is simple; it has one clear purpose—to ensure that the universal service provider keeps separate accounts for the services to be offered in respect of the licence to be held by that person or organisation, and for other postal services that might be supplied in the market. The amendment was tabled simply to prohibit the potential cross-subsidisation by a universal service provider of other postal services that lie outside its universal service.
      The Government want a level playing field; they want fair play. What better way to achieve that aim than by accepting our amendment? Our concerns were prompted by the position of Parcelforce in the Post Office's operation. It has made losses over several years—far too many years, some people may say. It has been able to survive because it has been cross-subsidised by other operations in the Post Office monopoly. There is no doubt that its commercial rivals have suffered as a result, because they have not had the advantages of protection to sustain loss-making activities. The phrase "level playing field" is a terrible one, but everyone knows what it means; it is vital that we have one so that that situation does not continue after the Bill is passed.
      I do not know how the Minister will react to the amendment, although I can make a strong guess. The Government made their position clear on the other amendments that I tabled—I am now offering them a little backbone, so that they can make progress. I suspect that they might be reluctant to accept the amendment, for fear of offending the Communication Workers Union. They may argue that it is for the Post Office to arrange its commercial affairs in the competitive environment into which it is being thrust.
      Why tie the Post Office down with such restrictions? Why does the Minister not go ahead and give the organisation a fair and open trading position so that everyone knows exactly where they stand?
      I make no apology for pointing out that amendments Nos. 64 to 69 are among the most important to be tabled by my right hon. and hon. Friends. They constitute a critical test of the Government's commitment to the process of competition. At present, clause 15 permits the Postal Services Commission to request the Competition Commission to investigate practices that may act, or may be expected to act, against the public interest and to report on whether modifications to the licence conditions might produce appropriate remedies. It also offers the Postal Services Commission latitude to vary the terms of reference to the Competition Commission and to advance its own view on the nature of any potentially adverse effects of licence modifications on dealing with such problems.

      911
      Furthermore, the Secretary of State may step in—as one might expect, because he appears either directly, or as some shadowy figure, behind most of the Bill—to
      direct the Competition Commission not to proceed
      with any reference to it, nor "to give effect" to any variation of the terms of reference previously made by the Postal Services Commission.
      The permissive nature of these provisions—the opportunities that the Postal Services Commission will have to decide whether to make a reference to the Competition Commission and to alter the terms of the reference once made, quite apart from the ability of the Secretary of State to cut short any investigation—seems strongly at variance with the Government's declared aims of promoting competition and preventing anti-competitive practices.
      My speech may be becoming a little too biblical, but I was going to say that that variance reminds me of the sinner who wanted to be virtuous but preferred not to be just yet—and we all remember the story of the maiden lady saying her prayers. [Interruption.] If the Minister does not know the story, I shall tell him afterwards and let him into the secret. It is not terribly scandalous.
      The amendments in my name and that of my hon. Friend the hors de combat Member for Rutland and Melton (Mr. Duncan) have a single purpose: to ensure that the Postal Services Commission is obliged to refer the activities of universal service providers to the Competition Commission every three years for a determination of whether they operate in the public interest. I do not believe that regular examination of the Post Office's activities will do it any harm if it is working in the overall public interest. It would be seen not to have indulged in any anti-competitive practices. Only those who have something to hide will seek to object.
      However, I expect that the Minister will tell me that the licence conditions under which the Post Office is expected to operate will ensure that it does not conduct its activities in an anti-competitive way. I have no doubt that we shall be told that the universal service providers, whether one or many, will be subject to competition law. So they will, and so they should be.
      The trouble with that view is that it does not take into account the way in which monopolies operate. We need to be sure that the Post Office will be properly controlled and its activities regularly scrutinised. I am worried that the regulator alone cannot do that task.
      The relationship between a powerful monopoly and its statutory regulator is complex and full of tensions. I served on the Committee that considered what became the Telecommunications Act 1984, which split telecoms from the Post Office and then privatised them, so I am fully aware of how tensions can move into a relationship between regulator and monopoly. The relationship resembles a marriage. Both partners need each other and cannot live apart, but there is a tendency for them to bicker constantly. That was certainly true of BT and Oftel for the first few years of their dealings with each other.
      The one thing that the arrangements for the external scrutiny proposed in clause 15 do not offer is the periodic appearance of a marriage guidance counsellor. Amendments Nos. 64 to 69 address that issue and close
      912
      that gap. It will help if an independent person studies the relationship periodically to ensure that it is fair and that there is fair play on both sides. I believe that that would ensure that the relationship between the Postal Services Commission and the industry that it regulates does not become too close—that there is no possibility of excessive familiarity between partners in that relationship.
      We all know the problems that can exist when hostages are taken, and the relationship between kidnapper and hostage becomes close and ceases to be antagonistic. Sometimes hostages go out of their way to protect the kidnapper. I know that I am now making a slightly broader parallel, but I believe that our suggestions would prevent excessive familiarity between the partners in that relationship. As a result, the Competition Commission could take a dispassionate look at the postal services industry's licence holders regularly but not too frequently.
      Mr. Bercow: Would my hon. Friend like to say something about paragraph (b) of amendment No. 62, tabled in his name and that of my hon. Friend the Member for Rutland and Melton (Mr. Duncan)? That amendment seems eminently reasonable, and I will be genuinely perplexed if Ministers do not support it. Can my hon. Friend enlighten me?
      Mr. Page: I have always had great difficulty in grasping why Ministers do not support my amendments, because I have always thought all those amendments, both here and in Committee, to be eminently reasonable and practicable in helping the Post Office and the whole postal industry to provide a better service in the very competitive world outside.
      Dr. George Turner rose—
      Mr. Page: The hon. Gentleman must hold his horses as I gallop to the end of my sentence.
      It amazes me that the Minister has not accepted our amendments. But I am being very kind to him today, because he is obviously under the weather. He is not well, and he is struggling to get through, so I shall not push too many of my amendments to what should be their logical conclusion.
      Dr. Turner: I should like to take the opportunity to congratulate the hon. Gentleman on at least realising the wisdom of withdrawing the amendment he moved in Committee that would have halved the weight of the parcels participating in the universal service. It seems that he does not, on reflection, think that all the amendments he moved in Committee were sensible, and I congratulate him.
      Mr. Page: I am always open to congratulations. Flattery, rather than kicks, gets people further in the world. But it will come as a huge surprise to the hon. Gentleman that not every amendment that one tables is selected for debate. There were a number of amendments that we would have liked to table, but did not, because we did not believe that they would be selected. I must express appreciation to the powers that be that have allowed these amendments to be given another run around the course. I hope that this time the Minister will stiffen his backbone, take his courage in both hands, act in accordance with all the other metaphors and similes that I can think of, and accept them.

      913
      I shall say no more about that amendment and draw my remarks to a close by saying a few words about amendment No. 73.
      The amendments that we are considering arise from issues that both I and my hon. Friend the Member for Rutland and Melton raised in Committee. We argued then, and on my hon. Friend's behalf I argue again now, that it would be appropriate for the regulatory body to collect information about the development of postal services within the rest of Europe and about the performance of the postal service providers there
      If my memory serves me correctly, the Minister broadly agreed that that would be sensible. I do not want to say "desirable", but when we discussed the matter he seemed to express some enthusiasm. I am sorry to say that his apparent generosity on that occasion does not appear to have been translated into action.
      My hon. Friend indicated that we would raise the matter again on Report if there was no response, or an inadequate response, by the Department. That explains why I am returning to the matter now. I hope that the Minister will think again about the small burst of enthusiasm for this measure that he expressed in Committee and consider whether he feels like accepting it now.
      As I said, this clutch of amendments would gear up the Post Office to face a competitive world that will become even more competitive. Fairly soon, there will be pressures from Europe on our postal services and on the Royal Mail. The quicker that we start to adjust to them and to prepare for them, the better.
      9 pm
      Mr. Cotter: As the hon. Member for North-West Norfolk (Dr. Turner) said, Conservative Members attempted in Committee to hit severely at the universal service. They have possibly since taken fright at that, because we are dealing with a serious issue. Communities are at risk and people expect and are entitled to expect a good service. We have had a universal service for many years. However, as the hon. Gentleman pointed out, one form of amendment was tabled in Committee but the hon. Member for South West Hertfordshire (Mr. Page) has made another attempt to attack the universal service and that is linked to the reduction in the limit from £1 to 50p.
      I do not understand the purpose of the amendment. An attack on the universal service would affect people across the country. Under the Bill, the regulator has an obligation to consider this issue, and I would much prefer his considered view to this amendment.
      Serious issues are involved. The £1 limit has been in place for many years, and has effectively reduced in value. Competition from e-mail and other services is another factor, and if the limit were reduced the estimated loss of income to the Post Office would be about £100 million. In addition, people in rural areas would suffer a diminution in their service.
      If, in due course, the regulator examines the issues that I have raised and comes to the conclusion, after careful consideration, that the proposal in the amendment is a way forward, it will be a different story. The regulator will have considered the issues properly and taken into account the position as it will be after the Bill has been enacted. That is preferable to accepting the amendment
      914
      tonight. I look forward to the Minister's response. Instead of taking the precipitate action proposed in the amendment, we should consider carefully any suggestion that might affect the universal service.
      Mr. Alan Johnson: The hon. Member for South West Hertfordshire (Mr. Page) mentioned prodigal sons, broken marriages and kidnapping. I thought that he was devising a Jeffrey Archer plot rather than considering the Postal Services Bill.
      Amendments Nos. 60 and 61 contain arguments that are so stale that they are curling at the edges. We debated the matter in the House on 8 December on a revocation order and we debated it again in Committee. I very much appreciate the remarks of the hon. Member for Weston-super-Mare (Mr. Cotter), but I remind him that he moved an amendment in Committee to bring down the £1 monopoly limit to 50p. It was forced to a vote and he voted against his own amendment.
      Mr. Cotter: As the Minister knows very well, we were trying to probe a point and he has misrepresented me very badly. On that occasion, he accused me of being mischievous, so I accuse him of being equally mischievous tonight.
      Mr. Johnson: The hon. Gentleman may well be right.
      Our argument is simple. The Trade and Industry Committee report suggested that instead of taking the drastic step of halving the monopoly at the very time we are setting up the Postal Services Commission, it would make sense, as the hon. Gentleman said, for us to ask the commission to do the necessary work. It should also make the judgment not whether to reduce the monopoly level to 50p but whether to reduce it at all, and if so by how much. That argument is perfectly defensible.
      On that basis, the Conservatives have accused us of delay. Their manifesto for the 1992 election, which they won—it will probably be their last election win for many a year—contained a commitment to introduce a regulator and reduce the monopoly limit to a level closer to the price of a first-class stamp. The party that is so keen on competition and regulation did absolutely nothing about those manifesto commitments, which many hon. Members on both sides of the House would have supported. Instead, it went off on a wild adventure of privatisation. If one sprinkled the Conservatives' manifesto with rosewater, held it up to the light and looked at it from every angle, one would find no reference to privatisation.
      We are having to wait a few months for the commission to be set up and, perhaps, for the monopoly limit to be reduced. We agreed that the limit should be sufficient only to guarantee universal service at a uniform tariff. That is the principal objective that we have given the commission. As to the wait, I can only say to the hon. Member for South-West Hertfordshire that under the previous Government we waited five years and there was no movement at all.
      It was timely of my hon. Friend the Member for North-West Norfolk (Dr. Turner) to point out that Conservative Members, who say that they are defending the universal service obligation, tabled an amendment in Committee which would have allowed parcels to be delivered in remote rural areas outside the terms of the universal service obligation. That would particularly have affected

      915
      parts of Scotland such as the highlands and islands, where the Conservatives have no parliamentary representation. They have met Disraeli's great objective of being a one nation party: they have no Members in Wales or Scotland; they have Members only in England.
      That amendment would have meant that the Post Office would no longer have a commitment to deliver to those areas, and if it did so, it could charge a higher tariff for going to the far north or to remote rural areas. We should remember that proposal the next time the Conservatives start banging on about how devoted they are to the universal service obligation. The Opposition's arguments are stale and we have debated them in the House before. I hope that the hon. Gentleman will have the sense not to press amendments Nos. 60 and 61 to a vote, but, if he does, I hope that they will be defeated.
      I cannot be much kinder about amendment No. 62, which thuds along heavily like a dinosaur through the Bill's lush terrain. We have debated the matter before. It is our intention that the requirements on universal service providers—such as quality of service standards, regulatory accounts, complaints and compensation schemes—will be imposed and enforced through the licensing regime. The outline licence has been distributed and comments are invited until September. All contributions will be gratefully received. Such matters should be dealt with in that manner, not in the Bill. We are setting up a commission, and we ought to allow it to decide how to do its work.
      The hon. Member for Buckingham (Mr. Bercow) is not in his place, but he was seized by new subsection (2A)(b) in the amendment, which refers to cross-subsidies. That matter is decided by the European postal directive, which will bring him no comfort. The directive allows cross-subsidy from the reserved to the non-reserved area, provided that it is necessary to maintain a universal service, so parcels, for example, can be cross-subsidised in certain circumstances. That is why the amendment should not be pressed.
      I can be a little kinder about amendments Nos. 64 to 69, which at least show a little originality. However, if I have understood their purpose correctly, it rather stands on its head the amendment that we introduced in Committee to give the Postal Services Commission the ability to refer to the Competition Commission any matters on which it considered that there was a conflict with public interest. Under the Bill as amended, the Postal Services Commission will have that important power to protect the public interest, and we need no further amendments to that effect.
      Finally, on amendments Nos. 72 and 73, perhaps I am becoming a little more mellow. The amendments would create a specific duty, requiring the commission to compare annually the efficiency and economy of postal services provided by licence holders to postal services in general, in the UK and elsewhere.
      The problem is that that is an unnecessary level of prescription. It specifies exactly how the commission should carry out its duties. We think that that should be left to the commission. It suggests that the commission should carry out benchmarking annually. The commission can decide on the importance of benchmarking and
      916
      whether it should be done annually, biennially or whenever. It is ridiculous for the Bill to be prescriptive on such issues.
      In addition, the amendment specifies that the commission should carry out its work to an arbitrary time scale, which once again is not helpful.
      We have said many times that our intention in the Bill is to set up an independent regulator. The Bill sets out the main functions, duties and powers of the commission, but it does not tell the commission how to fulfil those functions. That is for the commission to decide; otherwise it would not be a fully independent body. The amendment goes against the concept of the independent regulator. I therefore hope that the hon. Member for South West Hertfordshire will withdraw it.
      Mr. Page: I thank the Minister for his comprehensive response to the amendments that my hon. Friend the Member for Rutland and Melton (Mr. Duncan) and I submitted.
      I thought that the Minister was remarkably cruel to the hon. Member for Weston-super-Mare (Mr. Cotter). He should remember that the hon. Gentleman represents a party that is the Government's ally in Scotland. I find it slightly hurtful that the Minister should so thoroughly humiliate the hon. Gentleman in the Chamber. I suggest that, in future, the Minister should adopt the approach of forgiving the hon. Gentleman because he knoweth not what he does.
      We all know that when the Government are in trouble, they start harking back to the past, going back to the previous Government and history, when they should be looking to the future. The plain fact is that a year ago, the Government announced their intention to introduce certain reductions of the limits, and within a week or so, under a little pressure, they collapsed and caved in. Now the Minister is trying to get the commission to do the Government's work for them. I find that unsatisfactory. In his position, I would find it highly embarrassing. Nevertheless, in the circumstances, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. Alan Johnson: I beg to move amendment No. 30, in page 5, line 35, leave out from "letters" to end of line 39 and insert—
      'of members of a document exchange from a departure facility for that exchange to an arrival facility for another document exchange by persons who are not members of either exchange, and the collection and delivery by such persons for that purpose of letters delivered to the departure facility concerned,'.
      Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 31 to 33, 19 to 22, 47, 23 to 29 and 53.
      Mr. Johnson: In view of the time and my cold, I shall be brief. The amendments are technical and deal with matters such as petitions to the National Assembly for Wales. Hon. Members who served on the Committee may remember that we gave a commitment to introduce relevant amendments on Report.
      I shall spend a couple of minutes on certain aspects of amendments Nos. 30 to 33, which deal with document exchange centres. I need to put on record the reasoning behind the amendments.

      917
      9.15 pm
      We have a general policy of replacing the system of class licences with exceptions to clause 6. Document exchange is currently subject to a class licence, and including this exception in the Bill will allow a useful service to continue. Document exchange is a system used by many professionals, such as lawyers and insurers, who are members of a local document exchange to exchange documents with other members of that local document exchange. We have already defined such an exchange in the Bill as a system involving at least three members for each local document exchange, in order to ensure that this does not become an end-to-end service breaching the reserved area without a licence.
      Similar institutions exist in Europe, but they are not common. In the United Kingdom, the system has developed almost uniquely to include the conveyance and sorting of letters between document exchanges, with the result that a national network linking document exchanges has evolved.
      The amendment makes it clear that the exception allows for the conveyance of letters between document exchanges by a third party. We have now defined that more closely as transport between the departure facility of one document exchange and conveyance to the arrival facility of another document exchange. What the exception is not intended to do is permit end-to-end delivery by a third party. That would allow cream-skimming: it would allow unlicensed operators to jeopardise the universal service at a uniform tariff. To ensure that that does not happen, conveyance can occur only between the arrival and departure facilities of the document exchange, not within the document exchange. The letters being conveyed must be intended for a document exchange other than the one from which they are being sent, and the third party providing the service must not be a member of either of the document exchanges concerned.
      The members of any document exchange are responsible for the delivery and collection of their own letters. The amendment that we tabled earlier inadvertently left the slim possibility that a third party could take letters between the members within an exchange. Although the possibility was only slim, we could see that the loophole could have been exploited to create a rival end-to-end delivery system to a licensed universal service provider, but without having to obtain a licence from the commission. The amendment removes that possibility.
      As of now, nothing in the amendment would prevent the arrival and departure facilities from being located on the premises of a member of the exchange, as is frequently the case in the United Kingdom—although the requirement for three members means that it would not be possible to establish a sham document exchange in which the only member was the person on whose premises the exchange was located.
      Amendment agreed to.
      Amendments made: No.31, in page 6, line 10, at end insert—
      ' "arrival facility", in relation to a document exchange, means any box, receptacle or other facility associated with that exchange which is provided for the receipt of letters from members of another document exchange
      918
      which are conveyed to the facility from a departure facility for that other exchange for collection by members of the first exchange,'.
      No. 32, in page 7, line 2, at end insert—
      ' "departure facility", in relation to a document exchange, means any box, receptacle or other facility associated with that exchange which is provided for the collection of letters of members of that exchange which are delivered to the facility by those members for conveyance to an arrival facility for another document exchange for collection by members of that other exchange,'.
      No. 33, in page 7, leave out lines 5 to 7.—[Mr. Betts.]

    Clause 27

      ENFORCEMENT ORDERS: FURTHER PROCEDURAL REQUIREMENTS
      Mr. Alan Johnson: I beg to move amendment No. 1, in page 18, line 28, after "modifications", insert—
      'and the Commission complies with the requirements of subsection (1A)'.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 2 to 9.
      Amendment No. 70, in clause 38, page 25, line 8, at end insert—
      'and if a person objects to entry of anything in the register, he may appeal to the Secretary of State who may direct the Commission not to enter it.'.
      Government amendments Nos. 10 to 14.
      Amendment No. 74, in clause 53, page 33, line 41, at end insert—

      '( ) The Council shall, in exercising its functions, have regard to the interests of—

      (a) individuals who are disabled or chronically sick,

      (b) individuals of pensionable age,

      (c) individuals with low incomes,

      (d) individuals residing in rural areas, and

      (e) individuals who are homeless,

      but that is not to be taken as implying that regard may not be had to the interests of other descriptions of persons.'.
      Mr. Johnson: I hope that hon. Members will find our amendments uncontroversial, but I ask the House to resist amendments Nos. 70 and 74.
      The main purpose of amendments Nos. 1 to 8 is to introduce the change that I promised the hon. Member for Weston-super-Mare (Mr. Cotter) when he withdrew a similar amendment in Committee. They will make sensible changes to the Bill. When the Postal Services Commission is able, under clause 27, to modify an enforcement order with the consent of the licence holder, it will now have to comply with the requirements of the new subsection that we are introducing. It will have to give notice of the proposed change to the Consumer Council for Postal Services, and must consider any representations that it makes. That will provide an additional chance for consumers' interests to be aired.
      Amendments Nos. 6 and 7 are minor technical measures. They are simply a matter of common sense, requiring all relevant parties to be given notice of the commission's decisions. Amendment No. 9 is a small

      919
      consequential amendment to clause 38. It flows from the introduction of a licence modification procedure in Committee.
      Amendments Nos. 10 and 11 to clause 43 tackle an anxiety that was raised in Committee by the hon. Member for Rutland and Melton (Mr. Duncan), who we hope is now sitting up and eating his Scotch broth. Clause 43 currently requires the commission to keep under review and collect information on postal services
      in the United Kingdom and elsewhere…
      We agree that other European Community states, which operate under the same directive, are likely to provide especially useful comparisons and that there is merit in amending the clause to emphasise the commission's role in collecting and keeping under review information on the provision of postal services in EC member states.
      Amendments Nos. 12 to 14 deal with another anxiety that the hon. Member for Weston-super-Mare raised in Committee. Clause 53 currently specifies that the council must have regard to the views of users in different areas when carrying out its functions in relation to the relevant postal services. The purpose of the amendments is to clarify that the council, in exercising its functions, should consider the interests of the specified groups of individuals.
      I understand that the reason for amendment No. 70 is to ensure adequate safeguards to protect the affairs of individuals. That is a worthy objective about which we agree. However, we believe that clause 38 sufficiently protects the rights of individuals.
      Mr. Page: The Minister was brutal to the hon. Member for Weston-super-Mare (Mr. Cotter), but it was unnecessary to go over the top and try to accommodate him by tabling one or two minor amendments. If the Minister is going to be rude to someone, he should stick to that and not try to make amends in such a mealy-mouthed manner. If he tells me that crawling is successful, I am prepared to crawl to advance amendment No. 70. However, I have a strange feeling that, no matter how I abased myself, I would not gain the Minister's approval for the amendment.
      Amendment No. 70 seeks to amend clause 38 to ensure that information about anyone's commercial interests is not entered on the register that is available for inspection by the public. It would also grant the right to raise with the Secretary of State an objection to an entry on the register. I cannot understand why an individual's justifiable right to such provisions should be resisted.
      The current proposal for protecting confidential commercial information from disclosure on the register of licence is inadequate. It could discourage potential postal operators from applying for licences. The White Paper published in July 1999 and entitled "Post Office Reform: A world class service for the 21st century" was often cited in Committee. It dealt with the regulator's powers to publish information. Paragraph 32 on page 28 states:
      The Regulator will have … a power to publish information for the benefit of consumers and in the interests of good regulation, subject to tests relating to substantial harm, including matters of commercial confidentiality and public interest.
      920
      The need to protect commercial interests was further acknowledged in the White Paper in relation to the Post Office's five-year strategic plan, which states:
      The aim will be to report—
      to Parliament—
      once the Strategic Plan has been approved.
      That need was also acknowledged in the 12th report of the Select Committee on Trade and Industry, which considered major acquisitions by the Post Office. The report states:
      We recommend the greatest possible degree of transparency compatible with genuine requirements of commercial confidentiality on this and future major purchases by the Post Office.
      Amendment No. 70 would make the Bill consistent with the detail of the White Paper. It recognises the importance to potential licence holders of protecting information relating to their commercial interests that may be disclosed to the regulator as part of the application process. It would encourage them to be more open with the regulator in the knowledge that their commercial interests would be protected. It would impose an express obligation on the regulator to secure the exclusion from the register of information that affected commercial interests.
      However, amendment No. 70 would retain the provision's flexibility by continuing to allow the regulator to use discretion so far as is practical and enter in the register information that would be in the public interest. As a further safeguard, it would give people the express right to object to the Secretary of State about the entry of any item. That would complement his existing power to direct the regulator not to enter items. The amendment is perfectly fair. It would protect commercial interests and encourage those who make applications, as they would know that their commercial secrets would not be divulged. It would be of general benefit.
      Mr. Drew: Can the hon. Gentleman give an example that would go to the Secretary of State, but would not go to the commission? I am struggling to think of one.
      Mr. Page: I can understand the hon. Gentleman struggling; I listened to part of his speech and understand his difficulties. A commercial company may want to have certain details entered on the register, but not those of a marketing plan that it wished to introduce, an activity that it wanted to undertake to gain extra market share, or a method of delivery or operation. It might want matters such as potential ownership to be kept back. I can see no difficulty with that because such information might help the opposition and that would damage the company's interests.
      Time is moving on, so I shall speak to amendment No. 74, which would insert the words:
      The Council shall, in exercising its functions, have regard to the interest of … individuals who are disabled or chronically sick … of pensionable age … with low incomes … residing in rural area, and … homeless …
      That matter arose in Committee in a slightly different form. For the life of us, my hon. Friend the Member for Rutland and Melton (Mr. Duncan) and I could not understand why the Minister refused to allow the Bill to cover the homeless—a vulnerable section of society that should be protected. As he has shown again this evening, he seems to have set his face against looking after the homeless.

      921
      In an age of improved communication, it is surely indefensible that the Government have not highlighted the homeless as one of the groups for which the council should have regard. The expansion of electronic communications means that the council should consider the interests of the homeless as much as it considers those of the others on that list, such as the elderly, the disabled or the chronically sick. Why not the homeless? That could be easily achieved by designating a post office box number so that they could receive mail at a sub-post office.
      9.30 pm
      The problem of homelessness is growing in importance because the Government have failed to tackle it. The most recent Government figures show that, in the past year, there were 105,900 priority homelessness acceptances. In a comparable period in 1997, the figure was still far too high, but it was 102,410, so there has been an increase of more than 3,000.
      The measure could help the homeless to take a proper place in society. If one extrapolates the trend—I should like to think that the Government are trying to do something about it—it means that, every day under this Government, five more people are being forced into homelessness.
      Mr. Mike Hancock: I am touched by the hon. Gentleman's compassion for the homeless, but if you are arguing for more to be done for the homeless than giving them a post code and somewhere to collect their mail, I could understand it. However, could you explain—
      Mr. Deputy Speaker: Order.
      Mr. Hancock: I beg your pardon, Mr. Deputy speaker.
      Mr. Deputy Speaker: The hon. Gentleman perhaps anticipates the intervention that I must make.
      Mr. Hancock: I apologise, Mr. Deputy Speaker.
      I should be grateful if the hon. Member for South West Hertfordshire (Mr. Page) would explain the real benefit that he is trying to get for the homeless through that proposition.
      Mr. Page: It is nice of the hon. Gentleman to drop into the debate, which has been taking place for a number of hours. He was in for a few minutes several hours ago. Frankly, if I have to explain to the Liberal Democrats the advantages of helping the homeless, we are in difficulty. As I have already said—I shall repeat for the hon. Gentleman very slowly—in this time of electronic communication, it must be of advantage that the homeless are able to have a post office box number for communication and to get advice and support from the Government, rather than using the insecure and inaccurate methods that exist at present. I would like to think that, when the hon. Gentleman looks at Hansard, he will be consumed with embarrassment that he has been so dismissive of that genuine attempt to help the homeless.
      The Minister will know that this is not a one-off attempt, or something that has just been produced. We ran it in Committee. My hon. Friend the Member for Rutland
      922
      and Melton, who unfortunately cannot be with us this evening, argued far more eloquently than I have that the homeless should be included, yet the Minister seems to turn it down. I remind him that the Prime Minister promised that Labour would
      do everything in our power to end the scandal of homelessness, to tackle the spectacle of people sleeping rough on the streets and to end the waste of families sleeping in bed and breakfast accommodation.
      Surely, including the homeless in the Bill is a step in the right direction.
      Mr. Alan Johnson: As I have said, we believe that clause 38 provides sufficient protection. Amendment No. 70 would undermine the commission's independence by substituting for its discretion what would amount to a formal mechanism for persons to appeal to the Secretary of State if they object to an entry, together with a power for the Secretary of State to direct the commission not to make an entry, if he so decides. Such a procedure would be an unnecessary bureaucratic burden on the Secretary of State and would limit the discretion and independence of the commission without substantively increasing the protection of individuals. Regardless, clause 38(7) provides the power for the Secretary of State to direct the commission not to enter in the register anything that he considers
      would be against the public interest or any person's commercial interests.
      Inevitably, use of that procedure would also result in delays in getting information on the register, and in the register containing less up-to-date information than is appropriate in the interests of good, fair and open regulation. The presumption must be that entries are made, and that only in exceptional circumstances should an entry not be made. Provision for that is already made fully in clause 38.
      As the appointed regulator of the postal market, with clear duties and daily responsibility for regulation, no body is better placed than the commission to weigh up the merits of an entry in the register and, in keeping the register, to decide what is in the public interest. The clause provides adequate safeguards, and I hope that the hon. Member for South-West Hertfordshire (Mr. Page) will not press amendment No. 74.
      As for the hon. Gentleman's argument on homeless people, originally, the Bill required the commission to have regard in its work to certain groups of consumers. However, the point was clearly made that that requirement should be imposed also on the consumer council in doing its work. Government Amendment No. 14 provides for such a requirement.
      Opposition Members have used that provision to revisit the argument about why homeless people should be grouped with those who are disabled or chronically sick, those who are of pensionable age, those who have low incomes and those who reside in rural areas. The Committee rejected the proposal not because it was hard-hearted or unconcerned about the perils of homelessness, but because, first, the list of those to whom our provision applies is not prescriptive. Moreover, the end of Government amendment No. 14 provides that the list
      is not to be taken as implying that regard may not be had to the interests of other descriptions of persons.

      923
      Secondly, the groups that we have identified all have specific problems in receiving post office network services. Those problems have been communicated to us by various organisations and charities representing those groups. Therefore, for those who are disabled or chronically sick, there is the "articles for the blind" service, in which any item up to 7 kg can be sent free of charge anywhere in the world. Those who are of pensionable age sometimes have problems in collecting their pension from the post office network. The universal tariff is provided to ensure that postal services are accessible to everyone, including those who are on low incomes. Those who reside in rural areas have particular problems in receiving postal services.
      We have had no reports of homeless people having problems with postal services. Neither Centrepoint, Shelter nor any of the other charities involved with the homeless have advanced the type of argument made today by the hon. Member for South-West Hertfordshire. They have not said that providing homeless people with a post office box number is part of the solution in assisting those who sleep rough on the streets, particularly the streets of London.
      The Government's approach to a solution—on which I think there is a broad, cross-party consensus—is that the first step is to get homeless people off the streets, not to encourage a street life style. Many of those people have serious problems, whether it is with alcohol abuse, drug abuse, or something else. If we are to tackle those problems, we have to get homeless people off the streets.
      Anyone can have a poste restante address or a post office address. Moreover, once a homeless person is in a hostel, he or she will have a postal address at which he can receive benefits and other post.
      As we said in Committee, we would not be assisting the homeless by including them in the Bill's provisions and by saying that both the commission and the council have a duty to provide postal addresses for the homeless. Such a provision would encourage a street life style and achieve precisely the opposite to the sentiments expressed by the hon. Gentleman.
      Therefore, as the Government said in Committee, the House can safely oppose the proposal without being seen to be cruel or heartless. The hon. Gentleman's arguments, both today and in Committee, simply do not stand up. I should be very surprised if Conservative Members pushed those arguments in a proper debate on how to tackle homelessness. We are addressing that in the Bill, and the hon. Gentleman's comments were unimpressive. I urge the House to rejects amendments Nos. 70 and 74.
      Amendment agreed to.
      Amendments made: No. 2, in page 18, line 29, at end insert—
      '(1A) The requirements of this subsection are that the Commission shall—

      (a) give notice of the proposed modifications to the Council, and

      (b) consider any representations made in accordance with the notice and not withdrawn.'.

      No. 3, in page 18, line 30, after "requirements", insert "of this subsection".
      No. 4, in page 18, line 34, leave out "The notice" and insert—
      'A notice under subsection (1A) or (2)'.
      No. 5, in page 18, line 37, leave out "publication of the notice'and insert—
      'the giving of the notice under subsection (1A) or (as the case may be) the publication of the notice under subsection (2)'.
      No. 6, in page 19, line 13, at end insert—
      '(7A) If, after giving notice under subsection (1A), the Commission decides not to make a final order or confirm a provisional order, it shall give notice of that decision to the licence holder concerned and the Council.'.
      No. 7, in page 19, line 13, at end insert—
      '(7B) A notice under subsection (1A) shall be given by serving a copy of the notice on the Council and a notice under subsection (7A) shall be given by serving a copy of the notice on the licence holder and the Council.'.
      No. 8, in page 19, line 14, leave out "A" and insert "Any other".—[Mr. Betts.]

    Clause 38
      REGISTER
      Amendment made: No. 9, in page 24, line 40, leave out "variation" and insert "modification".—[Mr. Betts.]
    Clause 41
      DUTIES IN RELATION TO PUBLIC POST OFFICES.
      Amendment made: No. 34, in page 27, line 17, leave out "section" and insert "Act".—[Mr. Betts.]
    Clause 43

      REVIEW AND INFORMATION.
      Amendments made: No. 10, in page 28, line 10, after "Kingdom", insert ", other member States".
      No. 11, in page 28, line 12, after "Kingdom", insert ", other member States".
      No. 35, in page 28, leave out lines 30 to 32.—[Mr. Betts.]

    Clause 53

      EXERCISE OF FUNCTIONS: GENERAL.
      Amendments made: No. 12, in page 33, line 38, after "functions" insert—
      'in relation to relevant postal services'.
      No. 13, in page 33, line 40, leave out—
      'and matters affecting their different interests'.
      No. 14, in page 33, line 41, at end insert—
      '( ) The Council shall, in exercising its functions, have regard to the interests of—

      (a) individuals who are disabled or chronically sick,

      (b) individuals of pensionable age,

      (c) individuals with low incomes, and

      (d) individuals residing in rural areas,

      but that is not to be taken as implying that regard may not be had to the interests of other descriptions of persons.'.—[Mr. Betts.]

    Clause 62

      GOVERNMENT HOLDING IN THE POST OFFICE COMPANY AND ITS SUBSIDIARIES
      Mr. Alan Johnson: I beg to move amendment No. 15, in page 39, line 10, after "its", insert "wholly owned".
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 16 to 18.
      Amendment No. 78, in clause 66, page 41, line 21, at end insert—
      '( ) the effect of the proposed issue or disposal would be that no more than 10 per cent. of the total share capital of the Post Office company at the time of the transfer would have been disposed of.'.
      Government amendments Nos. 79 to 81.
      Mr. Johnson: The amendments provide further evidence that the Government are sticking to our commitment to keep the new Post Office company and its relevant subsidiaries within public ownership by ensuring that we allow only a narrow portal for share sales or swaps, while allowing it greater commercial freedom.
      Amendment No. 16 plugs a potential loophole in the restrictions on the disposal of shares in subsidiaries carrying out the core business by applying the restrictions on the disposal of shares to any subsidiaries owning shares in a relevant subsidiary.
      Amendment No. 15 amends clause 62 and seeks to ensure that the Government do not prejudice the rights of any external shareholders in the subsidiaries of the Post Office company by restricting the Secretary of State's power to direct subsidiaries of the Post Office company to issue shares to subsidiaries which are wholly owned.
      Amendment No. 17 is a minor drafting amendment to bring the wording of clause 65(3) into line with that of the new subsection (5).
      Amendment No. 18 supports the Government's policy of allowing the Post Office greater commercial freedom by allowing the Post Office company and its subsidiaries flexibility to reorganise its structure as it thinks fit. It relaxes the restriction in subsection (2) of clause 65 on the disposal of shares or share rights in a relevant subsidiary by the Post Office company, any of the subsidiaries or their nominees to allow disposal among themselves. Again, there is no harm in the shares being passed round in this way, as each of the parties concerned is subject to the restrictions on disposing of shares to a third party. There is great benefit, because it allows the company flexibility in its structure.
      Amendments Nos. 79, 80 and 81 are technical amendments which bring the provisions in those clauses into line with each other.
      Amendment No. 79 to clause 69 adds a provision requiring the Secretary of State to consult the Post Office company before exercising his powers to extinguish any of its liabilities and to consult the Post Office company and the subsidiary in question if any of a subsidiary's liabilities are to be extinguished.
      Amendment No. 80 provides power for the Secretary of State to make an order to repeal the clause when its purpose is spent. This power mirrors the provision in
      926
      clause 73 which provides for the Secretary of State to make an order to repeal clause 73 when its purpose is spent.
      Amendment No. 81 removes the requirement in clause 73(7) to consult the Post Office if an order is to be made to repeal the section under subsection (6).
      Mr. Bowen Wells: Who drafted these amendments, and why is it necessary to introduce them at this stage? Has the Bill been improperly drafted? Does it reflect Ministers' desires and objectives? Why are we being subjected to this long list of tiny amendments that should have been taken care of in the original drafting of the Bill?
      Mr. Johnson: It is not a long list at all. On Second Reading, Opposition Front Benchers were suggesting that there would be over 1,000 amendments. In fact, there were 185, of which only 80 have been Government amendments. I am not as experienced in this place as the hon. Gentleman, but I understand that that number of amendments compares very well with Bills under the previous Government.
      9.45 pm
      I also make the point that the Post Office is the Methuselah of public sector industries, because it has been publicly owned since 1631, and there is a lot of legislation to tidy up when making changes to the Post Office. I assure the House that I would have preferred not to have had so many amendments this evening, but these are minor, technical amendments and I have ensured that Opposition Front Benchers have been kept informed about our changes.
      As I was saying, there is no need to consult the Post Office in the same way if we intend to repeal the clause, as the repeal would not affect it in the same way as the creation of debt.
      Mr. John McDonnell: I wish to speak to amendment No. 78 and give an assurance to my hon. Friend the Minister, who is suffering from a heavy cold, that I will not press it to a Division. Amendment No. 78 would affect clause 66, which will enable a partial share sale in the Post Office company to further a joint venture or a partnership. However, no limit is set on the volume of shares that may be sold. As a result, any amount of the Post Office company could be sold off.
      As my hon. Friend the Minister has said, we obviously wish to ensure that we fulfil our policy of maintaining the Post Office company within the public sector. That is why we need clarity with regard to clause 66. There are concerns that the Government have not tabled an amendment, as requested in Committee, to limit the amount of shares that could be sold. For example, amendment No. 78 suggests a 10 per cent. maximum. The Government argument has been that that would restrict commercial flexibility and the room to manoeuvre of the company in cementing joint venture deals. However, the Post Office itself, in its evidence to the Select Committee, suggested that that problem would be highly unlikely to arise.

      927
      There have been joint ventures and share swaps elsewhere, but they have been restricted to the 5 per cent. level. That has happened occasionally in the telecommunications industry, and has never involved a share swap of more than 10 per cent. France Telecom and Deutsche Telecom, for example, had a swap agreement that involved a 5 per cent. exchange of shares only.
      The Government's legislative proposals arise from a Labour party conference motion that stated that there must be no uncertainty or ambiguity, now or in the future, about the commitment of a Labour Government to the continued public ownership of the Post Office. Clause 66, as drafted, is inconsistent with the spirit of that motion. It will raise doubts among the workers in the Post Office and among the electorate about our commitment to the public ownership of the Post Office in the long term. It gives the wrong signals to those in the industry and to the electorate.
      I am aware that, today, further talks have gone on that may resolve the problem, and therefore I urge the Government to table a clear amendment on the issue in the other place to prevent any back-door threat to the public ownership of the Post Office.
      Mr. Johnson: It must be borne in mind that, at the time of the Labour party conference last year, the issue of share sales to cement an alliance or a joint venture had not arisen. We have ensured that, if any future Government wish to sell shares in the Post Office, that would require primary legislation. However, we recognise that the communications industry is heading towards further globalisation.
      I can put it no better than the Communication Workers Union, which is very perceptive on such issues. It has said:
      Mail services have been seen as predominantly domestic markets met by national operators. However, the growth of international mail, the opportunities for e-mail and developments in the parcels market are all leading to a more international marketplace that is likely to be dominated by a small number of global players or alliances. The British Post Office cannot afford to stand apart from such powerful trends.
      The CWU understands that full well. The point about saying that any future share sales would require primary legislation, except in the case of share swaps to cement a joint venture or an alliance, is to ensure that the Post Office has greater commercial freedom in the public sector.
      Our battle in the early 1990s was not to maintain the status quo but to give the Post Office genuine commercial freedom in the public sector. That freedom will allow the British Post Office to move with the major international players. Our competitors have had the same freedom for many years.
      Mr. McDonnell: The CWU has stated today:
      In our view, the current open-ended nature of Clause 66 is inconsistent with the spirit of the Labour party motion at the conference and, if the Government persists in the current wording, it is bound to raise doubts in the minds of Labour Party members and Labour voters as to the commitment of the Labour Government to the public ownership of the Post Office.
      Mr. Johnson: The issue at last year's conference was the monopoly limit and not joint ventures and acquisitions.
      928
      I know exactly what the CWU position is, but it is stated on the face of the Bill that Governments cannot bring proposals forward to divest shares. Only the Post Office can do that.
      The Post Office begins the process when it makes a proposal to the Secretary of State. If the Secretary of State is convinced that that is in the best commercial interests of the Post Office, he or she will put it forward for affirmative vote in both Houses of Parliament.
      Post Office Acts come along only every 15 or 20 years. For example, such Acts were passed in 1953, 1969 and 1981. We cannot be tied to an arbitrary share limit—whether it be 5 or 10 per cent.—that will prevent the Post Office from securing a joint venture or alliance that is wanted by its work force, the Government and by the business itself. If we were so tied, we would have to ask the major market player with which we might be negotiating a deal to hang on for a couple of years until a slot appeared in the Queen's Speech for the necessary primary legislation. That would cause the deal to be lost, which would not be in the best interests of the work force or of the business.
      Mr. McDonnell: I believe that we should listen to the work force. The CWU statement today was in support of the 10 per cent. limit.
      Mr. Johnson: The triple lock that we have on the mechanism means that it would be senseless to impose an arbitrary figure, but in fact the situation is worse than that.
      Hon. Members from all parties—including the hon. Member for Macclesfield (Mr. Winterton), whom I see in his place—opposed the privatisation of the Post Office. We said that there was a way a forward that would allow genuine commercial freedom in the public sector. If the Government diluted or inhibited that commercial freedom by placing caps on joint ventures or acquisitions, that would leave us open to the argument that the only way to deliver commercial freedom was by privatisation. In other words, that would destroy the argument that Labour Members have supported for the past eight or nine years.
      The Government have looked at ways to resolve the concerns expressed by CWU members, and we have studied the provision of a special share. However, mergers will take place at the level not of the Post Office holding company, but of the subsidiaries. That is why amendment No. 78 would not have had the effect that its supporters wanted.
      Mr. Deputy Speaker: Order. I have given the Minister considerable latitude, as I understand that he is addressing an argument to hon. Members on the Benches behind him, but equally he should be addressing me at the same time.
      Mr. Johnson: I apologise, Mr. Deputy Speaker.
      Mr. Nicholas Winterton: I have been listening to the Minister's argument, and to the answer that he has given to the hon. Member for Hayes and Harlington (Mr. McDonnell) who, as I am sure the House understands, is clearly seeking to represent the best interests of the Post Office work force. Will the Minister say that the changes that these Government amendments bring about not only safeguard the position of the employees, the interests of the Post Office and the

      929
      interests of Government but, more than that, represent the interests of the consumer who is served by the Post Office? If the Minister could give us that assurance, we would be much happier with his brief explanation.
      Mr. Johnson: Yes, I can give that assurance. This series of amendments establishes the definition of relevant subsidiaries. Following a report from the Select Committee on Trade and Industry, we went to the extent of ensuring that future Governments could not get around the block on selling shares in the Post Office by putting them into one of its subsidiaries, such as German Parcel, one of the organisations that it purchased recently, by defining what is a relevant subsidiary. So there is no way around this.
      Mr. McDonnell: Will the Minister give way? Mr. Johnson: No, I am not giving way again.
      My final point is that, if anyone seriously wanted to privatise the Post Office, they would not go down the tortuous route of exchanging swaps and joint ventures. There is no money for the Exchequer in floating shares on the stock exchange. All those shares will, in a sense, be undervalued because they are used to secure an alliance or joint venture. They will not be worth their full weight.
      All the arguments suggest, as they did last July, that our proposals in the White Paper and the Bill represent the way forward in terms of genuine commercial freedom in the public sector.
      Amendment agreed to.
      Amendment made: No. 16, in page 39, line 46, leave out "in this subsection" and insert—
      'any other subsidiary of the Post Office company which holds shares or share rights in, or is connected to, any such subsidiary.
      ( ) For the purposes of subsection (8), a subsidiary of the Post Office company is connected to another such subsidiary which falls within any of paragraphs (a) to (d) of that subsection ("the operating subsidiary") if it forms part of a chain of subsidiaries of the Post Office company which leads to the operating subsidiary and which is identified by the fact that each member of the chain holds shares or share rights in the next subsidiary in the chain.
      ( ) In subsection (8)'.—[Mr. Alan Johnson.]

    Clause 65

      RESTRICTION ON DISPOSALS OF SHARES TO THIRD PARTIES
      Amendments made: No. 17, in page 40, line 37, leave out "such person" and insert—
      'person falling within this subsection'.
      No. 18, in page 40, line 37, at end insert—
      '( ) Subsection (2) does not apply in relation to any disposal by the Post Office company, any subsidiary of that company or any nominee of the company or subsidiary to any other person falling within this subsection.'.—[Mr. Alan Johnson.]

    Clause 69

      EXTINGUISHMENT OF CERTAIN LIABILITIES
      Amendments made: No. 79, in page 43, line 16, at end insert—
      '( ) Before exercising any power under subsection (1) or (2) in relation to liabilities of the Post Office company, the Secretary of State shall consult that company.
      930
      ( ) Before exercising any power under subsection (1) or (2) in relation to liabilities of a subsidiary of the Post Office company, the Secretary of State shall consult the Post Office company and the subsidiary.'.
      No. 80, in page 43, line 16, at end insert—
      '( ) The Secretary of State may by order repeal this section.'.-[Mr. Alan Johnson.]

    Clause 73

      FURTHER PROVISIONS RELATING TO THE CAPITAL STRUCTURE OF THE POST OFFICE COMPANY
      Amendment made: No. 81, in page 46, line 4, after "power" insert—
      '(other than the power under subsection (6)'.—[Mr. Alan Johnson.]

    Clause 93

      INVIOLABILITY OF MAILS
      Amendments made: No. 36, in page 55, line 26, after "customs" insert "or excise".
      No. 37, in page 55, line 27, leave out—
      '16 of the Post Office Act 1953'
      and insert—
      '(Application of customs and excise enactments to certain postal packets)'.
      No. 38, in page 55, line 30, leave out "17 of that Act" and insert—
      '(Power to detain postal packets containing contraband)'.—[Mr. Alan Johnson.]

    Clause 97

      CERTAIN EXEMPTIONS FROM POSTAGE ETC.
      Amendments made: No. 19, in page 57, line 31, at end insert—
      ', a member of the National Assembly for Wales'.
      No. 20, in page 57, line 38, after "Parliament", insert—
      ', the National Assembly for Wales'.
      No. 21, in page 57, line 40, after "Parliament", insert—
      ', a member of the National Assembly for Wales'.
      No. 22, in page 58, line 10, after second "Parliament" insert—
      ', the National Assembly for Wales'.—[Mr. Alan Johnson.]

    Clause 105

      THE POSTCODE ADDRESS FILE
      Mr. Page: I beg to move amendment No. 75, in page 62, line 16, at end insert—
      'and—

      (c) make provision for any person to seek and secure any reasonable correction in their details.'

      Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 76, in page 62, line 16, at end insert—
      '(1A) In the File—

      (a) each address shall reflect the county in which the addressee resides, except in as much as the efficiency of sorting addresses near county boundaries requires reference to a neighbouring county on the official address; and

      (b) each address shall include a county.'.

      Mr. Page: I hope that the Minister appreciated the fact that I did not intrude into private grief a few moments ago. I shall simply say that there is greater joy in heaven over a sinner that repenteth.
      These amendments are really the brainchild of my hon. Friend the Member for Rutland and Melton (Mr. Duncan). He has an enthusiasm for them that transcends anything else in the Bill other than the issue of homelessness, which the Minister so brutally dismissed. The knowledge that his amendment has been accepted will speed my hon. Friend's recovery and have him leaping from his sick bed with joy if the Minister is generous enough to accept it.
      I will not take too long in going over these proposals, as they speak for themselves. Amendment No. 75, which would make provision for any person to seek and secure any reasonable correction in their details, is simple and straightforward. The postcode address file is what it appears to be—a database of addresses. It is rare for a name to be on the file, as the Minister pointed out in Committee, and it must be as accurate as possible.
      I welcome the provision to allow access to the information that is held by the Post Office. As it is in the interests of the Post Office and of individuals for that information to be accurate, it is sensible to allow people to seek and secure reasonable corrections if the details held are wrong. I shall be intrigued to know whether the Minister can find any objection to the amendment.
      Amendment No. 76 makes the relatively simple point that the postcode address should reflect the county in which the addressee resides. I understand the point made by the Minister previously—
      It being Ten o'clock, the debate stood adjourned.
      Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
      That, at this day's sitting, the Postal Services Bill may be proceeded with, though opposed, until any hour.—[Mr. Betts.]
      Question agreed to.
      As amended in the Standing Committee, again considered.
      Question again proposed, That the amendment be made.
      Mr. Page: As I was saying, I understand the point made previously by the Minister that postcodes have not hitherto reflected the counties in which people live and that there would have to be significant changes to the records kept by the Post Office. Given the problems that have arisen in recent years and computer projects in the public sector, I have some feeling for its nervousness in contemplating change. However, I can see no good reason why county affiliation should not be recognised and accepted throughout postal services as part of the postcode address file.
      932
      The Minister was good enough to explain to the Committee on 21 March how insistent he has been in including "East Yorkshire" on his outgoing mail from his constituency in Hull. He explained that invariably he lets his bank or building society know that he lives in that county. What is good enough for the Minister in his constituency as a constituency Member and as a private individual should be good enough for the postcode address file. I look forward to what the Minister has to say—
      Mr. Alasdair Morgan: Will the hon. Gentleman give way?
      Mr. Page: I am bringing my remarks to a close. I would far prefer the hon. Gentleman to address his remarks to the Minister, who is an expert on how the postcode file works.
      Mr. Ieuan Wyn Jones: I am pleased to have the opportunity to speak in support of amendment No. 76. I never thought, given my experience of the House, that I would agree wholeheartedly with an amendment promoted by the hon. Member for Rutland and Melton (Mr. Duncan). I wish him well after his hospital treatment.
      I support the amendment because there is a great deal of irritation in my constituency of Ynys Môn that the name of the county is not recognised on the current database held by the Post Office. Only today, I was replying to a letter from one of my constituents who shares that irritation intensely.
      The Post Office database carries in Wales the names of the counties prior to reorganisation in 1996. People in Anglesey do not like to continue to receive their letters with the county name of Gwynedd. That county, as it was then constructed, was abolished in 1996. Gwynedd is now a much smaller county. A similar situation exists in other parts of Wales. For example, my hon. Friend the Member for Ceredigion (Mr. Thomas) will have letters addressed to Dyfed and not to Ceredigion.
      We are told by the Post Office that it is no longer necessary to have the county name on a letter. All that is needed is the post town and the postcode. So why are the old counties on the Post Office database? We are told that it would be far too expensive to change the database. We are told also that in a few years time, the Post Office will be changing all the databases and removing all the county names.
      Historic county names are extremely important. People retain an affection for their counties. In an area such as Anglesey, which is an island, people are independently minded and want their letters addressed to them as the people of Anglesey. We are asking the Minister only to recognise that there is strong feeling on this issue. It is a small matter for the Government to accept, but to do so would make many people happy.
      Mr. Nicholas Winterton: I mirror the views expressed by the hon. Member for Ynys Môn (Mr. Jones) because, as with his constituency, amendment No. 76 relates to my proud county of Cheshire. It is a very ancient county. Indeed, the Earl of Chester is a member of our royal family—[Interruption.] I am coming to postcodes.
      The county name means a great deal to many people. I shall go a little further than did the hon. Member for Ynys Môn by saying that insurance companies often set

      933
      lower premiums for some counties than for others. A constituent of mine who lives in or near the village of Kettleshulme who loses "Cheshire" from his or her address may be included in Greater Manchester—[HON. MEMBERS: "Oh!"] "Oh!" indeed—the matter is important. In Greater Manchester, the insurance premiums are higher. A cost is involved for such people, irrespective of the great affection in which most people hold the county in which they live.
      I am not up to scratch on exactly how postcodes are worked out, but if the postcode rather than the county is the critical factor, the Post Office could stick to the postcode but leave the county.
      Mr. Alasdair Morgan: How does the amendment apply to Scotland, where counties ceased to exist in 1975? Nearer to the hon. Gentleman's home, how would it apply to areas of Lancashire that were transferred into Cheshire at that time? Would people be given a choice?
      Mr. Winterton: The debates of the 1970s on local government reorganisation created considerable splits within political parties across the House. People took mixed views on the proposals of that time. I shall certainly not seek to intervene in matters internal to Scotland, irrespective of my view on devolution, which is not, as you will quickly remind me, Mr. Deputy Speaker, part of this debate.
      The hon. Gentleman referred to Lancashire, and considerable feeling remains to this day about the areas of Lancashire which were transferred into what is known as Greater Manchester.
      Mr. Peter Atkinson: My hon. Friend has referred to Scotland, so he may wish to know that people who live in Berwickshire may have a Berwick-upon-Tweed postcode and address. In that case, these matters may cross a national frontier.
      Mr. Winterton: I am not sure whether this is relevant, but I had the honour to Chair a sitting in Westminster Hall at which matters relating to regional aid in Berwickshire and Berwick-upon-Tweed were discussed at some length. I understand the problems relating to the border in that area. I shall not try your patience, Mr. Deputy Speaker, but my hon. Friend clearly made an important point.
      I consider the two amendments eminently sensible, reasonable and rational. They could add to the attraction of the Bill by meeting the needs of many people who feel great loyalty to the county in which they live. I wish my hon. Friend the Member for Rutland and Melton (Mr. Duncan), who is currently in hospital, a speedy recovery, and I hope that the Minister will aid that recovery by conceding the amendments and granting the House an opportunity to be parochial, but parochial in the interests of the people whom we serve.
      Mr. Baldry: Those of us who served on the Standing Committee became experts on the postcode system. To the possible surprise of the Minister, we spent almost as much time debating it as we did debating the Post Office monopoly. The reason for that—another surprise for the Minister, I suspect—was that there were concerns on both sides of the Committee about the working of the postcode system.
      934
      To his credit, the Minister took a wholly logical approach to the subject: all that mattered was the postal town and the postcode. All the members of the Committee understood that—it was perfectly rational and logical and perfectly well explained. The trouble is that matters do not work out like that on the ground.
      My hon. Friend the Member for Uxbridge (Mr. Randall), who was an Opposition Whip on the Bill, explained several problems relating to postcodes and postal addresses in his constituency. The hon. Member for Forest of Dean (Mrs. Organ) explained that, although part of her constituency was in Gloucestershire, it had a Welsh postcode and address, which caused considerable confusion.
      The matter provides an interesting test of the extent to which the Minister has discussed with the Post Office the concerns expressed by Members on both sides of the House. Has he had an opportunity to discuss those concerns? Even though he might not want to propose or accept an amendment, has he been able to find a pragmatic solution to improve the situation?
      The matter was not wholly fanciful, nor was it solely confined to Rutland—the concerns were shared by all members of the Committee. We devoted a considerable number of our sittings to the discussion of those problems, with no repetition or filibustering. Real concerns were expressed on both sides of the Committee. I hope that the Minister has had the opportunity to discuss them with the Post Office and that he can give the House some information on how they can be pragmatically addressed.
      Mr. Alan Johnson: The matter was the subject of passionate debate in Committee. If the hon. Member for Rutland and Melton (Mr. Duncan) has had his appendix removed, I am sure it has a postcode on it. He was still seething about events that occurred in the early 1970s—as are many other hon. Members.
      Let us get that matter straight. The Post Office is not responsible for the changes introduced by the Government of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) in the early 1970s, who moved Slough from Buckinghamshire to Berkshire and Bournemouth from Hampshire to Dorset, and introduced the county of Humberside—that was never warmly received in my neck of the woods. All those changes had nothing to do with the Post Office.
      Similarly, some people believe that the Post Office is responsible for numbering and naming roads and streets. It is not. If it were, the sequences would be much more logical. As we are all aware when we go canvassing, No. 2 can be followed by No. 23. Such issues are not the responsibility of the Post Office.
      Clause 105 would ensure that the postcode address file was maintained and made available to those who wanted to use it. That provision has unleashed much passion. I have already taken the matter up with the Post Office, but I shall briefly explain that the postcode is the Post Office's system of routing mail through the new automated equipment. Only the post town and the postcode are needed, thus for this place SW1 is the outward code and OAA is the inward code. That is

      935
      all the Post Office needs. Anyone can put the county name on his letters if he wants to do so. That is fine. The Post Office does not say that county names are not allowed.
      Mr. Drew: All the counties would have to be Tipp-Exed off the envelopes.
      Mr. Johnson: That would create a few more jobs in the Post Office.
      To insist that the Post Office must go to the enormous expense of adding a superfluous element to the postcode, which is not needed, would be over-prescriptive.
      Mr. Simon Thomas: The Minister said that only the postcode and the postal address were needed. In that case, why has the Post Office in Wales admitted that envelopes addressed in Welsh—even when they include the postcode—take longer to arrive than those addressed in English?
      10.15 pm
      Mr. Johnson: That is one question that I absolutely cannot answer. I will take it up with the Post Office.
      Counties are very important to people. We understand that; the issue is laden with emotion. However, although we may be prepared to use a county name in our addresses, it is a big step from that to insisting that the Post Office keeps superfluous information on a postcode address file that this legislation would give it a duty to maintain, at considerable expense.
      What I will do to address the point raised by the hon. Member for Banbury (Mr. Baldry) is continue my discussions with the Post Office. I shall ask about the point that was raised by the hon. Member for Ynys Môn (Mr. Jones)—the suggestion that all Welsh county names will be abolished by the end of the year. I shall also raise the point that was, I believe, the original catalyst for the debate—the argument that people who have the wrong postcode find it difficult to get it changed because there is a horrendous system of bureaucracy to go through, which is not useful to the Post Office as it means that mail is delayed because the wrong postcode is used.
      I will take up those issues, but I ask hon. Members—
      Mr. Nicholas Winterton: Will the Minister respond to the argument that sometimes insurance companies take the Post Office address as the formal address, and that that address might suggest that a residence is in an area where it is not? It might be described as being in Greater Manchester, when it is not. Although I have great regard for Manchester, that great second city of our country, there could be financial implications. If people want their county to be displayed on their address, is it right that a service provider such as the Post Office should tell them, "That is superfluous as far as we are concerned, and you can't have it"? Should not the Post Office serve the public?
      Mr. Johnson: The Post Office is not saying that the use of county names will delay the mail, or that it is prohibited. People are perfectly entitled to use a county name in the address. The point is that the Post Office does
      936
      not need the county name for the postcode address file. It is unnecessary to insist that it puts superfluous information into the file.
      I shall send a copy of the Hansard of this debate to the chief executive of the Post Office tomorrow to further our discussions on solving some of these problems. I ask the Opposition to withdraw the amendment, but if they press it to a Division I hope that hon. Members will vote against it.
      Mr. Page: I know that my hon. Friend the Member for Rutland and Melton (Mr. Duncan), lying on his sickbed, will be delighted by the passion that his amendments have raised. Representations have come from Wales, Scotland, northern England, middle England and southern England. However, I shall keep the Minister's uncaring, unfeeling response from my hon. Friend in case it inhibits his recovery. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 109

      ORDERS
      Amendments made: No. 39, in page 63, line 44, after "order" insert—
      ', or of the Treasury to make regulations,'.
      No. 40, in page 64, line 1, after "order" insert—
      ', or of the Treasury to make regulations,'.
      No. 41, in page 64, line 6, after "State" insert—
      'or (as the case may be) the Treasury'.
      No. 42, in page 64, line 16, at end insert—
      '( ) The power of the Secretary of State under section (Subsidy for public post offices) as extended by this section may be exercised by modifying any enactment.'.
      No. 43, in page 64, line 16, at end insert—
      '( ) Regulations under section (Application of customs and excise enactments to certain postal packets) shall be subject to annulment in pursuance of a resolution of the House of Commons.'.—[Mr. Betts.]
      Mr. Alan Johnson: I beg to move amendment No. 82, in page 64, line 19, leave out—
      'and paragraph 2 of Schedule 3'.
      Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 83 to 88.
      Mr. Johnson: Amendments Nos. 82, 83, 85, 86 and 88 preserve existing pension rights in the various pension schemes—of which there are many in the Post Office, some dating from civil service days. They protect those pension rights and transfer them across to the new Post Office company. Amendments Nos. 84 and 87 concern third-party dealings with the Post Office company in respect of land, and remove the burden on the third party to inquire whether Treasury consent to any previous dealings with the land was needed, or, if it was needed, whether it was given.
      These are technical amendments, which I do not think will raise much controversy. They protect the pension rights of all those working within the Post Office.
      Mr. Forth: That is all very well, but the Minister has not even begun to explain why the apparently simple and

      937
      straightforward part of the schedule that the amendment seeks to replace has to be replaced. Presumably, if the Minister were of a mind to do so, he could explain what was defective in the original wording, which I thought was self-explanatory. It would appear that there was something sufficiently defective in six lines of text for them to be replaced by the substantial wording before us, particularly in amendment No. 83.
      It is an old trick by Ministers, which I have come across over the years—and officials know this as well—to slip the word "technical" into an explanation, or lack of explanation, thinking that that will lull the House into a false sense of security and all will be well. You and I, Mr. Deputy Speaker, have been around for long enough to know that that is not always the case, and that the use of the word "technical" is not sufficient to explain the replacement of six rather simple and elegant lines of text with the very long, complicated wording in amendment No. 83 and the other amendments.
      It does not do the Minister or the House justice for him to expect to slide over the matter in that way. We need to know with more precision what was wrong with the previous words that required them to be replaced by this lengthy and complicated text. What is in the detail of amendment No. 83 that should give more reassurance to those for whom we have the greatest concern, the employees, with regard to their accumulated pension rights? Why was it felt necessary to go to this length of detail, unless there may have been something wrong, something rather sinister, lurking in the background that required reassurance of this length and this description for the employees involved?
      An answer to that question is the very least that we could expect at this stage, not a muttering about "technical", and not a superficiality of the kind that the Minister seems to have picked up very quickly. It is one thing for old ministerial lags to get away with that sort of thing, but from a fresh-faced new boy of the type that we have before us today I find it rather shocking.
      All that I wanted to do, Mr. Deputy Speaker—and I will not presume upon your patience any longer—was to give the Minister an opportunity to shine on this occasion, to put him through his paces and let him show his mastery of the amendment so that he could explain to us, but, more important, to the people most affected, what it is that he believes this will do that the previous wording did not do.
      Mr. Johnson: I suppose that when I become an old lag I shall follow the right hon. Gentleman's example. He has made fleeting visits to the Chamber during this debate. He came in halfway through the debate on new clause 1, raised a number of points—having not even heard the opening speech by my right hon. Friend the Secretary of State—and then disappeared before my right hon. Friend had a chance to reply. Now he comes and raises not a single point on the amendments, but instead asks why we have to remove elegant wording on page 75.
      I note that the question does not come from the Opposition Front-Bench spokesmen, who know full well that throughout the Committee stage we explained that those measures were there temporarily so that we could carry forward a whole host of issues that are very complicated, as pension matters are. I advise hon. Members to read Hansard. I cannot understand why anyone would not have read the Hansard report of the
      938
      Committee stage by now. We explained that we could not just leave the position on the basis of that simple wording. We need to ensure that the people who work in the business, who are part of about six or seven different pension schemes, are assured—[Interruption.] We will see how quickly letters on the Bill arrive. We need to ensure that people are assured to every last dot and comma that their positions are safeguarded. That is the purpose of the amendments, which I hope the House will support.
      Amendment agreed to.
      Amendment made: No. 44, in page 64, line 21, after "91" insert—
      '(Subsidy for public post offices),'.[Mr. Betts.]

    Clause 111

      GENERAL FINANCIAL PROVISION
      Amendment made: No. 45, in page 64, line 29, at end insert—
      '( ) any expenditure incurred by the Commission in consequence of this Act,'.[Mr. Betts.]

    Clause 113

      INDEX OF DEFINED EXPRESSIONS
      Amendment made: No. 46, in page 67, line 35, at end insert

      'Public post office

      Section 41(3)'.—[Mr. Betts.]

    Clause 115

      MODIFICATION OF LOCAL ENACTMENTS ETC.
      Amendment made: No. 47, in page 68, line 10, leave out—
      ', or in any instrument or other document,'.—[Mr. Betts.]

    New Schedule 1
      TRANSFER TO THE POST OFFICE COMPANY: TAX
        Corporation tax: general
        1. The Post Office company shall, on and after the appointed day, be treated for all purposes of corporation tax as if it were the same person as the Post Office.

        Shares and other securities
        2. Any share issued by the Post Office company or any of its wholly owned subsidiaries in pursuance of section 62 shall be treated for the purposes of the Corporation Tax Acts as if it had been issued wholly in consideration of a subscription paid to the company concerned of an amount equal to the nominal value of the share.
        3. Any security (other than a share) issued by the Post Office company or any of its wholly owned subsidiaries in pursuance of section 62 or 73 shall be treated for the purposes of the Corporation Tax Acts as if it had been issued wholly in consideration of a loan made to the company concerned of an amount equal to the principal sum payable under the security.

        Transfer arrangements
        4. The existence or exercise of the powers of the Secretary of State under section 61 shall not be regarded as constituting or creating arrangements within the meaning of section 410 of the Income and Corporation Taxes Act 1988 (arrangements for the transfer of a company to another group or consortium).
        Tax—free benefits
        5. Nothing in this Part and nothing done under it shall be regarded as a scheme or arrangement for the purposes of section 30 of the Taxation of Chargeable Gains Act 1992 (tax—free benefits).
        Assets acquired by the Post Office in 1969
        6. The Act of 1992 shall apply in relation to a disposal by the Post Office company of an asset acquired by the Post Office by virtue of Part III of the Post Office Act 1969 as if the acquisition or provision of the asset by the Crown had been the acquisition or provision of it by the Post Office company.

        Stamp duty
        7. No transfer effected by virtue of section 61 shall give rise to any liability to stamp duty.'.—[Mr. Betts.]
        Brought up, read the First and Second time, and added to the Bill.
        Remaining Government amendments agreed to.
        Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]
        10.26 pm
        Mr. Byers: I beg to move That the Bill be now read the Third time.
        I am sure that all Members of the House would like to thank those Members who served on the Standing Committee that scrutinised the Bill's detail. In particular, we thank my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. Member for Bournemouth, West (Mr. Butterfill) who chaired the Committee's proceedings fairly and efficiently. I add my personal thanks to my hon. Friend the Minister for Competitiveness who was responsible for taking the Bill through Committee. It was the first time that he has taken a Bill through Committee, and I have been very pleased at the way that he was able to conduct business and take through Government proposals. I know that all members of the Committee enjoyed the opportunity of engaging in lively and, I hope, constructive debate.
        The Bill is part of the Government's programme of modernisation and reform. As hon. Members will know from this evening's debates, it provides opportunities to preserve the national network of sub-post offices and to ensure that there will be a national network that can be supported, if necessary, through the scheme for providing a subsidy to which the House agreed this evening.
        We will, through the access criteria, ensure that all people in all parts of the country have access to postal services. We will also be able to ensure that the post office network can plan for a future based on diversity and investment in computerisation and that it can ensure that post offices can meet not just the needs of postal services, but of the communities that they serve.
        The Bill guarantees a publicly owned Post Office, but with the commercial freedoms that will be needed to meet the challenges of the 21st century. It will be able to compete and have the money to invest in the future. By reducing the cut that is taken by the Treasury, we will provide the Post Office, for the first time, with access to the funds that it will need for investment to ensure that it can develop its services.
        In the past, under the previous Government, the Treasury, rather than the Post Office, was always treated as a priority. Under this Government, the Treasury is withdrawing from the control that it has over finance, and
        940
        resources will be provided to the Post Office for the first time. That ensures that, when we talk about commercial freedoms, it is not just rhetoric; we are also providing resources to make the Post Office's commercial freedom a reality.
        The Bill will lift the uncertainty under which the Post Office has had to live for far too long. It will provide a firm basis for competition in the postal services market and it will provide a better deal for consumers, including those who are socially disadvantaged. It will ensure a strong Post Office that is better able to serve all its customers in all parts of the country. I invite the House to support the Bill on Third Reading.
        10.29 pm
        Mr. Page: As the House knows, the Opposition moved a reasoned amendment to the Second Reading motion for the Bill because
        it introduces an unsatisfactory structure of ownership which falls short of granting full commercial freedom, introduces uncompetitive borrowing criteria and does not include provision for transparent accounting practices, imposes new burdens of regulation on private companies rather than encouraging competition and fails to introduce clear access criteria to protect the network of sub Post Offices.—[Official Report, 15 February 2000; Vol. 344, c. 815.]
        The House will be fully aware that we had a long debate on the last point under Government new clause 1, at the start of this evening's proceedings. That debate proved the depth of concern felt by so many hon. Members. Now that the Committee and Report stages have concluded, we look to the other place to introduce appropriate amendments to inject common sense into the Bill.
        I echo the Secretary of State by congratulating the Minister for Competitiveness on the friendly, open way in which he has conducted affairs. I do not want to damage his career prospects, but I must point out that promotion in the Department of Trade and Industry seems a distinct possibility. I did not find him very accommodating with our amendments, but we cannot have too much at once.
        When the Secretary of State told the House on 15 February, on Second Reading, that he knew how many amendments he would table, we little realised that he was not joking. Despite all the spin and gloss that he has just put on the Bill in his speech, saying that it will be marvellous, it is most unsatisfactory that, on Report, we should have been debating important issues that affect people's livelihoods, as we did in our discussion of new clause 1. That was bounced on the House without our having the opportunity to take a long, measured look at what it implies.
        A pattern is emerging. We have had the shambles of the Utilities Bill, which has just completed its Committee stage and will be before us tomorrow. We have lost count of the hundreds of amendments that the Government have tabled. That is the hallmark of a Department that is out of control. The fact that new clause 1 was tabled at such a late stage shows that it is a panic measure, introduced simply to try to satisfy last Wednesday's mass lobby.
        We have had several debates on the Post Office in this Chamber and in Westminster Hall, and they concentrated on the sub-post offices. That point was emphasised by two debates last Wednesday. Those debates and today's proceedings highlight the confusion and muddle in the

        941
        Government and the apparent lack of leadership by the Secretary of State. I might be doing the right hon. Gentleman a disservice, but despite all his rhetoric, I think that he would have preferred privatisation to the fudged solution provided by the Bill. Perhaps even this new Labour Government, with their vast majority, still have no stomach for that.
        We can get a little distant from the subject matter in our debates, and it is useful to remind ourselves of the sheer size of the postal services and their importance to our economy. There are four main operating arms: Royal Mail, Parcelforce, Post Office Counters Ltd. and the subscriptions services. The Post Office employs more than 190,000 people and has a turnover in excess of £6.7 billion. However, we have said again and again, including on Report a few moments ago, that there is increasingly serious competition from overseas rivals as well as pressures from fax and electronic mail services. With all that comes the prospect of greater liberalisation in the European Union.
        It has been clear for some time that the present situation cannot be maintained indefinitely without the Post Office losing market share, notwithstanding the comments made by the previous Secretary of State in his announcement just before Christmas in 1998. A publicly owned and financed business subject to all the traditional constraints on pay and pricing, on acquisitions and borrowing, and on partnerships and joint ventures has become increasingly anachronistic.
        Postal administrations in countries such as Denmark, Germany, the Netherlands, New Zealand and Switzerland are already benefiting from the greater commercial freedoms that they have achieved. We would do well to remember what some of them have done. Some years ago, the Dutch postal business KPN bought TNT for 2 billion Australian dollars—a huge sum. The German post office acquired more than 20 per cent. of the shares in DHL.
        That is the size of the forces massing against us. In both of those countries and in France, the machinery and the rules of the European Union are being used to strengthen those postal organisations before they are fully or even partially privatised. That gives an idea of the market pressures that will be exerted on our own Post Office.
        The Bill takes a faltering step down the path to the reality of the commercial world, but surely the Post Office, and in particular Royal Mail, must be set completely free through privatisation, if it is not to be a bit player on the world stage of postal matters. If, before the next general election, the Government want to take that extra step towards privatisation, they can rest assured that we would be only too willing to assist them in that task.
        10.37 pm
        Mr. Cotter: The atmosphere in Committee was good natured, and I congratulate the Minister, especially on accepting my amendments and introducing measures that we welcomed. [Interruption.] The unaccustomed support of my hon. Friends has somewhat put me off.
        We are approaching the end of a long process to bring the Post Office into the 21st century. The previous Tory Government lost many valuable years while they hummed and hawed about whether to privatise or whether to do anything at all. In fact, they did nothing.
        942
        From 1992 to 1997 the Post Office was in limbo. In July 1992 the Tory Government announced a review of the structure and operations of the Post Office. In 1994 a consultation paper was issued. The confusion carried on, with the Tory President of the Board of Trade saying that he preferred privatisation as an option for the Post Office, but did not have parliamentary support.
        In 1996 privatisation was back on the agenda, with a plan to break the Post Office up into 11 regional franchises, similar to the rail privatisation. It was reported that as part of the proposed measures, a 5p cut was possible in the rates for London postal deliveries, which would have had an impact elsewhere in the country.
        The previous Government wasted much time in discussion. I recollect that in Committee, the spokesman for the Conservatives complained that we were rushing matters. However, the Government have addressed many of the issues that needed to be addressed. I am glad that they have recognised the need for a publicly owned service. The importance of the Post Office to communities is reflected by the extraordinary number of debates on it that we have had in recent months, as Ministers know. Only last week, there was a strong lobby.
        We were pleased but muted in our response today when the Secretary of State introduced new clause 1 because, as the right hon. Gentleman will recognise, his opacity was very much to the fore. We want clarification. We want the new clause to be implemented, and we are pleased that the Government seem to have responded to pressure from the lobbies—
        Mr. Don Foster: And from you.
        Mr. Cotter: And from me, as my colleague says. Anyway, the Government seem to have responded to pressure with their proposal for a subsidy, but, as I have said, we await clarification.
        Mr. Hancock: Does my hon. Friend agree that a cloud of doubt and uncertainty still hangs over the sub-post office network, and that, despite the promise that they gave earlier this evening, the Government have not done enough to give credibility to their claim that it is safe in their hands?
        Mr. Cotter: I agree. So many issues are involved that I could wax on indefinitely—[Interruption.] I assure you that I will not, Mr. Deputy Speaker, but let me deal with just one of those issues.
        We are concerned about sub-post offices, and about the closure of banks. We have had an assurance from the Government; when I had a meeting with a top manager just the other day, he said that he was in touch with 12 banks with the aim of getting a service operating. That is welcome, but we still have the problem of the lack of clarity. There is still the question of whether the Horizon project will work well with the software that needs to be designed. Will it be able to offer a real banking service?
        As my hon. Friend the Member for Portsmouth, South (Mr. Hancock) pointed out, there are many other issues to be dealt with, but I shall not deal with them at this time of night. [HON. MEMBERS: "Keep going!"] I shall finish while I am ahead.
        We are keen to see what will happen, especially to sub-post offices. We shall wait to see how words translate into action, and, in that sense, I look forward to future moves by the Government.
        10.42 pm
        Mr. Edward Leigh: The Bill proves that, however often things seem to change, they never change. It is much the same Bill that officials brought to us in April or May 1992, when we had won a general election. We rejected that partial approach on the basis that it was muddled and half-hearted, and would not deliver the first-class postal system that the country needs and deserves.
        I suppose the Government will argue that the Bill represents a sensible and non-ideological point of view. In fact, a sensible way of proceeding would be to recognise that Royal Mail is a successful, profit-making international company, at least potentially, and that, as such, it simply must be allowed to compete. It must be allowed to make acquisitions; it must be able to beat off the challenges of the technological age, and, above all, to beat off fierce competition from its German and Dutch rivals. As long as it is under state control, it will never be able to be the highly successful company that it could be.
        That is Royal Mail, and that is the future of Royal Mail. That is what Royal Mail will become in the long term. If only Ministers like the Secretary of State, who believe in the vision that I have described, had had the courage of their convictions, we would not now be discussing the privatisation of Royal Mail.
        Mr. Derek Wyatt: Does the hon. Gentleman accept that, if we took just that line, many sub-post offices would close?
        Mr. Leigh: That is the point of view—the untruth, in a sense—that the Opposition always present. They try to muddle up two issues. [HON. MEMBERS: "The Opposition?"] The opposition to what I have been saying, that is.
        Two businesses are involved. There is Royal Mail, which is a competitive, profitable business that can be privatised; and there is Post Office Counters Ltd, an overall national structure which, I agree, cannot be privatised. We made that clear—[Interruption.] The national structure—Post Office Counters—is owned by the state. We made it clear when we were hoping to privatise Royal Mail that Post Office Counters would be retained in the public sector to ensure an income stream to the privatised sub-post offices. [Interruption.]
        Mr. Deputy Speaker (Mr. Michael J. Martin): Order. It is extremely unfair to the hon. Gentleman that so many conversations are taking place. The House must come to order.
        Mr. Leigh: The Government constantly repeat that the Conservative party wants to privatise the Post Office, yet we intended to privatise only Royal Mail. We never intended to privatise Post Office Counters. Despite our determination to privatise Royal Mail, we would have maintained the universal tariff and universal delivery. [HON. MEMBERS: "How?"] Through the Post Office regulator. The Bill, which we would have brought before Parliament—and we shall introduce it one day—[Interruption.] What will happen is inevitable. The Government will find that they simply cannot allow the Post Office to be a strange creature, half public, half
        944
        private, owned by the state yet allowed to compete in the private sector. That is unfair and uncompetitive, and it will not happen.
        Labour Back Benchers must know that the Government' s secret agenda is full privatisation. That is the logical conclusion of their proposals. Why not be honest about it and privatise Royal Mail, but with the protections that I described to ensure a universal tariff and universal delivery? That could be achieved.
        Post Office Counters is a different operation. Sub-post offices are already in private hands. They are run by business men and women, who want not subsidies, but an income stream. Post Office Counters must be kept in the public sector and the income stream must be guaranteed. The Bill will not achieve that. The measure gives the Government only the power to provide subsidies.
        The Government's approach to the Post Office Counters network is wrong. Instead of forcing pensioners to accept their pensions through a bank account, we should mechanise sub-post offices and ensure that every sub-post office has the ability to develop modern post office and banking services. Pensioners could thus take their pensions from sub-post offices. The Government claim that they are providing for that. Their constant refrain is that a pension costs only 1p to deliver through the bank, but 48p through the Post Office. However, they do not admit that although it costs 1p to transfer the money from the bank to local distribution centres, it costs much more to pass the money over the counter.
        Today we read that Lloyds bank will charge its customers 50p to use the cash machines. The Government must come clean; there is no way out. Once one forces pensioners to accept their pensions through a bank account, they will be subject to hidden charges. Nobody has explained how those costs will be paid. Banks are not charitable organisations; they will insist on their costs being met. The public purse or pensioners will ultimately have to pay. That is why the Government's approach is wrong.
        The Government could have introduced a Bill that ensured that Royal Mail was competitive, profitable and independent. They could have retained Post Office Counters in the public sector and guaranteed an income stream for sub-post offices. They could have helped sub-post offices to mechanise and prepare for the future. That would have been an exciting, worthwhile and right measure. The Bill simply represents the Secretary of State putting a toe in the water. It is a pity that he cannot have the courage of his convictions and introduce a Bill that we all support.
        10.49 pm
        Mr. Baldry: I promise not to detain the House long, but, having sat through proceedings on a number of Select Committee reports on the Post Office and most of the debates in Committee, I want to make a few comments.
        On Third Reading, the Bill is a muddled halfway house and the Government have failed to give the Post Office the freedom that it needs to compete against its international rivals. Without full commercial freedom, it cannot take advantage of being the most efficient postal service in the world. Curiously, new clause 1, which proposed some subsidies, was introduced on Report. All Conservative Members, along with the National Federation of Sub-Postmasters, wish that not an opaque

        945
        subsidy, but a real income stream, had been introduced to support the post office network. The proposal was needed only because the Government are proceeding with the disastrous policy of switching to automated credit transfer, which threatens the survival of thousands of sub-post offices across Britain.
        In months to come, Conservative Members will look for transparency in the accounting structures to ensure that there is no undue or hidden cross-subsidy from monopoly to non-monopoly areas in the Post Office. We have welcomed the decision to grant plc status, but there is no support for the 100 per cent. retention of public ownership. The Government should have sold at least 51 per cent. of the shares, which would have enabled the Post Office to compete on a level playing field, particularly with Dutch and German post offices. We all know why the Government held back and this evening we heard examples of how they are beholden to the trade unions. The Minister said that Post Office Bills come around only once every decade and it will be interesting to see how long this one endures. Back-tracking on plans to reduce the Post Office's legal monopoly over deliveries from £1 to 50p, which followed strong trade union opposition, is another example of how the Government are in thrall to the unions.
        Without full commercial freedom, the Post Office cannot take advantage of being the most efficient postal service in the world, so there is real doubt as to whether the Bill will succeed in its aim of providing greater commercial freedoms. It offers little comfort to those threatened with the loss of their livelihood following the Treasury-led decision to switch benefit payments to ACT and the future of a third of the 18,5000 sub-post offices is at risk.
        Although the Bill puts in place the mechanism for setting out access criteria for the post office network, details will not be forthcoming until after the performance and innovation unit has reported. Again, that is a bizarre way to implement legislation. However, nothing surprises me about a Government who managed to introduce what they admit to be the most important measure in the Bill not on Second Reading or in Committee, but on Report. That is perhaps their hallmark; it is certainly the hallmark of the Department of Trade and Industry. They create huge problems and spend a considerable time struggling to solve them. That is apparent in automotive industry policy, energy policy—yesterday's statement to the House made it clear—and postal services policy.
        We all hope that the Post Office will be able to compete against international competition, but I fear that this muddled, halfway house of a Bill is a disservice to the Post Office and to United Kingdom consumers.
        10.53 pm
        Mr. Burns: As my hon. Friend the Member for Banbury (Mr. Baldry) said, the Bill is a muddled halfway house. It represents a group of issues that have been lumped together in a Post Office Bill because they relate to post offices. However, for people outside the House who are not aficionados of the minutiae of the problems facing the Post Office in respect of its ability to compete, the outstanding concern is the future of the post office and sub-post office network throughout this country.
        As the Secretary of State candidly admitted in a somewhat cavalier fashion, his thinking and decision making were affected not by the relevance of last
        946
        Wednesday's debates in Westminster Hall and in the Chamber, but—his words show how the Government treat the House with utter contempt—the 3 million signatures on the petition from sub-post offices. That is what most influenced his decision to try to allay public fears.
        The thing that worries me about the Bill is that all of us, regardless of which side of the House we are on, have in the past six months or so seen the concerns and anger of pensioners and others in receipt of benefits who use either their rural sub-post office or their suburban post office to collect those benefits. We have seen the concerns and anger of postmasters and postmistresses, whose livelihoods have depended on the structure and business as currently constituted. That anger has been caused by the Treasury's decision, aided and abetted by the Secretary of State for Social Security, to change the way in which benefits will be paid.
        Figures have been bandied about over a number of weeks and months, both on the Floor of the House and in Committee—there has been the threat of possibly a third of sub-post offices being closed. That is what has generated tremendous fear among those who use sub-post offices and those who operate them, for whom it is their livelihood.
        It has brought fear to a number of Labour Members, who have witnessed the pressures felt by their constituents who have been so concerned about the implications of the Treasury-driven policies. One only has to read regional newspapers to realise that Labour Members are queueing up to have their photographs appear in them, claiming their support for sub-post offices and for the rights of their constituents to continue to collect their benefits as they always have. However, it is interesting that few Labour Members have today echoed the concerns that they expressed in local newspapers.
        The Deputy Chief Whip, the hon. Member for Manchester, Withington (Mr. Bradley), has been sitting in his place listening to the debate. No doubt the serried ranks behind him have been aware of it. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) described the Secretary of State as the Corporal Jones of the scenario. The Deputy Chief Whip's colleagues behind him know that Herr Flick is keeping an eye on the cohorts of the Labour Benches to ensure that no one gets up and causes any problems for the Government.
        The problem is new clause 1, which the Secretary of State introduced today. I do not believe that its inclusion in the Bill, to which presumably we will give a Third Reading in the not too distant future, enhances the Bill. I do not believe that it addresses the problems that the Secretary of State has sought to convince the House it does.
        The new clause seeks to introduce a subsidy system. The trouble is that it is so vague. There are so many ifs, buts, mays and shalls in it that there are many escape routes that allow the Government not to bring in a scheme if they decide at a later date either that they can get away with not doing so, or, as my hon. Friend the Member for West Dorset (Mr. Letwin) said, that they do not want to open up a bottomless pit of public subsidies ad infinitum.
        As was said earlier, subsection (6) of the new clause even has a provision to ensure that the power to make a scheme under the new clause shall not be exercised without the consent of the Treasury.

        947
        As I reminded the Secretary of State for Trade and Industry in an intervention—which he did not deal with specifically—he has been a Chief Secretary to the Treasury; and, as any Chief Secretary will know, the Treasury's workings are supreme within Government. The Treasury's consent for any scheme involving the expenditure of public money is the paramount factor.
        It will be interesting to see whether the Secretary of State is sufficiently candid to tell the House before the Bill is passed whether the Treasury and the Department of Trade and Industry have calculated the subsidy's cost; whether the Treasury has told him that it has placed a ceiling on the amount of public money it is prepared to spend, thereby possibly restricting the scheme's effectiveness; and whether the scheme is time limited or open ended.
        If we are to deal with the concerns of the general public and of those who run sub-post offices, we need answers to those questions. Sub-postmasters need to know whether they will be helped, or whether the scheme is simply spin. They need to know whether—once the Bill is passed by both Houses and Parliament can no longer try to amend it, and if the Government will not implement the scheme that the Secretary of State has unveiled today—they will be left to hang out to dry.
        As half a fish is better than none, I do not oppose new clause 1. However, it is seriously flawed by its vagueness and by the sparsity of detail on it provided to the House. I hope that the Minister who replies to the debate will address those issues. [Interruption.] The Deputy Chief Whip disappoints me by shaking his head. He seems to be suggesting that no Minister will bother to reply to the debate. That is unfortunate because this is an important Third Reading debate on an important Bill. We should have had that information before Third Reading.
        11.2 pm
        Mr. Tim Collins: As has been said often in the debate, the Bill is somewhat disappointing. I give the Government half marks for recognising that the Post Office needs greater commercial freedom, and also for recognising that their own decision making has threatened the future of the rural post office network and that they need to be responsible for providing financial support.
        I cannot, however, give them credit for the half-hearted way in which they have introduced a half-thought-through privatisation scheme; the way in which they have not properly considered the implications of the commercial freedoms that they are introducing in the Post Office; and—as my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said—the way in which they have clearly inadequately considered the example of similar events elsewhere in Europe and in the rest of the world.
        As for the hon. Member for Weston-super-Mare (Mr. Cotter), who spoke on behalf of the Liberal Democrats, I give him credit for making a speech that, in many ways, was a typical Liberal Democrat speech. He was half on the Government's side and half against the Government. He therefore spent most of his speech attacking the official Opposition. He certainly gave no justification—no justification can be given—for Liberal
        948
        Democrat Members' decision last week to vote with the Government against the official Opposition on a motion to save the rural post office network by scrapping the Government's plans.
        Mr. Edward Davey: Will the hon. Gentleman give way?
        Mr. Collins: I have no intention of giving way to the hon. Gentleman; we have heard quite enough from the Liberal Democrats on these matters.
        It is deeply disappointing to hear from the Government that they believe that new clause 1 will provide the solution to the difficulty that they themselves have created. I agree with my hon. Friend the Member for West Chelmsford (Mr. Burns) that the Secretary of State is increasingly resorting to short-term temporary subsidies to get himself out of short-term political difficulties. This week, the consensus in the national newspapers has been that the Secretary of State's announcement on a subsidy scheme for the coal industry was designed simply to keep minds open until after polling day in the general election.
        Mr. Deputy Speaker: Order. We are debating the Bill's Third Reading, not what is happening in the coal industry.
        Mr. Collins: The suspicion, Mr. Deputy Speaker, is that the subsidy in this Bill has precisely the same short-term purpose—merely to keep post offices open until after polling day, after which the Secretary of State will not be interested.
        If rural post offices are dependent on Treasury funding, they will be mindful of the fact that Treasury funding under this Government has not been sufficient to keep our police stations open or our roads and village schools maintained. The same Treasury, with the same Ministers providing the same funding formula, will supposedly keep open our local post offices. The result, once again, will be a betrayal by the Government.
        In last week's debate, I asked the Secretary of State whether he could guarantee to match the one third of income to be lost by Mrs. Hilary Pavitt, the postmistress at Kent's Bank post office at Grange-over-Sands. He refused to give that guarantee then. Nothing that he has said today leaves me with any greater indication that she will get the resources that she needs. The Bill is a short-term political fix from a Secretary of State who is in a lot of short-term political fixes at the moment.
        11.6 pm
        Mr. Edward Davey: It is shocking that the hon. Member for Westmorland and Lonsdale (Mr. Collins) criticised the Liberal Democrats for not supporting a Conservative motion which asked this House to applaud the record of the last Conservative Government. Under that Government, approximately 3,000 post offices in the network closed. There was no way this party would support such a motion, because it was hypocritical and did a lot of damage to the current campaign to persuade the Government to change their mind and defend the post office network. The Conservatives do pensioners no favours with their hypocrisies, and we will not support such statements.

        949
        Before coming to this House, I was a management consultant for a company called Omega Partners, which did a lot of work in the postal service industry. I visited 40 postal administrations and worked for 12 of them. I wrote a paper, co-authored with a company called Pricewaterhouse, for the US Congress on how one could commercialise, deregulate and liberalise postal markets.
        That study looked at the experience of post offices internationally and how they could commercialise and gain commercial freedoms, as the Bill seeks to provide for the British Post Office. It was clear that post offices had managed to enter the modern world, take on modern management theory and develop and modernise their postal services while remaining in the public sector. To that extent, I welcome the Bill, which retains the UK Post Office in the public sector.
        However, the commercial freedoms that are being given to the Post Office in the Bill are limited. Countries such as New Zealand, Finland and Sweden have enabled the management of their post offices to invest, develop modern technology, have freedoms to manage their work forces more effectively and provide the consumer with a better-quality service at a lower price. They have been able to do that far more ambitiously than this rather timid Bill proposes.
        When the New Zealand post office was given its commercial freedom, it was allowed four long-term lines of credit with private sector banks. These were not guaranteed by the state; therefore, they did not score in what used to be called the public sector borrowing requirement.
        Mr. Alan Johnson: I just wondered whether the hon. Gentleman had noticed in the course of his investigations that New Zealand Post no longer delivers to the door in rural areas; and that, despite paying a charge of $80 a year, rural customers still have to collect their mail from the nearest post office.
        Mr. Davey: I am well aware of that, but the Minister does not give the full story. He may not know that I have visited New Zealand Post twice and I have spoken to the former chief executive, a Mr. Elmar Toime, who is actually a citizen of Australia. He explained that situation when I questioned him on that very point. He said that those circumstances affected a small handful of farms on the south island of New Zealand that were hundreds of miles from the postal network. In other words, New Zealand Post faces totally different geographical and topographical conditions.
        Mr. Deputy Speaker: Order. It is very interesting hearing about New Zealand. I have relatives there and it is nice to hear how they are getting on. However, on Third Reading we should perhaps not be going into such detail. It is necessary to mention only that there are good things and bad things about New Zealand and then move on.
        Mr. Davey: I totally agree with you, Mr. Deputy Speaker; I am in danger of being a post office anorak. However, my point was about capital investment, which goes to the heart of the Bill. The experience of other countries, such as New Zealand, shows that long-term lines of credit that have not been guaranteed by the state have enabled other postal administrations to develop real commercial freedoms to invest significantly and develop their services.
        950
        Those postal services have blossomed, and the only reason we have not taken that route in this country has nothing to do with a tiny number of very remote farms having to collect their post at the end of long lanes, but is connected with Treasury rules that are constraining the development of a potential new type of corporation. New Labour's modernisation programme has not seen fit to modernise the Treasury. The prehistoric, dinosaur thinking of the Treasury has not changed one bit to enable the sort of development that has taken place in other western democracies and allowed them to modernise their public services. That is why the Bill has not lived up to the billing that the Government gave it, and that is a great shame. If the Government had given the Post Office those unguaranteed long-term lines of credit, with no bail-out from the state, it would have enabled the development of a real entrepreneurship within public sector ownership. It is a shame that the Government have not taken that approach.
        Subsidies have been an issue in the debate tonight. In many ways, total nonsense has been talked about subsidy, because there have always been subsidies in the Post Office. The whole system of uniform pricing and uniform tariffs incorporates subsidy, and the idea that there was no subsidy under the Conservatives is nonsense. There were vast subsidies paid between one post office network system and another, between delivery in one city and delivery in another, and between delivery in urban areas and delivery in rural areas. Of course those subsidies existed. The Bill means that they will continue, but in a different form.
        The question is not whether subsidies are paid to maintain a universal postal service in the country—I am sure that all hon. Members would agree that such subsidies are needed; the question is one of transparency. Under the Conservative Government, the subsidies were totally opaque. New clause 1 has brought a degree of increased transparency, although I wish that it made matters clearer. As my hon. Friend the Member for Weston-super-Mare (Mr. Cotter) said, the question of subsidies is still far too opaque, but at least it is clearer than it was under the ancien regime of the former Conservative Government.
        It is amazing that Conservative Members should criticise subsidies now. Subsidies existed under the previous Conservative Government, who were not prepared to acknowledge them. They wanted to try to hide them and pretend that they did not exist.
        Mr. Leigh: Does not their acceptance of the universal service and universal tariff shout from the rooftops the fact that the previous Conservative Government, like every other Government, accepted the principle of cross-subsidy in the Post Office?
        Mr. Davey: That was exactly my point, but the question is whether a Government are willing to make those subsidies more transparent. This Government are going down that road, and the previous Government did not. I think greater transparency in subsidies would assist public policy development.
        Finally, I am worried that the Bill does not protect sufficiently the ordinary post offices in my constituency. Under the Conservative Government, post offices in Kingston, Tolworth and Surbiton were closed. The Bill will cause some of the retail outlets that took over some of those post offices' responsibilities to close as well.

        951
        That would be a great shame. People will be put out of business. Pensioners will have to take long bus journeys into town to collect their pensions. That will reduce the services available to my constituents, and I sincerely regret that the Government are going down this route.
        The Government should be modernising by trying to assist the Post Office to take on contracts from the banks. The Bill does not do that, and it fails to give real commercial freedom to the Post Office. It is therefore a missed opportunity.
        11.18 pm
        Mr. McLoughlin: Having listened to the hon. Member for Kingston and Surbiton (Mr. Davey), I am glad that the Liberal Democrats are the Government's allies, and not the Opposition's. The hon. Gentleman said that he has studied the matter with great care and has examined what has gone on in New Zealand, but the Minister was able to point out some of the disparities between the universal service here and the service in New Zealand.
        The hon. Member for Kingston and Surbiton answered that we should not worry about a few farmers scattered around the ends of the earth. That is an insult to farmers in my constituency of West Derbyshire—and to farmers in the Romsey constituency. I shall take every opportunity to make sure that they are aware of what the hon. Gentleman said.
        I shall not make a long speech, unlike the hon. Member for Kingston and Surbiton, who took us on a world tour.
        Mr. Edward Davey: The hon. Gentleman does not have a clue.
        Mr. McLoughlin: The hon. Gentleman says that I do not have a clue, but if he spoke with a clue, I am glad that I speak without one.
        I am sorry that the Secretary of State waited so long before bringing new clause 1 before the House. In so doing, he did not give us enough opportunity to study the new clause. Having seen it, I can understand why he did not want to give us long to study it. The new clause does not say that there will be a subsidy to village post offices, or what level of subsidy it will be. Let us be clear that we are talking about sub-post offices.
        The hon. Member for Kingston and Surbiton talked about 3,000 post offices having closed during 18 years of Conservative Government. Post offices will close, given the very nature of their business. They are often run from people's homes, and when the people running them want to retire and sell their homes, that leads to closures. I accept that there were closures under the previous Government, yet over the past three years we have seen
        952
        1,000 closures. That is an escalation of post office closures on a massive scale, which is why the Government introduced their new clause. When the Bill was first conceived, the Government were not looking at supporting the sub-post office network. It is only as the Bill has progressed through the House that the new clause has been brought forward.
        I have seen the number of post office closures in my constituency escalate dramatically. There have been closures in Cubley, Longford, Roston, Flagg, Lea Bridge, Tissington, Fenny Bentley and Taddington. Such a major escalation of closures is a cause of concern. It is partly due to the Government's insistence on the switch to automated credit transfer and the fear that that decision has struck into the sub-post office network. That is why, after much pressure on the Government, we have managed to drag out from them this new clause.
        I hope that the new clause will do what the Government desire. We will be watching future closures very closely. The system of subsidy does not reflect the great difference in the rural network of sub-post offices. Some are open for two hours in the morning for four or five days a week, while others are full time. It will be interesting to see how the Government arrive at the formula to give subsidies to community post offices and to those that offer full services in rural areas.
        We have not found out enough from the Government. I hope that when the Bill goes to another place, people there will tease out from the Government exactly what they are talking about in new clause 1. I hope that the other place will fulfil that role.
        Question put and agreed to.
        Bill accordingly read the Third time, and passed.

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

    DELEGATED LEGISLATION
      CRIMINAL LAW
      That the draft Youth Justice Board for England and Wales Order 2000, which was laid before this House on 3rd April, be approved.

      LOCAL GOVERNMENT FINANCE
      That the Local Government Finance (England) Special Grant Report (No. 61) on Special Grants for School Standards, Support of School Budgets and Costs of Transitional Funding (HC 399), which was laid before this House on 6th April, be approved.—[Mr. Betts.]
      Question agreed to.

    Assisted Areas Map
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]
    11.24 pm
    Mr. Malcolm Moss: The Minister's announcement on 10 April of the Government's intention to submit an amended set of proposals for new assisted areas brought disappointment and dismay to many of my constituents and delivered a body blow to the Fenland area. It is almost a year since I stood in more or less the same place in the Chamber to plead the case for the continuation of assisted area status for Wisbech. At that time, the Government were making their first attempt to redraw the regional selective assistance map of the United Kingdom. We were delighted that a new area, embracing Fenland district council and King's Lynn and West Norfolk borough council, was designated by the Government and included in their submission to the European Commission in July 1999.
    Imagine our devastation, then, when we heard of the Government's latest U-turn. Our area is to be removed from the assisted area map because of concerns expressed by the Commission, and we have only three weeks for consultation. I believe that the Government have made an error of judgment, and I shall try to put the case for reinstatement of the Fenland partnership area in the assisted area map.
    No one disputes that there must be rules and strict criteria to identify areas that warrant regional selective assistance. However, a model that fits the city-region concept of mainland Europe does not necessarily embrace the particular needs of rural areas in the UK. To my mind, the key is flexibility, without which needy areas such as Fenland and others in the eastern region will lose out.
    The new criteria set by the Commission require a reduced population coverage of the national map. The eastern region has provided 43 per cent. of the reduction. That can hardly be fair when eight regions are involved. The east of England is being asked to shoulder the lion's share of the proposed reduction, but has also received the lowest funding for its regional development agency and its inward investment effort.
    Several companies with the potential to employ significant numbers in a rural area suffering from a steady reduction in agricultural employment have been encouraged to consider investment in the fens. They have been attracted by the opportunity of offsetting logistical disadvantages with financial assistance. I believe that Fenland and King's Lynn and West Norfolk deserve reinstatement.
    Let us consider the track record of assisted area status in the Wisbech travel-to-work area, which has been the cornerstone of economic regeneration in the area since 1993. The area has an impressive track record in attracting grant, assisting companies and creating and safeguarding jobs. Some 75 offers of grant were made, totalling £5.6 million. That levered in some £35 million in private investment. A total of 1,043 jobs were safeguarded, and 1,296 created. There is both an opportunity and a need to continue to make effective use of regional selective assistance grants and to secure best value from them in the King's Lynn and Fenland areas.
    954
    In the recently published draft regional planning guidance, paragraph 4.2.5 states that a key element of the strategy is
    addressing the remaining disparities in opportunities and quality of life across the region through a focus on the priority areas for regeneration.
    Policy 10 of the guidance states:
    Development plans should include policies consistent with sustainable development to promote regeneration, economic enhancement and environment protection and enhancement of the Priority Areas for Regeneration, including Wisbech and the remote rural areas, the Rural Development Areas and those rural areas designated under the European Union's Objective 2 and Transitional Objective 5b programmes.
    Among other things, policies in those priority areas should, first, ensure an adequate supply of land, employment and premises; secondly, promote the areas for inward investment; and, thirdly, provide business support services.
    The priority areas for the regeneration strategy are also reflected in the regional economic development strategy published by the East of England development agency. One of the aims of that strategy is the development of a thriving rural economy. Strategic priorities identified in the REDS include the attraction of new and high-growth businesses to the area; the revival of market towns; and the support of diversification in the agricultural sector. The strategy also refers specifically to the rural development area and to the Wisbech priority area for economic regeneration.
    If the Government are serious about developing a thriving rural economy and targeting resources on priority areas for regeneration, they must understand the important role that assisted area designation has played, and can play in future, in delivering their stated economic objectives in the fens. To withdraw assisted area status does not represent joined-up thinking on the implementation of their policies for those areas that have already been identified as priorities for regeneration.
    Although current economic headline indicators might not appear to be as poor as those for other areas, the Fenland and the King's Lynn and West Norfolk areas are characterised by an exposure to structural decline among traditional local industries; by over-dependence on declining economic sectors—Fenland is placed at 443 out of 459 in the Henley centre's industrial structure index; by a forecast jobs gap of 9,800 by 2006; by low educational attainment and skills; by lack of an investment image and a credible offer in the investment market; by a cost-value gap for industrial and commercial development that inhibits investment; and, finally, by peripherality and poor strategic transport infrastructure.
    The substantive case relates to the underpinning principles of the Industrial Development Act 1982, which clearly states that the Secretary of State
    shall have regard to all the circumstances, actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies.
    The economy of the area has shown some improvement in recent years, in line with the national picture. However, the local economy and employment are based on industries that are in rapid decline, where only continuing capital investment will prevent rundown and closure. Recent closures and job losses in the fens include H.L. Foods Ltd., which is making 300 people redundant. Kings Lynn Steel is closing, creating 40 redundancies;

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    SCL Breamist Ltd. is closing, making 70 people redundant; and Courtaulds is closing with 75 redundancies.
    Without the designation, private sector investments will be diverted elsewhere in the United Kingdom and to Europe. Nor have the fens benefited from a jobs and business spin-out from Cambridge with its high-tech and knowledge-based economy—despite its geographical proximity. That benefit may reach the southern parts of the fens in the longer term, but it is unlikely to affect the whole area until there are significant improvements in the skills of the work force and in the transport infrastructure. It is simply unrealistic to expect benefits from Cambridge.
    The area's poor future prospects are demonstrated by the fact that it has little representation in the seven sectors identified by the East of England development agency as key to the region's future growth and prosperity. The fens has a far lower proportion of employment in those sectors than the region or England as a whole. It also has a work force with considerably lower educational attainment and skill levels than elsewhere in the region. Such attainment and skills are essential to attract and support these high-growth sectors.
    The withdrawal of assisted area status puts at risk the attraction of the areas to future investors. Specifically at risk is a significant investment by a European company in the fens.
    I have in front of me a letter from the managing director of Graveley Packing, owned by Budelpack, a Dutch company. The managing director, James Robinson, writes to me in the following vein:
    I was dismayed to hear the news that the Government has decided to remove Fenland from the above grant assistance.
    As you may know we applied for, and received, a grant of £0.5m towards buildings and equipment under the selective regional assistance scheme. This of course was subject to the EC confirming the UK regional proposals. The grant was based upon the creation of 283 permanent and 75 temporary jobs in addition to safeguarding the current 125 jobs.
    Because industrial property values in March
    in the constituency of North-East Cambridgeshire
    are extremely low we have to take a substantial loss on our investment. Our new building will cost £3.8 million. Its open market value when complete will be
    only
    £2.8m. We have had huge difficulty in obtaining adequate external finance for the building because of this Elm cost-value gap. I have today received a suitable offer but unfortunately it is dependent on grant assistance being
    made
    available to us.
    It appears therefore that this decision, if confirmed, has pulled the rug out from under our scheme and its associated job creation.
    The possible consolation prize of tier 3 assistance of some 7.5 per cent. grant aid to a maximum of £75,000 in Cambridgeshire is not an option. That company is unlikely to be eligible, as it is too large and multinational—and, of course, the Dutch parent company takes a dim view of what has taken place.
    While the first programme of assisted area benefits had largely helped the indigenous business base, there were emerging benefits of attracting new firms to the area from
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    abroad. Those benefits will now be lost, as the fens will no longer be able to offer financial support for companies seeking to relocate to the area.
    The way forward for the fens is to redraw the whole map and provide the fens with the assistance that it needs. I know that we have only a few weeks for consultation and I recognise the need for the Government to press on with the regional map so that the key areas may receive the necessary financial assistance. Therefore, in asking the Minister to consider redrawing the map, I realise that it is something of a tall order.
    However, last week, the Government, in launching their national strategy for neighbourhood renewal, acknowledged that job creation was the key to addressing social exclusion. Regional selective assistance and the invaluable help that it provides in both creating and retaining jobs is crucial to addressing the wider deprivation and social exclusion problems facing the fens. It will support investment to retain and enhance the competitiveness and performance of existing industry—notably the food cluster that we have in that part of the fens. It will be a vital tool in creating opportunities for rewarding work, raising aspirations and making learning pay. Finally, it will promote private sector investment in infrastructure and property, essential prerequisites for attracting and creating more businesses.
    All the agencies in the fens area are committed to working together in a co-ordinated way to address the area's problems. The area had already suffered one body blow, with its failure last autumn to be designated as an objective 2 area. Without RSA designation, it is likely to miss out on other forms of national support, such as the single regeneration budget and EEDA's partnership investment programme, which is largely tied to such priority areas. The funding available to EEDA, as the most poorly resourced RDA in England, is already limited. Targeting to objective 2 and RSA areas will mean that little funding is available for other areas that are not so designated.
    Assisted area designation up to 1999 brought significant benefits to Wisbech. It helped the area benefit from the general improvement in the national economy. However, agencies in the fens believe that this is only a temporary position, and that with the removal of two core pillars of support—objective 2 and the RSA—the economy will falter and slip into decline. Assisted area designation will help prevent that, and, as we all know, prevention is better and less costly than cure.
    The Minister will now know that the fens should not be bypassed again, and he should give the partners—notably the East of England development agency—the resources to do their job. I ask the Minister to assist and encourage all central Government, regional and local agencies and the private sector to work together to address the problems of the fens area. We hope that, in this very short consultation period, they will listen to all the representations made to them by the interested parties, and reinstate the fens on the assisted area map.
    11.42 pm
    Dr. George Turner: I congratulate the hon. Member for North East Cambridgeshire (Mr. Moss) on securing this short debate, and thank him for allowing me to contribute briefly to it.
    As the hon. Gentleman pointed out, the area that earlier had assisted area status included the fenlands part of my constituency to the west of King's Lynn, which forms

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    almost a separate travel-to-work area from the Wisbech area. The hon. Gentleman made the case very clearly with regard to the disappointment that will be felt by my constituents who live in that fenlands part of my constituency, who will feel the same deprivation as his constituency will feel over the withdrawal of support for that travel-to-work area.
    I must admit that there was some icing on the cake for us last summer, when we heard that the Government were taking to Europe proposals to extend the former area to include much of the rest of my constituency—in particular, some of the major areas of deprivation in the King's Lynn area itself. It is a part of the country that has lost many jobs as a result of the decline of fishing from the port and the loss of the food processing and canning works which were there historically, and one that suffers from a great portion of work being too low-paid and in non-growth areas of the economy. We were looking forward to the extra support that assisted area status would have brought to us.
    Those constituents saw what they had thought would be some icing and some jam taken away from them. I suppose that they will reflect that, under the same Government in the past three years, unemployment has dropped considerably within the area. The economic development officer will have a harder case to make in pressing the need for assisted area status than he would have had three or four years ago, thanks to the Government's success in running the economy.
    I should like to add two points to those made by the hon. Gentleman. First, could my right hon. Friend the Minister assure us that the case that is being drawn up will be considered carefully? The representations and the work being done now will be considered in a short consultation period, so will he assure my constituents that that does not mean, as some cynically think, that the representations will not be listened to? Secondly, will he assure us that the decision, which was pushed on us in large part from Europe, does not mean that the Government will withdraw other measures of support and that they will consider carefully the needs of the area? As the hon. Gentleman said, we have one of the worst funded—by almost a factor of two—regional development agencies in the country. There is concern that not enough measures are in place to support the economy if assisted area status is not given to us.
    11.45 pm
    The Minister for Trade (Mr. Richard Caborn): I commend the hon. Member for North East Cambridgeshire (Mr. Moss) on the case that he has put forward on behalf of his constituents for assisted area status. I understand his disappointment and that of my hon. Friend the Member for North-West Norfolk (Dr. Turner). May I point out at the outset that—yes—the consultation period is short, but we will consider all representations very seriously?
    The east of England region, even under the amended proposals, will have an increase in coverage on the assisted areas map, which was introduced in 1993. That increase has been made at a time when the overall population coverage has been reduced by a fifth. Overall, the amended proposals will represent a pretty good deal for the east of England region.
    There is, I know, disappointment in King's Lynn and the fenland areas. However, there is a recognition and understanding of why the changes have been made.
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    Indeed, I was particularly interested to read last Tuesday's article on the assisted areas announcement in the Eastern Daily Press. In that article, the chairman of the development committee of King's Lynn and West Norfolk council is quoted as saying that, in comparison with other areas—including Yarmouth, Lowestoft and Luton—that area has not done too badly. Similarly officials at Fenland council are quoted as saying:
    The first time we applied for assisted area status in 1994, unemployment was three times above the national average and now it is only half of one per cent. above it. There are areas of much greater need than ours.
    The local newspaper and the people who were quoted were responsible to make that point.
    The Eastern Daily Press article clearly shows that, although there is disappointment, there is also an understanding of why we have made the choices that we have. Our objective for the new assisted areas is to target assistance on areas of need where such assistance will be effective in meeting that need. That remains the case.
    However, we are trying to meet our objective within the population ceiling that the European Commission has set us. If we include King's Lynn and Fenland in our proposals, another area—either in the region or across the country—will have to come out to facilitate that. That is the hard choice that we have had to make.
    We recognised the needs of King's Lynn and Fenland in our original proposals and I can assure the hon. Member for North East Cambridgeshire that we fought hard to secure the July proposals that we submitted to the European Commission. However, ultimately the Commission holds the whip hand on assisted areas. Therefore, we were faced with the choice of amending our proposals or facing, as the hon. Gentleman underlined, a lengthy and uncertain investigation process, at the end of which we might still have been in exactly the same position as we are now.
    The hon. Gentleman may find it helpful if I set out the background to the changes that we made last week. The Commission made it clear to us that it was concerned that our July proposals would have given the United Kingdom an unfair advantage over other member states. However, in view of the misconception that appears to be held by some people, I want to stress that the Commission did not decide that our July proposals were illegal. Also, I note that it has never accused us of gerrymandering them.
    The competition directorate of the Commission was concerned that our approach to the July proposals might have allowed the UK to include employment sites within the assisted areas without including the population in surrounding areas who might benefit from aid given to the businesses on those sites. Within our population ceiling, that would have allowed the UK greater scope for securing mobile investment in competition with our European partners.
    In view of those doubts, Commissioner Monti informed us that unless the proposals were amended, he would be required to open an investigative procedure under article 88(2). Under that procedure, the Commission would set out its concerns about the UK's proposals and invite comments from interested parties, not just in the UK but in every member state. It would then, in the light of those comments, decide whether to accept the proposals.
    Even if our proposals were accepted at the end of that procedure, approval of the new assisted areas would be delayed by up to six months. The hon. Gentleman

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    recognised that there would have been a risk that our original proposals would not be accepted at the end of the article 88(2) procedure, given the Commission's concern that our proposals gave us an unfair advantage and given the scope for interested parties in other member states to put their case. The only alternative open to us, other than the article 88(2) procedure, was to amend our proposals to meet the Commission's concerns, and that is what we duly did.
    We are not alone in amending our proposals in response to the concerns raised by the Commission. The European Commission opened article 88(2) proceedings against the proposals submitted by Germany, France, the Netherlands, Belgium, Portugal and Italy. Germany, Belgium, France and the Netherlands have amended, or are amending, their proposals in response to the Commission's request. The procedure continues for the other member states.
    With many other member states making changes and securing the Commission's agreement to their new regional aid maps, it would have been wrong to continue to press our case with no guarantee of success. The new assisted areas map will benefit some 16.5 million people in the UK. During the seven years that the map is in place, companies will be able to apply for grant aid from total expenditure currently in excess of £250 million a year. Further delay and uncertainty would have been damaging to those people and businesses.
    We have had to make a number of hard decisions and as a consequence some areas have had to be removed from the map. Although that is obviously disappointing
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    for the areas concerned, I am confident that our new proposals present the best possible deal that we could broker with the Commission.
    I should, however, make it clear that the new assisted areas are only part of the Government's strategy for tackling regional and local needs. We are putting in place a comprehensive framework for ensuring that all parts of Britain can meet the challenges of the future. We inherited an unco-ordinated, disjointed set of regional bodies. Regional activity on inward investment, supply chains, rural development, physical regeneration and social and economic regeneration were all in separate organisations. There was no overall strategy to bring together regional activity. We have addressed those problems.
    I am pleased that the hon. Gentleman pleaded for more resources for the East of England development agency, and I hope that he will continue to do so. I hope that, if the Conservatives ever get back into power—God forbid—he will argue that the development agencies ought to remain in place, because the official position of Conservative Front-Bench Members is that they will be closed down. It is therefore pleasing that the hon. Gentleman acknowledges the worth of the development agency in the lives of his constituents.
    The hon. Gentleman will also understand that we have devolved power to Scotland and Wales and set up the regional development agencies in England to address the fragmentation to which I referred. Last October, each RDA produced, with local partners, a strategy for improving the economic performance—
    The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at six minutes to Twelve midnight.

Preamble
[MR. MICHAEL J. MARTIN in the Chair]

Tobin Tax
Motion made, and Question proposed,That the sitting be now adjourned.—[Mr. Robert Ainsworth.]
10 am
Mrs. Maria Fyfe: May I begin by saying how grateful I am to have secured the debate, given the competition with other hon. Members for debates in Westminster Hall? I am particularly grateful, as this is an opportune time to debate the subject.
In case anyone in the room does not know what a Tobin tax is, perhaps I had better briefly explain that it is a shorthand way to describe a tax on foreign currency exchange. It is named after Senator Tobin, a Canadian who devised the idea some years ago. I have tabled a parliamentary question on the subject, so I know the Government's view: they reject the idea on the grounds that
it would be almost impossible to achieve a global coverage, and there would be huge scope for avoidance.—[Official Report, 15 March 2000; Vol. 346, c. 188W.]
However, I am not sure whether the advisers in the Treasury are familiar with the work of some highly qualified people who believe that the proposal should be considered, as it is workable and could create enormous benefit worldwide.
A highly regarded economist and former adviser to the Canadian Government, Dr. Rodney Schmidt, recently attended a series of War on Want-sponsored meetings. He argued that, due to changes in technology and banking practices, a Tobin tax would be relatively easy and cheap to impose. He said that the tax could be applied to all deals through the settlement system, which tracks every trade and would be unavoidable. Evasion of the tax and the establishment of Tobin tax havens would be impossible. Dr. Schmidt's paper is available from War on Want. Even if his case were incorrect and the tax were not totally unavoidable, it would be largely unavoidable and should be explored.
An international group interested in the Tobin tax met in Cologne at the G8 summit in June. It heard that a more sophisticated version of the tax with a variable rate could be used to put a stop to the kind of speculation that undermined the south-east Asian tiger economies in 1997–98. A loose grouping of nongovernmental organisations and campaigning groups has set up an electronic bulletin board that will allow future research and co-ordination of activities. There are now many international Tobin tax websites, and War on Want can supply a list of those that it considers best informed.
The tax has political support. In this country alone, about 100 Members of Parliament from all the major parties have expressed support for it, and I congratulate my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) on his activities on the subject. The Trades Union Congress backs the Tobin tax, and a fringe
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meeting with my right hon. Friend the Secretary of State for International Development at last year's Labour party conference attracted more than 200 delegates. Thousands of War on Want members and supporters are keen on the idea, and it is no wonder that people are so interested. Levelled at a modest rate—say 0.25 per cent.-it could raise the astonishing figure of $250 billion a year to help fight poverty and calm down volatile markets.
Who would be upset if the tax were imposed? Apparently, HSBC, NatWest and Barclays are major players in the currency trading markets. Pension funds, hedge funds, insurance companies, trans-national groups and some rich individuals play the currency market. It would be interesting to know what profits are made from currency speculation. By way of a few examples, however, I learnt that NatWest made £432 million profit from currency trading in 1998 and that the Hong Kong and Shanghai bank claimed £2.3 million profit a day from currency speculation.
The volume of foreign exchange trading has grown over the years and far outstrips the amount necessary for trade. Up to $2 trillion a day is traded, but only 5 per cent. is necessary to finance trade in goods and services. If asked to consider the matter, most people would not believe that; they would think that currency speculation was to do with buying goods and services. However, very little of it is, and the rest of the $2 trillion represents speculative activity. In 1975, 80 per cent. of foreign exchange transactions were trade related.
Those who are busily engaged in mopping up so much money for no productive effort could easily cope with a small universal tax on their transactions. The banks already levy pretty hefty charges. The margin between buy and sell rates for foreign exchange is a sight more than 0.25 per cent, as we can see for ourselves next time we go on holiday and buy pesetas or drachmas. If banks can get away with that, why is it so difficult for Governments to tax currency speculators by a tiny amount? One argument is that the tax could reduce international trade by increasing costs. However, trade is an essential activity, so a small tax is unlikely to kill it. War on Want recommends a very modest rate of 0.25 per cent., but the level would be up for discussion if the principle were agreed.
Let us consider avoidance and evasion. At present, 84 per cent. of all foreign exchange transactions occur in only nine countries. We would not, therefore, need worldwide accord to create a workable tax regime. War on Want recommends that the tax should be created through an international agreement backed by national legislation and the national central bank should collect it when transactions occur. The setting up of a global settlement bank—the continuous linking settlement bank—in mid-2000 will make such taxation simpler to carry out.
It is hardly reasonable to argue that the tax will fail because speculators will find ways around it. Our current taxes present the same problems, but the fact that big businesses attempt to evade or avoid corporation tax does not prevent us from imposing it. If people were determined to evade a microscopic tax such as the Tobin tax, they would have to go to the considerable expense of carrying out their transactions in a non-Tobin tax country, which is likely to be more costly than the tax itself. It is a matter of finding the right

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level of tax, so that we have an effective deterrent against such a strategy. Besides, the money involved in evading the tax must come back into official world markets, and it could be taxed more heavily as a deterrent against such a ploy.
The Treasury's view is that there are already high transaction costs on speculation. The Government are taking measures to redesign the international financial architecture, but there is concern that the Tobin tax campaign could detract from them. In that case, we need to hear more about those measures and what they are intended to do. If they involve a tax, the Treasury has presumably found a way to overcome at least substantial avoidance and evasion; if they do not, what are they? Would they promote stability better than a Tobin tax? Would they raise a large sum as cheaply and easily as a Tobin tax? Could they help to create a substantial fund for international development and to support countries through disaster relief? If the Treasury's proposed measures are all those things, I hope that we shall soon hear about them; if they are not, I wonder what reasons it has for introducing them.
Granted, there may be technical difficulties with the Tobin tax, but the issue remains whether the tax would offer a nation or the globe greater net benefit than leaving the problem unaddressed. Has a better alternative somehow escaped our attention? The European Union funds its infrastructure through a supranational VAT collected by each member state, with each state keeping 10 per cent. of the revenue that it collects. If that can be done, why is a Tobin tax so difficult? It probably comes down to this: do we believe that we should have an international economic order based on openness, multilateralism and co-operation? If so, how will we create it? Global wealth is increasing by hundreds of billions of dollars every year. The funds and the knowledge exist to end absolute poverty and conserve our planet. Will we allow the greed of the few to override the needs of the many?
On that subject, I will quote from an article sent to me by Mr. Gary Brisley, a senior currency trader at NatWest for several years, in which he says:
Speculation does not arise because of market consensus about economic fundamentals. That is just a fantasy story created by the markets to disguise the ugly truth of what they really do. In fact, the majority of traders have very little economic expertise at all. What dealers have is a gambler's instinct for a one-way bet and a quick profit. To be frank, they would be equally at home plying their trade in a Las Vegas casino…A speculation tax would be the first step on the road to restoring some sanity to a global economic madhouse run by a minority for a minority.
To conclude, it is always possible to find reasons not to do things. If we want to find reasons to explore the Tobin tax, we are not short of them: there is massive world poverty and there are huge environmental problems. Millions of dollars in relief are required to cope with disasters. If another way exists to raise money globally for such endeavours, let us hear it. However, we should not dismiss out of hand a proposal that has a huge amount of expertise behind it. For that reason alone, the Tobin tax demands serious investigation.
10.12 am
Mr. Harry Barnes: I congratulate my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) on securing a debate that is of key
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significance and importance, and I am pleased to take part in it. I approach the subject as someone who has been fortunate enough in recent years to make Commonwealth Parliamentary Association visits to sub-Saharan African countries Zimbabwe, Malawi, Tanzania and Ghana. We can observe nations and developments from afar, but visiting places, meeting people and seeing the circumstances in which they live are of vast importance in shaping people's attitudes about what needs to be done in the modern world.
However, I will start by mentioning Arthur Schopenhauer, a 19th-century German philosopher, who became known as the philosopher of pessimism. He subverted Leibnitz's phrase and said that everything is for the worst in the worst of all possible worlds. If Schopenhauer were alive today, he would find plenty in third-world nations that would allow him to add to that analysis of despair, such as the floods in Mozambique and the horrors experienced by people trying to survive in those circumstances, starvation in Ethiopia, and ethnic cleansing and its consequences in Kosovo. Those are just today's recent problems that we have all observed on television screens in our living rooms.
However, the media misses and never observes much suffering elsewhere. For example, last year's massive problems in Somalia did not hit our screens. There is poverty, exploitation and environmental deterioration in much of the third world. Because of its extreme poverty, few trees are left in Malawi. It has no source of fuel and is open to environmental devastation as well as serious economic problems with its future energy supplies.
Adverse economic and social conditions lead to collapse and conflict throughout the world, even in slightly more advanced nations than the third world. I am sure that economic problems and international indebtedness were major factors in the break up of Yugoslavia. The problems in Northern Ireland could surely be tackled more readily if there were an improvement in economic and social conditions. Nation after nation in sub-Saharan Africa is caught up in indebtedness and we are thankful that the Government have taken a lead in tackling international debt. Christian Aid and others rightly want the Government to go further and their campaigns should be noted carefully by the Treasury. The Government can pick up and run with the Tobin tax and take the moral lead. They can tackle the problem of indebtedness.
Third-world nations suffer adverse terms of trade in, for example, coffee or timber—or even gold, in the case of Ghana. When its price falls on world markets, masses of people in the gold mines near Kumasi become unemployed. When one job goes in a gold mine, six other jobs within the community disappear. We always said that if one job went in a coal mine here, two other jobs would go, but, given the nature of African society, the loss of one important job will lead to all sorts of other consequences for supply and services.
The International Monetary Fund and World Bank programmes insist that there should be privatisation, balanced budgets in third world nations and free trade, although free trade may destroy indigenous commercial developments and result in the need for protection. They are called structural adjustment programmes and are forced on Governments who, surprisingly, are often still dominated by parties that previously ran a one-party

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command economy, as in Tanzania. Such programmes have been operated in extreme circumstances outside the control of those Governments, and are now being driven into other areas. We should be more careful about that.
Unlike Arthur Schopenhauer, we should not just throw up our hands in despair and horror, and say, "That is the nature of life and it is how things will be. One problem will be built on another." It is time for the politics of optimism. That has been shown by the Government's response to the Jubilee 2000 campaign on dealing with debt. At the very least, we need to consider ways of raising massive resources to tackle environmental, economic and social problems in the third world. Those nations should be allowed to facilitate their own development, unhindered by the problems that the more advanced section of the world has sometimes created for them.
The Government should seriously investigate the possibilities of the Tobin tax—I hope that they take that message from the debate and put the issue on the agenda. There is no ready-made solution, and we do not know all the ins and outs of how the tax would work. The principle is worthy of investigation and serious study, however, and our Government, in association with some of their partners around the world, should consider it fully. A lead should be given on accepting the tax and international agreements should be made to ensure its operation.
An increasingly wide range of commentators and politicians across the political spectrum argue that a relatively small tax of 0.25 per cent. on currency trading—the figure mentioned by my hon. Friend the Member for Maryhill—could dampen currency speculation and raise enormous revenues. If it dampened that speculation entirely it would obviously not raise those revenues, but we cannot realistically believe that it could achieve that. We are not ready to overcome speculation in the modern world, but let us draw on it for resources to help the poorer nations to whose destruction it contributes.
War on Want, which leads a campaign for the tax, estimates that even such a small tax would raise up to $250 billion a year. Those revenues could be used to tackle global poverty and environmental crises. Eradicating the worst forms of poverty in the world and providing basic health care, nutrition, education, water and sanitation would cost $80 billion a year. A further $125 billion a year could be used to address environmental problems. The Guardian has estimated that providing universal primary education would cost only £8 billion a year. We are committed to advancing basic educational provision throughout the world.
The implementation of the Tobin tax would not all be plain sailing. We would need an acceptable international organisation to distribute the resources. Some have mentioned the United Nations in that context. The IMF, despite its problems, is another possibility. We will need a universal regime to prevent traders from migrating elsewhere. There is the rub, however. Traders use sophisticated computer systems to prevent their partners from ratting on deals, and those procedures might be adapted to prevent tax evasion. Furthermore, 80 per cent. of the speculation is undertaken in seven countries, and most transactions
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take place in a few large institutions. Respectable banks and brokers' houses might not wish to buck a popular tax, which is seen as a tax on sin and undue speculation.
It is probably naive to believe that there could be total enforcement, but that is a problem with all taxes and laws. The most important issue faced by Tobin advocates is the resistance to it from international capital, and the need for an international political organisation to roll in the speculators. We should have the will to do those things and press for them. The Government should view Tobin's aim as a noble one, which can uplift and encourage younger generations to believe that a decent, honourable world can be built. Those of us fortunate enough to live in the richer parts of the world should play our full part in that.
Support for the Tobin tax has been growing in the past decade. There is an increasing ferment of support in France, with about 14,000 people signing up to a campaign in the past year and organising demonstrations. The Canadian Parliament and the Finnish Government back Tobin, as does the Socialist International, together with many MEPs, whose recent motion on Tobin in the European Parliament failed by just four votes. A French parliamentary committee is investigating Tobin and two of its members have come to the Commons to discuss the issues with me. I am pleased by those developments.
My hon. Friend the Member for Maryhill referred to early-day motion 312 on the Tobin tax, signed by 101 Members of Parliament from all political parties and none. Several ex-Ministers have also signed it. The Tobin tax is clearly understood and has much going for it in the Commons. I hope that we shall hear more about the campaign, which is being led by War on Want, just as we heard more and more about the Jubilee 2000 campaign.
The Tobin tax is not a panacea, but progressives should raise their sights and seriously consider the fact that it would kill two birds with one stone by curbing a certain amount of currency speculation and tackling global poverty and global warming. I hope that the Government will take a lead on this key issue, at least by pursuing a full investigation so that, in the concluding words of the early-day motion, they
discuss the concept with its partners in international organisations such as the World Trade Organisation, the IMF, G8 and the European Union with a view to drawing up an internationally coordinated and feasible tax regime for currency speculation.
My hon. Friend the Member for Maryhill said that she had received a parliamentary answer saying that the Government did not favour the tax because they feared that there would be massive evasion. When I took a delegation of MEPs and representatives from War on Want to meet the Economic Secretary, we heard another argument: that the Treasury is engaged in an alternative programme to tackle currency speculation. That is welcome, but it is mistaken to claim that the Tobin tax would cut across and destroy such alternative measures.
It is obvious that a lot of work would have to be done before there could be a Tobin tax and serious agreements would have to be reached. That is some way in the future. Although the Government's programme of tackling currency speculation is an important step, we all know that ways will be found around it, as ways will be found around Tobin. Tobin could block those

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avenues and be additional and complementary to the Government's intended measures, not in conflict with them.
I hope that the Minister will respond positively today, because this is one of the most worthwhile measures that the House can consider. We are talking about an improved international order and a world of greater prosperity and improved trade. That is obviously in our interests too. However, Tobin should be initiated not for those reasons, but to tackle the manifest problems in the third world and to prevent the increasing occurrence of such hideous scenes. Having taken the lead in tackling international debt, and with the Department for International Development's good record, the Government should be at the forefront of these measures.
10.31 am
Dr. Vincent Cable: I add my thanks to the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) for introducing this useful debate. The Tobin tax is in danger of becoming a bit of a mantra, so the arguments should be properly set out and debated. I have mixed feelings about it. I normally sign most of the early day motions that come from development lobbies, but I have not signed this one as I have genuine concerns about what it means. I am not sure that the tax is a good successor to the Jubilee 2000 campaign.
As the hon. Member for North-East Derbyshire (Mr. Barnes) pointed out, Jubilee 2000 was a powerful movement. It brought together a strong moral purpose with a practical mechanism that everyone recognised debt reduction and helping poor countries to revive growth through the Paris club and official aid write-offs. The new campaign is not in the same league. It is tantalising. We are talking about vast sums of money that could be mobilised, but the mechanism is illusive. I may be damning the proposal with faint praise, but I am concerned about the idea simply running without being properly thought through.
I have a little bit of background on this. I worked a few years ago with the world Commission on Global Governance, a body set up by the Secretary General of the UN. It appointed Ingvar Carlsson, who was then Prime Minister of Sweden, and Sonny Ramphal, who was the head of the Commonwealth, to bring together a group of people to look at how the multilateral system could be sustained and financed in the long term. One of the ideas that was thrown up was the Tobin tax. There was a great deal of enthusiasm for it initially, but as we began to rub up against the practical problems, the strongest conclusion that emerged was that it should be studied further. I am a little concerned that five years further down the track we are still at the same level of argument.
Mr. Barnes: How far are the views that the hon. Gentleman is expressing the views of the Liberal Democrat party? He is presumably here to speak on behalf of his party. I had understood that the Liberal Democrats were likely to take a lead on the Tobin tax
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and were coming out in favour of it, in line with the arguments that my hon. Friend the Member for Maryhill and I have presented.
Dr. Cable: I am speaking as my party's spokesman. We had a good debate on the issue as part of a wider discussion on the problem of globalisation at our conference a few months ago. The Tobin tax concept was on the agenda as being worth considering, but we do not advocate it as a hard-area policy. I do not want to be destructive or to knock it down, but I shall set out its practical problems, although if someone can show me how those problems can be overcome, I shall be happy to advocate the tax.
The first difficulty is the rationale of the proposal as it relates to the workings of the foreign exchange markets. Tobin's original proposal emerged from the confusion and chaos after the breakdown of the Bretton Woods system and the collapse of the dollar in the early 1970s. It was necessary to find another, stable alternative to the exchange rate system that had operated for most of the post-war period. However, for most of the following quarter of a century we have staggered from one type of system to another, with many episodes of speculative capital damaging national economies: the history of the Asian crisis is one example.
The lesson from experience, after reflection on the history of the period, is that in a modern, globalised world where capital flows easily, only two types of system work. The first is irrevocably fixed exchange rates, such as those in the European monetary union, where there is no speculative capital, because there is nothing to speculate on. The advantage of that system is complete stability and predictability, because foreign exchange rates are not volatile. That is the future of the EMU.
The alternative is the other extreme: allowing currencies to fluctuate in the market, as the yen, the dollar, the euro and sterling do at present. For those currencies, a large liquid market for foreign exchange is an advantage. "Speculators" is a pejorative word, but those who buy and sell foreign exchange in such a market contribute to a stable environment in which speculators are not given a one-way bet, as they were when sterling was pegged, or in the Asian market.
The Liberal Democrats believe that there are serious problems with the sterling exchange rate, because sterling is seriously overvalued. It is not unstable; sterling is extremely stable compared with its main competitors. Speculators are not creating problems for sterling on a day-to-day basis. The problem must be tackled by considering Government policy, interest rates, intervention and so on.
Other countries are also worried that they will have insufficient currency if their currencies are driven up to unsustainable levels by what is misleadingly called the Tobin tax. Chile is often cited as an example of how a tax on the inflow of foreign exchange can have a beneficial effect. Chile intervened to stop inflows of capital; it is true that it imposed a tax, but it was a tax not on foreign exchange transactions as such, but on the inflow of capital, which is different. The Germans and the Swiss also imposed such a tax for a while, but they, too, had to abandon it because it could not operate within the system of exchange control freedom.

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The fundamental practical problem is how to operate a Tobin tax, especially in OECD countries, when there are no exchange controls and traders are not required to record their business. There is thus no paper trail and no links connecting countries' central banks with foreign exchange transactions.
The hon. Member for North-East Derbyshire made a brave attempt to describe how the settlement system could be used as a base for calculating the tax. I am not sure how that would work, because foreign exchange dealings, more than any other, are very mobile. If there is the slightest difficulty in the market, the transactions are simply moved to the Cayman islands, Luxembourg or somewhere else. Even if the Bank of England were somehow to get hold of and tax the transactions in London's foreign exchange markets, it is not clear how such a system could be made to stick. In the past few years, we have moved from paper-based trading to electronic trading, which is even more difficult to track, and even if one accepts that it is fundamentally undesirable for people to buy and sell foreign currency, it is difficult to understand how the system would work. Could somebody plausibly explain how it could be made to operate?
Mrs. Fyfe: I will not embark on a dissertation on precisely how the system would operate—no doubt to the hon. Gentleman's great relief. Does he accept that people with enormous expertise have believed for years that the tax can work and have argued for it? All that my hon. Friend the Member for North-East Derbyshire and I ask is that the proposals be given thorough consideration. Let us hear the arguments and not push them aside because they seem difficult. We should have a proper debate and examine the proposals made by people who are convinced that they will work.
Dr. Cable: Put like that, the hon. Lady's argument makes a lot of sense and we have much common ground. I, too, would like the proposals to be studied properly. The hon. Member for North-East Derbyshire described a world in which settlement systems could be monitored and made subject to a sort of stamp duty. It would be interesting to find out whether that proposal could be described in practical terms and be shown to be operable in Britain in co-operation with other countries. I have no wish to slap down the idea of further research, because it is desirable. If that results from the hon. Lady's initiative, I shall be delighted.
My concluding comments support her arguments a little more. I accept one of her basic propositions, that people who make much income from foreign exchange should be taxed on it. However, there are different ways of taxing. The capital gains tax regime is meant to tax people on their large capital gains winnings from dealing in foreign exchange or from other activities. Equally, banks that make substantial profits should pay tax on their income. Those who have read the Cruickshank report will know that he defines excess profits in the banking system. Maybe that should be taxed additionally. I have no quarrel with the idea that income generated from foreign exchange business represents a taxable base, although that is not exclusive.
Mr. Barnes: I am not particularly opposed to the other avenues of taxation described, but is not the
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problem with that argument that capital gains tax and other taxes would be pulled in by each nation's Treasury? They would not create a pool of funds for international institutions to use, as the Tobin tax would.
Dr. Cable: The hon. Gentleman raises a valid point, and I will conclude on that issue. Clearly, additional resources are needed for development assistance and multilateral initiatives, which could include peacekeeping and policing the global commons, the oceans and the Antarctic, which are not the property of any country. However, the Tobin tax argument worries me, because it creates the impression that there are vast sums of money out there that can easily be captured for a global body, whereas it is very hard work for us to raise money for aid. I am strongly in favour of countries raising their levels of aid to match a figure such as the United Nations target. It would be desirable for some of that money—I would argue for a high percentage-to go towards general global initiatives from bodies such as the World Bank.
There is no shortcut round the hard political task of persuading people in rich countries that they should take such decisions and make painful trade-offs against other public expenditure. The Tobin tax debate gives the impression that there is an easy option—a vast sum of rent waiting to be collected—and a shortcut to avoid the political necessity of raising capital for aid, for which I would argue strongly.
Mrs. Fyfe: I am sorry to intervene again, but I am curious about the dismissal of the notion that there are vast sums of wealth out there. The hon. Gentleman may remember that I mentioned that the Hong Kong and Shanghai bank claimed, in 1997, that it was making £2.3 million profit each day from currency speculation. Those who benefit to such a huge extent are better able to pay towards the reduction of international debt and meeting UN targets than, for example, a Govan shipyard worker.
Dr. Cable: That may be true, but the Tobin tax is not necessarily the best way forward. If it is true that the Hong Kong and Shanghai bank is making vast profits, there is a way of taxing it. As a British bank, it will pay British corporation tax and its British shareholders will pay income tax on their dividends. Moreover, if, as the Cruickshank report says, British banks are making excess profits, a case exists for the Financial Secretary and his colleagues to find a way of taxing them. However, that is a different argument from that of the Tobin tax.
I accept the necessity for additional resources for worthy causes. Aid given through national aid budgets and multinational agencies is important and must be supported. Although it is a little further down the track and more difficult, an argument also exists for raising money for the United Nations system in a less precarious way than the current means of funding peacekeeping and other international agencies. One of the proposals that has been considered—like the clever way devised by the Treasury to auction mobile phone licences—is to derive a modest amount of income for the UN by auctioning licences for the geostationary orbit, for high-orbital televisions stations. Those fall outside national jurisdiction—they are a genuine global

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commons—and the income could be used for multilateral purposes. I do not know whether that is more practical than the Tobin tax, but such proposals could be used to realise income for international agencies such as the UN, the IMF, the World Bank and the World Trade Organisation. I do not discount putting the Tobin tax into the pot of ideas and researching it seriously, but I am cautious about whether it is an easy option, or whether it is ready for a substantial campaigning initiative. We have not reached that stage. I apologise to the hon. Member for Maryhill if I seem to be damning her with faint praise. I agree with much of what lies behind her proposal, but the practicalities and some of the economic reasoning appear, at first sight, to be seriously flawed.
10.48 am
Mr. Howard Flight: I also congratulate the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) on securing a debate on this subject. It raises separate issues, which do not necessarily follow each other. One is whether developing economies should raise and direct more money for international aid, to relieve the economies and suffering of countries that are insufficiently developed economically. Other questions are whether a Tobin tax on exchange rate transactions would be effective in producing a more stable currency regime, whether it would have undesirable side effects and whether it is practical. The two parts of the argument do not hang together. If it were practical to levy such a tax, it would be necessary, as many people have pointed out, for each country in which the tax applied to agree that the revenue raised would be placed in an international pot. In the event of genuine differences, they could agree to using any tax revenue—even, perhaps, VAT. There is nothing magic about revenue on foreign exchange dealings.
Mr. Winterton—
Mr. Deputy Speaker(Mr. Nicholas Winterton): Order. The occupant of the Chair in Westminster Hall is called Mr. Deputy Speaker or Madam Deputy Speaker.
Mr. Flight: I apologise, Mr. Deputy Speaker.
I declare an interest in that, in 1988, I wrote a book with the rather pompous title "All You Need to Know About Exchange Rates", which nevertheless sold 15,000 copies worldwide. It was a history of exchange rates, explaining how they operate under floating regimes. At business school 30 years ago, heralding the end of Bretton Woods, my major was on how businesses manage their exchange rate exposure. In 1980, I pioneered the concept of the managed currency fund for use by individual investors, which manages a basket of currencies much like a central bank manages its currencies.
To some extent, every Member of Parliament has an interest, in that we all have beneficial interests in the House of Commons pension scheme, which, like every other pension scheme, is a major activist in foreign exchange markets. Every time it buys or sells investments in other parts of the world, it enters into a foreign exchange transaction, as it does for every dividend that it receives on such investments.
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The argument that 5 per cent. of such activity is trade and the rest is speculation is inaccurate. The great bulk of such activity arises from the fact that investments, whether they are United States, UK or Dutch pension funds, are now managed and invested internationally. Every activity associated with pools of financial assets that are managed internationally results in a foreign exchange transaction. That represents much of the activity in financial markets.
The standard argument against the Tobin tax that has been echoed by the Secretary of State for International Development and two recent Economic Secretaries to the Treasury, including the current one, is that it would not be practical. The broadly accepted points that follow from that argument are that such a tax would need to be global and to cover all instruments. I shall not repeat the arguments advanced by the hon. Member for Twickenham (Dr. Cable) about the need for such a tax to be global, but covering all instruments would be tricky. In today's world of derivatives, it is easy to cover currency positions without buying currency or an instrument denominated in a foreign currency. That is a practical issue to which few people have given thought.
Tobin's proposals appeared following the end of the Bretton Woods era. Some people look back on the end of that era as a terrible event, but in fact its breakdown was inevitable. Bretton Woods was a crude system that worked okay after a major world war, when economies were essentially closed and relatively unsophisticated and undeveloped, but it could never have sustained what has happened since. Indeed, as the hon. Member for Twickenham said, all respectable economists have ultimately concluded that the only choice is between a currency bloc—such as the dollar bloc, which extends well beyond the United States, or the euro bloc—or freely floating exchange rates.
When people refer to the emotive subject of currency speculation and profits made by the Hong Kong and Shanghai bank, the biggest bank in the world, some misunderstanding is involved. Ultimately, there are no net winners. If someone makes money out of buying a currency that increases in value, someone else has lost. If everyone in the participating arena is included and costs to central banks are taken into account, there are no net winners resulting only from exchange rate movements. The banks' profits derive mainly from the margins—often small margins—that they add when they enter transactions with clients. That is not necessarily an argument against the tax, but the perception that pots of gold can be had from currency speculation around the world is not accurate. Some win and some lose, but the net effect is no winners through changes in exchange rates alone.
Mrs. Fyfe: Will the hon. Gentleman clarify whether he is in favour of the principle of taxing currency speculation if all the difficulties could be ironed out? Or does he wish to draw attention to numerous difficulties in order to prevent any such tax being levied?
Mr. Flight: I thank the hon. Lady for her point. I was about explain that I have more fundamental objections of principle to the tax proposals. It is perhaps a nice but impractical socialist idea that echoes back to Harold Wilson and the days of the gnomes of Zurich. Reading

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between the lines, the Treasury has the same view. It may give polite reasons why it is not practical, but it does not believe in the idea.
I shall explain why I am uncomfortable in principle. The two objectives of Tobin were to make exchange rates more stable in order better to reflect economic fundamentals and to support the autonomy of nations in the running of their monetary and economic affairs. On the first issue, a Bank of England study on stamp duty arrived at the conclusion that the effect of a Tobin tax would be neutral. A US study further suggests that the larger the markets and the greater their liquidity, the better the stability. If a Tobin tax substantially reduced the volume of transactions, it could increase the scope for volatility.
Mr. Barnes: What does the hon. Gentleman think about the size of the Tobin tax? A tax of only 0.25 per cent. might not have the impact that he fears, or is he arguing that it is the thin end of the wedge—that once the tax is introduced, it will be increased later?
Mr. Flight: My point arising from the Bank of England study on stamp duty was that a marginal tax might have little or no impact. If there were a discernible impact, as a result of either a low tax level or subsequent increases, my point of principle was that reducing the volume of transactions—Tobin's objective—would not lead to greater currency stability.
I wish to deal with studies of the UK's membership of the exchange rate mechanism and of what happened in Asia. Before I do, let me repeat that the participants in foreign exchange transactions are not a limited number of rich individuals and banks who sit around gambling all day. They are mainly the huge volume of savings funds, pension funds, corporate moneys, companies covering their assets as well as their trade, and so forth. During the bounce back in Asia last year, Asian central bank reserves increased by about $80 billion over just a few months. As I said, there is an inaccurate conception of what the currency world is about.
Under floating exchange rate regimes, there is reasonable stability until something gets seriously out of line. That is when substantial speculative activity occurs. The change in the exchange rate is a steam valve that corrects things that have gone wrong economically. A classic example is 1992, when we were getting into a worsening recession because our membership of the ERM meant that we had to have rising interest rates when we needed falling interest rates. Germany needed higher interest rates because of the post-unification boom. Hon. Members will recollect that that was a painful period—businesses were going bust, people were losing their houses and so forth. On what some people describe as black Wednesday and others describe as white Wednesday, sterling broke out of that straitjacket as a result of massive speculation, bringing huge economic relief to this country. The economy recovered strongly from that day onwards, and we were rescued from something that was causing us grave economic damage.
In the wake of the Asian crisis, many fine development economists came up with theories suggesting that it was a tragedy that should not have happened and asking what we could have done about it.
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However, Asia has bounced back completely in the past two years, with growth rates of 8, 9 and 10 per cent. Like the UK, Asia got into an impossible position by having managed exchange rates and not allowing its currencies to float up and down according to economic pressures. In the early 1990s, the Asian economies should have allowed their currencies to strengthen to ward off overheating pressures, and in the mid-1990s they should have allowed markets to weaken their currencies. The mistake of trying to manage exchange rates led to participants in the Asian economies borrowing heavily and relatively cheaper in dollars, depositing the proceeds in their local currencies, making a large interest rate margin and believing that they could go on doing that for ever without trouble. Of course, that was nonsense. The banking, lending and Government systems were not on top of the situation, but the explosion that occurred is leading to a considerable correction of the problems. We no longer hear calls for a change in the system of floating exchange rates, because Asia has recovered. Good has come out of a crisis that happened, mechanistically, at a peak period of currency speculation.
The crucial issue is whether one wants to raise more taxes. There is potentially an argument for the Tobin tax as a source of raising tax. That would no doubt appeal to the Government, who have thought of many new ways of raising tax. It is also argued that, if the tax were modest, its impact might not be too detrimental to the effective working of currency markets. However, the big issue is whether this country and the world want to raise tax revenues in this area. As the hon. Member for Twickenham argued, and as Ministers have noted previously, the question is whether the proposal is practical and whether one could have a wholly global tax-raising system in the world of today's electronics.
Paper currencies are no more than the common stock of the economic areas—the countries—that they represent, and there is no more of an argument for taxing transactions in that asset than there is for other stocks. There is a good argument for taxing transactions in commodities, as commodity markets work in a similar way to exchange rate markets. That is also increasingly true of labour, especially highly skilled labour, which is a global commodity that buys and sells itself, not only through pay remuneration, but with transfer fees.
There is a point of principle—why tax one stock and not others? The closest comparison is with ordinary securities, for which stamp duty acts as a turnover tax. As the Minister will be aware, there is growing pressure to end United Kingdom stamp duty on security transactions, because they can be undertaken without stamp duty in other parts of the world, including Germany. The revenue will dwindle to nothing if stamp duty continues. I do not argue the case for or against stamp duty, but economic forces tend to be against measures such as stamp duty and withholding tax.
The concept has been debated on and off for nearly 30 years and has had support from time to time in the wake of exchange rate crises and from those who believe that economies should be controlled and managed by Government, so it is not new. It has not been taken up, largely because of its impracticalities. Moreover—this is my underlying point—why should we put a turnover tax on one commodity and not do so more widely? The

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Government will argue that it would be nice, but it is impractical. There are much more effective ways for the United Kingdom's people and Government to assist the developing world. Currencies are a common stock; countries that have problems with their currencies have badly managed economies and bad systems of law and banking. We must do something about those fundamentals. Money will not help by itself. Pulling together to do more for developing economies is a decent and Christian cause, but it does not emerge out of the Tobin proposal. The Tobin tax runs the risk of spreading the illusion that there is a pot of gold of immoral speculative profits that can be tapped to answer the developing world's problems. The reality is not like that at all.
Mrs. Fyfe: We should not continue without remembering that the Conservative Government failed to match the United Nations target for aid and allowed our aid budget as a percentage of GDP to fall. Far from exploring what useful alternative there could be to a Tobin tax, they showed that they were not interested.
Mr. Flight: I thank the hon. Lady for her comment. A great deal was done in the voluntary sector during the years of Conservative Government. I am not aware that this Government's record has been significantly different. Encouraging the voluntary sector is the most effective method of helping to develop economies, but we are arguing not about party politics, but about the principles of the Tobin tax.
In conclusion, the Tobin tax would be unacceptable to the United States. Whatever we or Japan may think, unless the US changed its views, the tax could not become a practical reality.
11.10 am
Mr. Andrew Tyrie: I shall be brief. I apologise for not having been here at the start of the debate. I was on a minor mercy mission—I saw a dog locked in a car in the car park and thought I should find someone to open a window for it.
I agree with almost everything that my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said. The Tobin tax is almost certainly wholly unworkable. Even if it were not, it would be unattractive, because it is not clear that a reduction in the total amount of exchange rate flows would result in decreased exchange rate volatility; it might increase volatility. Many of the advocates of the tax also seem confused about whether they are seeking to create a tax base or to reduce exchange rate volatility.
The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) spoke about aid flows. Aid is more or less irrelevant to the development of most of the third world. The key issue is total trade and investment flows. Investment flows have rocketed as a consequence of globalisation and huge parts of the third world have experienced massive increases in GDP per capita over the past 20 years on the back of those increased capital flows. That has had nothing to do with state aid or activity. That is not to say that I oppose an aid programme. I
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support one, but we should not think that such a programme has much to do with long-term economic development and prosperity. For most of the countries involved, it is at best peripheral. I even have sympathy with some points—others of their points are confused—made by the demonstrators who were waving banners against the World Bank in Washington this week.
The only point on which I disagree with my hon. Friend the Member for Arundel and South Downs is on exchange rates as a pressure valve. They are a pressure valve only in that they can absorb short-term asymmetric shocks. All too often, advocates of free floating argue for exchange rate adjustments that then become a substitute for more fundamental adjustments—in real factor prices rather than in nominal terms—in the real economy that should have taken place anyway.
Mr. Flight: My point was that exchange rate crises force adjustments as well as correct an incorrect exchange rate, but the forcing of adjustments is the important point.
Mr. Tyrie: They may force or they may delay adjustments. As we saw in the UK during the 1960s and under the Bretton Woods system, devaluations are often a substitute for real economy adjustments that would inevitably have to take place anyway.
I shall be interested to hear how much the Treasury deviates from the line predicted by my hon. Friend the Member for Arundel and South Downs that, although it may wring its hands a little, it is as opposed to the Tobin tax as the Opposition are.
11.14 am
The Financial Secretary to the Treasury (Mr. Stephen Timms): It has been an interesting debate with several thoughtful contributions. I will do my best to emulate the high standard that we have heard.
I congratulate my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) on securing the debate, which has allowed discussion of a subject that is currently of widespread public interest.
We are all aware of the damage caused by recent turmoil on the Asian markets, referred to in the characteristically well-informed contributions of the hon. Members for Twickenham (Dr. Cable) and for Arundel and South Downs (Mr. Flight). The scale of poverty in large parts of the world was tellingly described by my hon. Friend the Member for North-East Derbyshire (Mr. Barnes). It is no surprise that James Tobin's 1978 proposal has been the subject of such widespread new interest. We have been talking about it for 22 years, rather than the 30 years mentioned by the hon. Member for Arundel and South Downs, but it has certainly been around for a long time.
As my hon. Friend the Member for North-East Derbyshire said, we have taken a lead in addressing world poverty. We have a markedly different record from that of the previous Conservative Government, to correct the point made by the hon. Member for Arundel and South Downs. The aid budget will rise by 28 per cent. in real terms over three years between last year and next year. We are now seen as a pace setter in

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international development. I greatly welcome public debate of such matters, of which today's debate is an instance.
The turmoil in Asian markets highlighted some weaknesses in the global financial system. We share the aspiration for more stable capital markets, which are better placed to deliver the economic growth and development that so many nations are crying out for. The key question is how best to achieve that.
It has become fashionable to disparage globalisation. However, we should remember that the increased cross-border activities during the second half of the previous century—trade, capital flows and foreign direct investment—went hand in hand with rapid rises in global output and wealth. In the past 20 years, annual world trade rose from $2,000 billion to $5,500 billion a year, world foreign direct investment inflows rose from $55 billion to $640 billion and world GDP increased from $10,000 billion to $30,000 billion.
The benefits of globalisation cannot be ignored. What is disappointing is that they have not translated into sufficiently large falls in poverty. The hon. Member for Chichester (Mr. Tyrie) was rather complacent on that point. The proportion of people in developing and transitional economies living in abject poverty has declined—and we should not forget that—but the falls have not been large enough. More needs to be done to ensure that the poorest benefit. I shall say more about that in a moment, but retreating from globalisation is not the answer. We need to make it work better, but it would be wrong to deny the poorest countries in the world the development opportunities from which we have benefited.
Globalisation has transformed the world economy. The relatively sheltered national economies from the Bretton Woods era are gone and have been replaced by a global marketplace. In the new economy, national Governments depend for investment funds on day-to-day confidence among international investors. Governments must therefore pursue consistent and credible policies that provide stability.
Faced with financial crises in 1998, the G7 countries took rapid international action. As G7 president, the UK took a leading role and we have started to put in place new, long-term disciplines to promote greater stability—a new framework of rules that meet the demands of the global marketplace. Over the past 18 months, we have worked hard in the G7 to reform the international financial architecture. My hon. Friend the Member for Maryhill asked me what we have done on that front, so let me outline progress in four key areas.
First, we have produced a framework of internationally agreed codes and standards to be implemented by all countries that participate in the international financial system. Secondly, there is global financial regulation to make the international and national bodies who are responsible for financial supervision work together more effectively. Thirdly, there is a new framework for crisis prevention and crisis resolution. Fourthly, there is a framework of new social principles allied to our initiatives for immediate debt
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reduction. I shall sketch out where we have reached on each of those four reforms, which should provide a backdrop for today's debate.
Those reforms will deliver the stability objective of the Tobin tax more effectively. First, the codes and standards will deliver transparency and accountability. By taking the right actions in their own jurisdictions, Governments can help to deliver financial stability at a global level, but they need to set out clear objectives and to put in place open and transparent procedures. That is crucial for investor confidence; without transparency or proper procedures, investors will not make the long-term investments that are needed. We are working internationally to put in place the surveillance machinery needed to monitor the implementation of those codes and standards and to ensure that they are effective.
Secondly, global financial markets require proper national supervision and the innovation of global financial regulation. The responsible national and international bodies must work together more effectively, so we propose to bring together the IMF, the World Bank and key regulatory authorities in a new permanent committee for global financial regulation, charged with delivering a stable financial system. The financial stability forum has now been established and has made a successful start on its work. In time it can become the world's early warning system for regional and global financial market risk.
Thirdly, the financial crises of the past two years were deep and protracted. Better mechanisms are needed to prevent and resolve crises, so we have developed a new approach, in which both the public and private sectors contribute to maintaining stability. At the summit in Cologne last June, the G7 agreed a new framework for private sector involvement in crisis resolution, which will shape private sector expectations of how crises will be handled in the future and guide policymakers' responses. We are working to ensure that that framework is implemented as soon as possible.
Sound economies also depend on welfare and social systems that build social cohesion and trust. The World Bank and the UN have been asked to develop principles of good practice in social policy, which will be used by the IMF and the World Bank to design adjustment programmes. They will ensure that the burden of adjustment is not placed on the poorest people in the world. Those programmes are not just for use in times of crisis; they will also be used in normal times to assist countries to put in place the strong social systems and mechanisms necessary to help the poorest people.
Fourthly, we are committed to reducing the debts of the poorest countries; the heavily indebted poor countries agreement reached in Cologne set out to cancel $100 billion of developing countries' debt. We are working for faster, wider, deeper debt relief. That is the reason for our initiative to give 100 per cent. debt relief to every country that qualifies under the HIPC initiative. The challenge now is to implement it. We remain at the forefront of efforts to persuade our international partners to meet the agreed targets and to go beyond the level of debt relief agreed to provide 100 per cent. relief on the commercial debts owed by HIPC countries.
Mr. Jim Cunningham: What is the attitude of the United States to international efforts? Is it co-operating?
Mr. Timms: There have been some encouraging developments on debt relief, not least President Clinton's announcement on the subject. There are good grounds for optimism about the United States in that respect.
Mrs. Fyfe: My hon. Friend listed measures that will improve stability. We are familiar with the debt relief steps taken by my right hon. Friend the Chancellor of the Exchequer; everyone thinks that they are great. Does the Treasury object in principle to having a tax on currency speculation that could be used in beneficial ways as an addition to the existing funds, or does it think that a currency speculation tax would cut across those initiatives?
Mr. Timms: The Tobin tax has a twin objective: first, to promote stability—the measures that I set out address that objective—and, secondly, the fund-raising effect, which I shall explain. It is an interesting idea, but it has a number of serious likely or possible drawbacks. First, it could introduce serious economic distortions to the international financial system. International currency transactions bring huge economic benefits by facilitating trade and investment flows. Restricting currency exchanges through taxation could have quite serious economic side effects. It might endanger economic growth in some of the least well-off countries.
Some currency transactions undoubtedly reflect pure speculation and contribute to financial crises, but others help economic adjustment and market stability. Currency transactions, as my hon. Friend the Member for North-East Derbyshire put it, are not all sinful. They are not all speculative. A Tobin tax would not distinguish between the two. By slowing the adjustment of financial markets, the tax would slow recovery from a crisis. Artificially slowing market adjustments to genuine price shocks would have a higher economic cost than rapid adjustment.
Secondly, and perhaps more tellingly, it is not certain that a modest tax would have much effect in a crisis. It might hit routine, day-to-day transactions, but it is unlikely to prevent the high volume flows seen at times of crisis. As Oxfam's thoughtful paper from last May put it
Economists are divided as to whether a currency transaction tax significantly reduces systemic instability in foreign exchange markets…the beneficial effect of the tax on its own should not be overstated.
There is a good argument, which has been advanced in this debate, that a Tobin tax might increase volatility by reducing liquidity. Liquid markets are more efficient and price transparent. That argument is borne out by what has happened in some emerging markets. Their transaction costs are already high compared with those in the City of London. It could be said that that amounts
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to a tax on capital flows, yet those are precisely the markets that have suffered from serious currency instability and capital flight.
Mr. Tyrie rose—
Mr. Timms: I do not think that I can give way in view of the short time that remains.
Thirdly, a Tobin tax would be practically impossible to implement effectively. That point has been well made in the debate. It is probably a show-stopping practical means for achieving what my hon. Friend seeks. The UK has been leading the fight against international tax evasion and avoidance. We have taken a number of important steps in that regard, but we simply do not live in a world where taxes can be set and enforced at an international level. Every country jealously guards economic sovereignty on tax. Are we ready to cede our authority over tax matters to an international body? I do not believe that we are.
Whatever we think about financial secrecy havens and offshore centres, we must acknowledge their existence. Most of them are sovereign nations exercising exactly the influence over their tax affairs that the House and the UK Government exercise over tax matters in the UK. No international mechanism—not the G7, the IMF or the UN—is in a position to secure the agreement of all the countries in the world, or even those with a significant financial centre, to impose a Tobin tax, but that would be required to make the tax workable.
Currencies can be traded anywhere. We know how quickly capital markets can move. Traders would simply move their activities to regimes without the tax, with the likely result that the market would become less well regulated. We currently host about a third of the world's currency transactions—worth $637 billion a day. If a tax were imposed on foreign currency traders, they would move their activities to somewhere with less regulation. Driving the markets offshore to poorly regulated centres would add to the instability of the financial system at the cost of substantial job losses in the UK. Even it were possible to achieve the universal agreement that would be needed, there would still be huge scope for avoidance.
A large body of academic study is available on the Tobin tax; some support the idea and others oppose it. No one has successfully answered the concerns that I have set out. We must draw policy conclusions in the context of the practical realities of our wider international financial responsibilities. There is no multilateral mechanism for establishing a tax, and little international appetite for it.
We are pleased that organisations such as War on Want and Oxfam are engaged in the international debate about how we can ensure the stability of the international financial system and how we channel resources to the poorest countries. As Oxfam has said, the more visionary the proposals for spending tax revenue, the harder it may be to gain political acceptance for the tax. The best strategy seems to be to promote the less controversial suggestions regarding use of revenue and try to increase the allocation to development over the longer term.

Police (Lancashire)
11.30 am
Mr. Lindsay Hoyle: Thank you, Mr. Deputy Speaker, for allowing the debate to take place. I also thank the Minister for giving up his valuable time. I would have preferred not to have the debate today, but in the circumstances I had no choice other than to raise the subject of Chorley police station.
The relationship between Chorley police, the local authority and local groups has been good, and all parties working together have produced some good initiatives. It is disappointing that we will end up discussing the closure of the police station, or its possible closure between 12 midnight and 8 am, but we will deal with that later.
Good work has been done. A scheme was started in Anderton and Adlington to put in place new security arrangements at bungalows where old people live. That is important. Only last month, the Home Secretary visited the area and was impressed with the scheme. It has ensured that crime has fallen greatly, which was what we wanted.
It is also important that Chorley is receiving more closed circuit television money. Chorley was a pathfinder with its mobile CCTV unit, which has been the envy of many other areas. Many police authorities have visited the town to see it and it will certainly be copied. We can be proud that it came out of Chorley.
A major campaign is under way to ensure that Clayton village has a police station. The population of the village is 15,000, but there is no police station. That is another campaign that we have taken on board. The community groups and I have been discussing the matter with the police.
The decision of the police to close Chorley police station between 12 midnight and 8 am undermined all those new initiatives. The real problem is that there was no consultation. Earlier in the year, the police decided to close the custody suite at the police station. As the local Member of Parliament, I was not consulted. The local authority, the police forum and other groups that we thought would have been consulted, were not. That closure raised concerns about the future of the police station.
The divisional commander and the chief constable of Lancashire constabulary guaranteed that the police station was not under threat and that they would consult any relevant bodies in the future. That was crucial. The chief constable sent a letter to the local authority on 11 February stating that the policy station would not close.
The decision to close the station was taken with no consultation, no notice and no warning to the local authority or myself, as the Member of Parliament. In fact, the local press stumbled on the note outlining the decision to close Chorley policy station. At 5.30 pm last Tuesday, I received a telephone call from the local press who said that they would respect my comments and asked for my view on the closure of the police station between 12 midnight and 8 am. I was absolutely flabbergasted; I had no inkling whatever about the decision. After everything that we had achieved by working well together, I was disappointed that that decision was taken with total disregard for everyone else.
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The claim is that the station was closed for only one night, but it is the fact that it closed without any consultation that is important. Lancashire police authority's policing plan outlines the corporate strategy. The key part concerns partnerships. Lancashire constabulary prides itself on consulting local representatives, the police and community forum and community groups. Clearly, it did not do so, which has caused the problems. How could it have made such a decision without consulting or even informing relevant groups? That is the major worry. Budgets may be devolved and the local inspector may be allowed to take decisions, but such a lack of communication is unacceptable. It is not the way forward and it is not the way to run the police in a modern society. To go forward, we should work in partnership. Concerns will be raised if current practice continues.
Inspector White said that the closure was on health and safety grounds and was to protect police officers. If the police inside the station must be protected, what about the public outside, who need the police? In London, thugs pursued an Asian gentleman, who had to lock himself in a mobile toilet, where he then used his mobile phone to summon the police. People could be running down the street to the police station, only to find that they cannot enter because the doors are locked. They would then have to pick up the mysterious phone. Who would answer? At present, Chorley police answer, but soon calls will be re-routed to Hutton. That is centralisation, because the headquarters of the Lancashire police are in Hutton.
People must man those phones. Could there be 10 phones, but only five people to answer them? What would happen if all 10 phones rang at the same time? If there were one person per phone, why could one person not be put in Chorley police station? That would be more beneficial. The plan is not good politics or good policing and it could make people who have been able for many years to enter the police station, and who have always thought that a police station of that size would be open 24 hours a day, more vulnerable. We must reinstate such provision. It is important to remember the purpose of the police station.
Inspector White should reconsider his comments, because people feel more vulnerable when they believe that the police must be protected within their own police station. He has sent out the wrong messages. The closure of the police station is a worry, because Chorley is unique. It is not a little town centre, but a big area of 80 square miles. Chorley has a population of more than 100,000 and 27 parish districts surround its centre. It should have a 24-hour police station, because it is no ordinary district. It is a large, varied area that goes from the moors and the hills to the plain of Lancashire. A 24-hour police station is the least that we should ensure for the good people of Chorley.
As centralisation and the movement towards Hutton continue, we must consider the fact that Chorley is on a county boundary. Greater Manchester police force operate on one side, but they will not work in Lancashire, so we can only go further north or west for services. There is no access across the Pennines and Greater Manchester police cover the south. It is important to recognise that the police stations that will back up Chorley are some distance and I know that the Minister will take on board that important matter.

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Centralisation and the fact that we were not consulted or informed before the station started to close its doors have caused problems and worry.
The response times to criminal activity in Chorley will increase because of the need to travel further, which will also raise costs. There are more arrests in Chorley than South Ribble, yet all the people arrested in Chorley are booked in South Ribble. That takes up more police time. It has now been recognised that the custody suite in Chorley may have to be opened at weekends, because Chorley is a busy town. People from all around visit it, and that means disturbances. Taking those people to a much quieter place is not feasible, especially if numbers cannot be catered for when custody suites are needed at the weekend. The plan needs to be re-jigged and reconsidered. Nothing more should happen before consultation. Public perception will be bad, as the closure sends out all the wrong signals about crime and the future of the police station.
People suffer not merely from crime, but from fear of crime. Their fear will continue if they believe that the doors are locked and that sometimes no police officers will be in the station. It is another big worry when the police are called out and no one is left in the station. It is crucial to ensure more police resources in Chorley.
Mr. Michael Jack: The hon. Gentleman mentioned resources. Does he agree that the problem in Chorley reflects wider resource pressures on the Lancashire police force? It also reflects the fact that 6.6 per cent. of the Lancashire police are either ill or on light duties. Pressures on resources and manpower are also manifested in the Ingol ward of my constituency, which cannot sustain more than one community beat officer. That relates to the hon. Gentleman's theme of the fear of crime.
Mr. Hoyle: I agree that there is a problem in Lancashire. Police numbers are down and too much time is lost through sickness. It is important to deal with that. Police resources are undoubtedly a major concern for many Lancashire people. I recognise that the Government have taken that into account and intend to deal with funding issues.
I shall provide some statistics. Public satisfaction about the perceived level of foot patrols in Lancashire fell from 19 per cent. in 1997–98 to 14 per cent. in 1998–99. Satisfaction with perceived mobile patrols during the same period fell from 53 per cent. to 42 per cent. Closure of police stations during the night will not improve public perception. It will only add to people's worries. Public confidence is crucial to good policing.
Another key objective of the Lancashire constabulary's strategy is to maintain satisfaction among commuter groups and the public, but that is not being achieved. I have with me a copy of the Chorley Guardian, with the headline, "Locked Out". It is right for the local paper to draw attention to the public's anxieties. The article states:
Insp White also admitted that when the planned move of the station's communications room to police HQ in Hutton takes place later this year. calls from the phone at the bottom of the station steps will be routed through there rather than into the Chorley station.
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People dashing to a phone may find that their calls will not be answered because so many calls are coming in from all over Lancashire. If that is allowed to continue, there is a real danger of this policy being copied elsewhere.
The Minister must answer some key questions. Are further resources available to ensure that Chorley has a 24-hour police station? Can resources be directed differently to keep the police station open? What pressure can the Minister apply on Lancashire constabulary to keep the police station open full time? That is what the people of Chorley expect and what they deserve. Will the Minister ensure that Lancashire constabulary consults local representatives and other relevant bodies before taking such important decisions in future? Will he initiate a review of the role of police authorities in response to recent events, because the police are taking decisions that affect thousands of people without giving them the elementary courtesy of informing, let alone consulting, them?
The local newspaper in Chorley discovered what was happening out of the blue when someone left a notice on the board saying that the police station was to be closed between 12 midnight and 8 am. No one knew about it, no one was advised about it and no one was consulted on it. That is not the way forward; it is through partnership and consultation. We must urgently deal with the fact that Chorley was denied any partnership or consultation.
The situation may have changed a little, as the Home Office has phoned up responsible individuals. Some people may rightly be jumping about, demanding to know who took such a decision and how it could have happened. The point is that it did happen. The Minister may have received some flannel from police HQ and may have been told that it was a one-off problem resulting from staffing on a particular night and that the station was not closing. However, the inspector admitted in black and white that it was closing. If nothing else, the fact that we are having the debate today has ensured that our police station will remain open for the near future to allow consultation to take place. The bottom line, however, is that the measure was going to be sneaked through under the door without anyone knowing about it—that is the crucial point.
Reports on the knock-on effect may be filed away somewhere. I know that reports are not good in other areas in which they have lost their 24-hour police stations. People may say that only one person a night visits the station and that person may only be a drunk. If we consider only that small statistic over a short period, we do not take into account what happens the year round and what will happen. Chorley has a growing population—a new town has been built in the region and before long there will be a new village with 2,000 houses. The area is growing, not declining.
The closure took place without consultation and we must keep the station open in the future. New licensing laws may be introduced—there may be a 24-hour alcohol licence. We will not be able to close the police station at midnight, because everyone will not be put out into the town centre at 11 o'clock. Far from it, there will be a busy time around 1.30 am to 2 am or 2.30 am, when people may cause trouble. A handbag or a car may be stolen, or someone may be attacked, but when the victims go to the police station they will find that huge,

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eight-storey building in the town centre closed. With the changes in the licensing laws and patterns of behaviour in town centres, people should feel that the 24-hour station is a refuge to which they can go if they have a problem.
Civilian staff have always worked at the station, but that has suddenly become a health and safety problem. Why is it supposed to be a problem only from midnight to 8 am? Surely, if there is a problem, it must be for 24 hours a day?
Let us be honest: such closures are not good policing. I look forward to the Minister's speech because I am sure that he will take on board my arguments and will recognise that the people of Chorley are important.
11.47 am
The Minister of State, Home Office(Mr. Charles Clarke): I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on obtaining the debate on police funding in Lancashire as a whole and in Chorley in particular. He has already achieved part of his ambition by ensuring that the subject receives local and national airing.
Let me set the context for the debate. The House debated and approved the Government's proposals for police funding for 2000–01 on 3 February 2000. Under those proposals, Lancashire constabulary's Government-supported funding for that year will be £185.3 million, an increase of 4 per cent., which represents an extra £7 million over the previous year—that 4 per cent. contrasts with the national average of 2.8 per cent. Lancashire police authority has set a budget of £189.6 million, with a 4.6 per cent. increase in net revenue spending. The south Lancashire devolved budget is £26.7 million, which means an increase of 12.7 per cent in that region in the past year. Those figures contrast with an average of 4 per cent. for England and Wales as a whole.
Lancashire is, therefore, a relatively well-funded force. Audit Commission figures published in March show that the force spends nearly £121 a year per person, compared with a national average of £118. As the right hon. Member for Fylde (Mr. Jack) said, there are fewer police officers in Lancashire than there were when the Government took office in 1997. In September 1999, there were 3,221 police officers—27 fewer than there were in March 1997. I should set that figure in context, however, as in contrast to that reduction, in the same period the number of civilian support staff employed by Lancashire constabulary increased by 90.
As the House will understand, many of those extra civilians will undertake operational support jobs that were once the preserve of police officers such as scenes of-crime officers. Their recruitment makes it possible for the operational front line to be maintained. It is a means of ensuring that best value is obtained from the available resources and that police officers do the jobs that we expect of them—patrolling our streets and working towards the reduction of crime.
On police numbers, I remind the House that in September my right hon. Friend the Home Secretary announced a new crime fighting fund, which will be used to recruit 5,000 police officers over and above the number that forces would otherwise have recruited in the three years from April 2000. About a month ago, on
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27 March, my right hon. Friend announced how the £285 million that my right hon. Friend the Chancellor provided in this year's Budget was intended to be used. The first deployment of that money will be to enhance the crime fighting fund, which will be brought forward to deliver those 5,000 officers in two years rather than three, and at least to double the number to be recruited in the first year. In the next two years, Lancashire constabulary will receive sufficient funding from the crime fighting fund to enable the recruitment of 126 extra police officers over and above the number that the force would otherwise have recruited.
It is important to pay tribute to the work of Lancashire constabulary, the chief constable and her force. They have made impressive inroads in the reduction of crime. In the 12 months to September 1999, crime fell by 10.8 per cent. That is a substantial achievement. It is the biggest single reduction in crime achieved by any force in the country. From the way in which my hon. Friend the Member for Chorley is acknowledging my remarks, I know that he would want to join in that tribute.
I gather from the Lancashire policing plan for this year that the crime rate in Chorley is about half that recorded in some other local authority areas, making south Lancashire statistically one of the safest places to live in the country. I also gather that the priority anxieties in Chorley include drug and alcohol misuse, personal safety, fear of crime—to which my hon. Friend referred—vehicle crime and road safety. All those anxieties are significant, but they have been prioritised on the basis of generally good crime figures compared with the rest of the country and, indeed, the rest of the county.
My hon. Friend mentioned partnership, which is the core of the Government's approach in such matters. It is important to acknowledge, as he did, that partnerships can mobilise community resources at every level to prevent and reduce crime and the impact of offending. I understand that my hon. Friend was instrumental in the partnership between the police and Chorley borough council's housing department, which targeted vulnerable sheltered housing in the Anderton and Adlington areas. More than £90,000 of local authority money was used to improve security. I am told that that partnership has been a great success, with no reported crime since the works were carried out, and I pay tribute to my hon. Friend for that work.
I also understand that Chorley borough council has for some time led the way locally in developing CCTV systems, to which my hon. Friend referred. The Government have awarded £2.4 million to 11 CCTV systems in Lancashire, including a £271,000 scheme for Chorley town centre car parks, and £120,000 for a mobile system covering urban and rural areas in Wyre.
The key point, and the core of my hon. Friend's speech, is the future of Chorley police station. I hope that he will not mind my explaining the general context because it is important to set the decision in the overall context of the force.
My hon. Friend was clear about consultation. I acknowledge that and will deal with some of his arguments. I assure him that he will not get any flannel from me on the matter. It is for the chief constable, Mrs. Clare, to decide, and ultimately she must take operational responsibility.

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The chief constable informs me that she has no intention of closing Chorley station and wants that explicitly on record. I gather that the station is part way through a £300,000 refurbishment programme, which it would obviously not be if the intention were to close it. However, my hon. Friend is right to mention proposed changes in the use of the station. As he said, the new police service radio communication system, PSRCP, will be based at police headquarters and, as he knows, Lancashire will be one of the first forces in the country to use it. The communications room at Chorley will therefore be closed. It is important to emphasise that the migration of the communications system to the force headquarters will have no effect on the operation at or the policing of Chorley. The purpose of PSRCP is to increase police activity in the area being policed, instead of officers having to remain in the police station.
The migration of the communications rooms at Chorley and other police stations to the Lancashire force headquarters will reduce the staff available to reinforce custody suites at short notice. Therefore, for the health and safety reasons of short notice that my hon. Friend gave, the force advises me that it has had to reconsider the number and location of custody suites in the force area. As a result, Chorley custody suite was closed on 1 April and Leyland police station became the main custody facility for the southern division of the Lancashire force. The chief constable stated her belief that those changes would not affect the policing of Chorley. However, I understand why my hon. Friend makes his points and shall respond accordingly.
The chief constable has informed me that she is considering the possibility of ending the current 24-hour status of Chorley police station. That is a matter for Mrs. Clare and the police authority.
Mr. Hoyle: Is the Minister aware that the chairman of the police authority did not know that the decision had been taken?
Mr. Clarke: I was not aware of that. My hon. Friend has put the matter on the record.
I was informed that the reason for the chief constable's decision is that surveys conducted by the Lancashire police have found that, on average, only one
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person visits police stations between midnight and 6 am. It is maintained that closing the station to public access does not affect the policing of Chorley precisely because of the availability of modern telecommunications. By ensuring that police are on the beat instead of in police stations, new telecommunications systems will result in a higher police profile. The chief constable has reached a decision on the basis of the limited need for public access late at night, which is why she is considering Chorley's future as a 24-hour station. She proposes to reduce its hours of business when the radio communications facility moves to headquarters. I should emphasise that she intends to consult the local community on the process before making a final decision. My hon. Friend—and his local paper—can therefore take some satisfaction that, in raising this issue in this Chamber and more widely, he has secured part of his ambition to ensure proper consultation on the matter before a final decision. However, I reiterate that, ultimately, it is an operational decision for the chief constable. That is the fact.
My hon. Friend also referred to whether restricted hours for Chorley police station would affect the force's involvement with partnership. The chief constable has asked me to inform this Chamber that there is no question of the police's commitment to the Chorley partnership being inhibited by such decisions. That is an important point.
I have answered a number of my hon. Friend's questions about consultation. He also raised the important issue of response times, with which police are wrestling throughout the country. Call centre systems are becoming more efficient at dealing with incoming calls, instead of a whole range of local calls in different circumstances. The purpose is to reduce rather than increase response times. I do not have the figures for Lancashire, but I can assure my hon. Friend that he should not be worried on that score.
On further resources, I cannot help my hon. Friend with his request. As I said, the Lancashire force is relatively well resourced in comparison with other forces and that is an operational matter for the chief constable. I know that the hon. Gentleman will discuss his concerns with her.
This has been a useful debate, which has raised several important issues. I emphasise that Lancashire is being well policed and that crime is falling.

Assisted Areas Map
12 noon
Mr. A. J. Beith: The Berwick and Berwickshire areas received a bitter blow just over a week ago. As is often the way these days, we read the news in a newspaper on Monday morning, in advance of an announcement made in the House on Monday afternoon giving further details, that we were to be excluded from the assisted areas map. As speculation had suggested, the Berwick town wards of Edward, Elizabeth, Shieldfield, Seton, Spittal and Tower were excluded, with the rural wards of Belford and Beadnell, and the Islandshire ward, which includes rural and urban areas. A total population of about 17,000 was removed from the list of areas eligible for tier 2 status. In adjoining Berwickshire, the ward areas of Burnmouth, Foulden and Hutton, Eccles and Leitholm, and Edrom, Swinton and Whitsome were also dropped from the tier 2 map. Those areas, on two sides of the national boundary, are clearly connected—many people travel to work across the boundary.
We were pleased to be included in the draft map when it was published last year and assumed that we had been included because of the problems caused by the loss of more than 250 jobs with the closure of the Pringles textile factory. A total of more than 800 jobs have been lost from the town's textile industry since 1996. The over-reliance on the textile industry was acknowledged by the establishment of the Berwick task force, with the encouragement and participation of the Department of Trade and Industry. Berwick was also included in the last months of the European Retex programme, but that gave time only for studies and programmes to be prepared rather than for regeneration work.
The proposals of the Northumberland Strategic Partnership for assisted area status for Northumberland noted that
20 per cent. of the workforce in Berwick on Tweed borough were employed in manufacturing in 1996… unemployment in Berwick shows a strong seasonal pattern… Berwick is a strategic site, being capable of attracting substantial inward investment.
Regional selective assistance is the main instrument of the Government's regional industrial policy. It is designed to create and safeguard jobs, to attract and retain mobile investment and to improve the competitiveness of disadvantaged areas. However, regional selective assistance is the key factor that is lost by removal from tier 2 status. The wards that are being removed include those that contain sites where just such selective assistance could be used—sites such as large factories, where substantial opportunities for promoting employment can be pursued.
Dr. Desmond Turner: I offer the right hon. Gentleman my sympathy for the plight in which his constituency finds itself. I have an analogous problem in my constituency, where one ward that forms half of a new deal for communities pathfinder because it is in the top 5 per cent. of the local deprivation index and includes industrial sites capable of modernisation—where tier 2 status can be used to promote significant employment—has been replaced by a town centre ward that is so heavily developed with houses that not even a garden shed could be added to it. One could not possibly
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spend the money there. I am frustrated and puzzled. Does the right hon. Gentleman have an idea of what is going on?
Mr. Beith: I hope that the Minister recognises that that problem was brought about by the changes in the map. In several places, the very wards in which industrial development could take place have been taken out, while those in which it could not conceivably take place have been put in. That is the situation in Northumberland and other parts of the country.
Let us consider the index of deprivation, which includes factors such as unemployment and economic activity. There are 119 wards in Northumberland and three of the excluded wards—Edward, Tower and Spittal—are in the worst fifth. However, wards much lower down the index of deprivation have been added to the list.
One of the list's eligibility criteria is that areas should be "compact and contiguous". Berwick and the adjoining Berwickshire wards are, indeed, compact and contiguous and they contain the employment sites and the people who would benefit from the opportunities created by regional assistance. About 87 per cent. of people in the Berwick area who travel to work do so within the Berwick borough. That is a fairly unusual figure and it is far higher than elsewhere. Cross-border travel is primarily from the immediately neighbouring area of Berwickshire, which is represented by my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood). The area is, of course, isolated—that is part of its problem, not a reason for denying it the help that it needs.
The unemployment rate in Berwick town is 7.1 per cent., which is up from 5.7 per cent. in 1998. In some wards, it is dreadfully high—9.4 per cent. in Seton ward and 7.3 per cent in Elizabeth and Spittal wards. Those figures are well above even the north-east average of 6.8 per cent., let alone the UK average of 4.6 per cent. Two hundred and fifty jobs were lost at Pringles in 1998–99 and 50 jobs were lost at Libris Computing and other firms. Northumberland as a whole is unable to keep up with the job losses and more than 2,000 jobs have been lost, while only 800 have been gained.
Manufacturing accounted for 20 per cent. of the employment sector in Berwick in 1996. About 93 per cent. of women employed in manufacturing work full time. Equally, 16 per cent. of all the unemployed in Berwick were plant and machine operators—the largest group among the unemployed. However, the rate for the creation of new firms is well below national figures—6.09 per cent. as opposed to 8 per cent. for Northumberland and 11.6 per cent. for England.
We could also consider the decline of VAT-registered businesses in Berwick. The number dropped by 6.5 per cent. in 1994–97. The figures for vacant premises show that 23 per cent. of Berwick's industrial premises were vacant in 1998. The economic activity rate is in the lowest quarter for all English regions.
Let us, however, consider the future. The prospect of tier 2 status in July 1999, when the map was first published, led at least three local companies to draw up plans, which would have meant approximately 100 new jobs. Those proposals will not now be eligible for the reduced rate of assistance through tier 3 enterprise

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grants and are in jeopardy because of the revisions to the map. They were at the heart of the work of the regeneration task force. When a comparison is made with the incentives available in other areas, exclusion from tier 2 will weaken the case for relocating firms to Berwick. We have a single regeneration budget programme, but it cannot deliver enhanced competitiveness by itself. There will be a significant negative impact on the programme, which does not have the resources to deal with it.
I have concentrated on the problem in the Berwick town wards, where the major industrial expansion can take place. However, there are also problems in some rural areas. Sea houses, which has its own small industrial estate, has been excluded from the beginning. The Minister wrote to me on 11 August, before last week's announcement, to say that the Sea houses case could be re-examined if the map had to be reconsidered. Nevertheless, Sea houses has been left off the map and the community does not have access to the help that it needs.
In 1999, a harbour regeneration study called for extra funds to be targeted at the infrastructure of the harbour, which lies at the heart of the village's economic viability. In March, the harbour was refused a single regeneration budget grant. Now assisted area status is denied. A pile of reports and studies keeps showing the need for help, but not the means for its delivery.
Mr. David Crausby: I understand the right hon. Gentleman's natural disappointment, but does he accept that my right hon. Friend the Minister had to do a difficult job as best he could? A reduction was required. The right hon. Gentleman may know that my constituency did rather well out of the redrawing. There will inevitably be some winners and losers. Is that not one of the points of a review?
Mr. Beith: I am sure that the hon. Gentleman's constituents will be pleased by that news, but I would like him to come to Sea houses to explain to a community that is desperately in need of such help why it should be denied to it. I appreciate the Minister's difficult task, but suggest that he could have handled the matter differently.
Mr. William Cash rose—
Mr. Beith: I must limit the interventions that I allow, or I shall not be able to give the case that my constituency needs presented.
The Belford area became nationally famous a week or so ago with the closure of a Barclays bank. That community is engaged in active regeneration projects and has been dropped from the map this time round. I would like the Minister to suggest whether the third tier of assistance—more limited assistance for small and medium-sized firms—will be made readily available to those more rural communities. If it is not, I do not see how they can achieve the needed regeneration. That tier of assistance may be available on only a limited scale. The funds may not go round all the areas now dropped from the map and would not support the relevant industrial projects in Berwick.
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I shall suggest some ways in which the Minister can consider the matter in the remaining consultation period. I am puzzled that the Government have not appealed against the refusal of the map that they first proposed. That may be because of the time—probably about six months—that it would take to appeal. The process itself will also take some time. The original proposals were subject to extensive consultation, involving more than 350 responses and 40 meetings throughout the country. When the Government proposed the original map, surely they were satisfied that it met the European Commission's guidelines and the local circumstances, so far as possible, on the basis of the consultation. Now the map is completely different. Some areas have been removed and others have been added that have not been subject to such consultation. Would it not have been better to have appealed against the European Commission's objections to the original map, as the Government had the power to do?
The Government's first proposals did not include the limit to populations of 100,000. Areas with populations of less than that figure could be included, with the penalty that they would be counted as having populations of 100,000 for the purposes of the overall figure. It is worrying that the Commission seems to be moving the goalposts. If its doing so excludes the Berwick area, the Government must deal with that.
If the Commission insists that the areas must have a population of 100,000, the logical consequence is to put all the border areas hit by the decline of the textile industry together and treat them as a single area. As the Minister knows, that decline has spread across the borders. What consultation has there been with Scottish Departments and those with responsibilities in Scotland about the implications? Berwick is part of a border economy more than a north-east economy, so it would have been logical to have joined it to the chain of wards that has been affected by the devastating decline in the textile industry. My hon. Friend the Member for Roxburgh and Berwickshire will refer more to the matter in a moment.
There are two more weeks of consultation and the Minister will receive representations. In my view, a disastrous mistake has been made in an area in which the Department of Trade and Industry recognised that a task force and regeneration programme had to be implemented because there was a serious problem. If Ministers are serious about the regeneration of the Berwick economy, they cannot deny it the regional assistance that I described. I therefore plead with the Minister to restore the Berwick area to the map when the consultation period ends in two weeks' time.
Mr. Deputy Speaker(Mr. Nicholas Winterton):The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) has sought the permission of the right hon. Member for Berwick-upon-Tweed, the Minister and Ito take part in the debate. I call the hon. Member for Roxburgh and Berwickshire.
12.15 pm
Mr. Archy Kirkwood: I am pleased to be able to make a brief contribution to the debate. I am pleased, too, to support the eloquent and telling case made by my right hon. Friend the Member

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for Berwick-upon-Tweed (Mr. Beith). He is absolutely right to say that throughout my parliamentary career he has been telling me that there is no national boundary between the economies of north Northumberland and the coastal communities and those further west, north of the border in Scotland. There is much social intercourse between the areas and many people travel to work across the national boundary—facts of which the administrative proposals take no cognisance whatever.
My right hon. Friend is also right to say that there is anger and confusion about the changes to the July 1999 map. The amendments are severely deleterious and prejudicial to the community served by Berwickshire and the town of Berwick-upon-Tweed. The area was recognised recently by the Scottish Office as a regional economy in dire need of special assistance. Indeed, a ministerial working party was set up to make cogent proposals to tackle some of the issues. If the amidst to the map are implemented, they will severely damage any prospect of development in places where there are real opportunities for doing so. My right hon. Friend is right to underscore that point.
The towns in Berwickshire in my constituency that will be particularly prejudiced are Eye mouth, especially the Gunsgreen industrial estate, and Chirnside, where there are substantial manufacturing employment opportunities. Further west, the electronics industries in wards 7, 11, 12 and 16 would benefit from significant and sustained future development. As my right hon. Friend said, in all those areas projects are in the pipeline—they were encouraged, worked out and are ready to go. The amendments to the map will put the kibosh on them and render the projects nugatory.
Competition is an important issue. As my right hon. Friend said, if Berwickshire is not eligible, firms there will suffer severely from competition from companies in other parts of the United Kingdom that are eligible for area aid.
I hope that the Minister will accept my right hon. Friend's offer of serious consultation with his colleagues north of the border to bring some coherence and sense to the proposals. I endorse my right hon. Friend's plea that the deletion from the map of the town of Berwick-upon-Tweed and its surrounding areas and areas in Berwickshire should be urgently and seriously reconsidered. Account must be taken of the long-term future and prosperity of the entire area.
12.19 pm
The Minister of State for Trade(Mr. Richard Caborn): I have listened carefully to what has been said and will take it into consideration in the consultation period, which ends on 2 May. If right hon. and hon. Members want to submit further evidence, we shall consider it.
I commend the right hon. Member for Berwick-upon-Tweed (Mr. Beith) for the force with which he put his case. I know that he feels strongly about the matter. I am sure that he appreciates that in July last year, when the Government submitted the original proposals for the assisted areas and the structural funds objective 2, we recognised the needs of that area. Indeed, I know that the right hon. Gentleman and the people of Berwick are disappointed that we have not been able to deliver what we put forward in the July proposals. We listened carefully to the views of the local and regional partners
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and that included the regional development agency. We also worked closely with the Scottish Executive and the National Assembly for Wales.
We found it hard to maintain the July proposals in our negotiations with the Commission. Indeed, the amendments that we announced last week were solely to meet the Commission's concern about those proposals and not because we do not recognise the case that has been put forward today. As the right hon. Gentleman appreciates, the British Government do not have a free hand. Under the EC treaty the Commission has sole competence in this area. We cannot pay any regional state aid without an assisted area map approved by the Commission. We have, therefore, been faced with some hard choices.
Mr. Cash: Will the Minister give way?
Mr. Caborn: No, I had better reply to the outstanding questions first.
Mr. Cash: Could the Minister just confirm that it is not simply a question of wanting another place to be given assisted area status? There are circumstances in which people, such as those in my Grindley lane investment area, would want themselves to be taken out, having examined the structure plan.
Mr. Caborn: I am coming to that matter. I am just explaining how the maps are drawn up.
We were first faced with hard choices because of the criteria that were applied much more stringently by the Commission. We could either make the changes to meet the Commission's concern about the July map or, as the right hon. Member for Berwick-upon-Tweed said, we could take that challenge. We are trying to get clearance for these maps before the summer. That would then backdate to 1 January when a number of indicative offers were made to people who have made applications that we cannot pay.
Some of the Government's indicative offers have gone through the due procedure for regional selective assistance; others have not. If we delayed and went through the procedures of article 88(2) of the treaty the process would go on for at least another six months and the outcome would be doubtful. We therefore decided to submit the revised map to the Commission. We made those amendments to ensure that 16.5 million people who will be covered by the new assisted areas are not disadvantaged.
We have made two principal changes, we have had to reduce the population covered by our proposals by a third of a million people and we have had to show that the areas proposed are more compact and self contained. Both of those changes have had an impact on our proposals for Berwick and Berwickshire, but we could not simply extend coverage up the coast to Berwick-upon-Tweed and across the Scottish border into Berwickshire, as we did in the July proposals. The areas proposed in July were not sufficiently compact to secure the Commission's approval. Under the new constraints that the Commission has imposed, we would have had to include much of Northumberland to ensure coverage of Berwick, and most of the Scottish borders to

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include Berwickshire. That approach would have been expensive in terms of population and would have had to be taken for other parts of the UK.
Overall, the coverage of the north-east has increased by 10 per cent. on the July proposals and a further increase to allow the coverage of Berwick-upon-Tweed could not have been accommodated within the overall reduction in population coverage imposed by the Commission. The alternative would have been to exclude another area of the north-east to allow the inclusion of Berwick-upon-Tweed. Similarly, within Scotland, the inclusion of Berwickshire as part of the wider Scottish borders area could have been achieved only at the expense of other areas.
The Government are conscious of the needs and concerns of the people of Berwick and Berwickshire and I stress that the assisted areas are but one part of a package of measures that the Government have put in place to meet regional needs and tackle the problems of Britain's most needy areas.
We inherited an uncoordinated and disjointed set of regional bodies with no overall strategy to bring together regional activities and we have tackled that problem. With devolution in Scotland and Wales and the establishment of the regional development agencies in England, we have put in place a framework to ensure that all parts of Britain share in our future prosperity.
The regional economic strategies that the RDAs produced last October are a significant milestone and provide the basis for promoting development and competitiveness in the regions. The Government are working with the RDAs to ensure that those strategies are delivered. Indeed, we are committed to delivering an integrated package of support for the regions to tackle poverty and unemployment and to support regional developments. As the right hon. Gentleman will know, the Budget introduced a £100 million regional venture capital fund to help to finance small and medium-sized companies, a £60 million package to help small firms to get online, a new £50 million regional innovation fund to provide support for business clusters and incubators and an enterprise grant to offer assistance to small and medium-sized enterprises.
The right hon. Gentleman will be aware that £3.4 million from the Northumberland strategic partnership's award of £15.6 million under single regeneration budget round 5 has been allocated to Berwick district for its action for communities programme. The measures that have been identified for support include increasing the competitiveness of local companies, providing work space and developing Berwick docks.
The right hon. Gentleman will also know that, two weeks ago, the European Commission approved the UK's objective 2 fund map, which included Berwick and Berwickshire. That will ensure that many of the most needy areas in the UK benefit from the £3 billion of
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European regional funding for the next seven years. The north-east, including Berwick, will benefit from more than £400 million of objective 2 funding in the next seven years. In Scotland as a whole, the total value of objective 2 is about £500 million.
I assure the right hon. Gentleman that recognition of the amended assisted areas proposals, together with the new objective 2 maps, will mean that all but 1,000 people in his constituency are covered by tier 2 and tier 3. That cover has been achieved at a time when our assisted areas are being cut by a fifth and our objective 2 areas are being cut by a third. The right hon. Gentleman will agree that his constituency has got a pretty good deal.
Mr. Beith: I hope that the Minister will recognise that the largest industrial project that might be mounted in the wards of Berwick that contain the industrial estates is the one that I fear will fall between the spaces in the policies that he has described.
Mr. Caborn: We will consider those matters. The right hon. Gentleman must understand that we are acting under constraints that have been imposed by the European Commission, not Whitehall. Given that context, we have got an extremely good deal. I am sure that the right hon. Gentleman and many of his colleagues in Cornwall, the north-west and south Yorkshire understand that if my right hon. Friend the Prime Minister had not got the two thirds safety net in relation to objective 2 in Berlin 12 months ago, we would not have got such a good deal. Our coverage in terms of structural funds would have been considerably less—about 50 per cent. of what my right hon. Friend achieved. That coverage, the assisted areas map and what we are doing in the round for regional development agencies represent a mature approach to sustainable economic regeneration. The RDAs are considering the issue in a strategic way and that is the right way.
We could do what the previous Administration did, which was to chuck a few bob at the problem—a few crumbs off the master's table—and let areas scramble for them. However, those days have gone; our approach is about partnership and a sensible approach. We cannot deliver anything but, on this occasion the northeast has probably got an extremely good deal. I know that it will use the resources effectively for longer-term sustainable regeneration.
The consultation is open to 2 May and we will seriously consider all proposals. We want to do the best that we can for UK Limited, within the constraints that the European Commission imposes on us.
Mr. Deputy Speaker: Order. We move on to the last debate in Westminster Hall this morning. It is initiated by the hon. Member for Brent, North (Mr. Gardiner) and the title on the Order Paper is "Regulatory supervision of the transfer of domestic utilities supplies".

Domestic Utilities Supplies
12.29 pm
Mr. Barry Gardiner: One of the great privileges of being a Member of Parliament is our link with constituents. Constituency casework can be onerous, especially on top of Select Committee work, but occasionally the two come together in unexpected ways. In those circumstances, the experience of constituents can reinforce parliamentary investigation, grounding the statistics of Government Departments and the National Audit Office in the genuine experience of what it feels like to be on the receiving end of Government policy.
It was precisely such a coming together of theory and practice that prompted me to initiate the debate on the regulatory supervision of the transfer of domestic utilities supplies. I apologise for the length and clumsy nature of that title. I had originally suggested "Doorstep fraud in the sale of gas and electricity", but the Table Office thought it a trifle blunt.
Some 20 million domestic customers in Britain spend around £6 billion a year on gas. Between April 1996 and May 1998, competition was introduced to the domestic gas market and customers can now choose the company that they wish to supply their gas. By February last year, 25 new companies were selling gas and more than 4 million customers had switched from the old monopoly supplier, British Gas Trading. Since April 1996, British Gas Trading has cut its price to the average consumer from £348 to £300 at 1999 prices—a reduction in real terms of £48. That is before factoring in the present Government's reduction in VAT to 5 per cent. on domestic fuel. I welcome that good news.
New gas companies have done even better. Customers who switched saw their annual bills fall not by £48, but by £78 in real terms. That shows competition working to the public benefit. Once again, I welcome that. It has meant a global reduction in customers' bills of £ 1 billion per year. I should like immediately to acknowledge the role of Ofgas—or Ofgem, as it is now—in driving costs down, partly through price controls, partly by nurturing competition.
The House will be aware that on 12 May last year, the National Audit Office published a report—House of Commons paper 403, 1998–99—entitled "Giving Customers a Choice—the Introduction of Competition into the Domestic Gas Market". The report broadly welcomed the introduction of competition, but highlighted certain issues about quality of service. It reported that in 1998 Ofgas and the Gas Consumers Council received 45,000 complaints from the public about gas transfers from one supplier to another.
In paragraph 13, the Comptroller and Auditor General says:
One of the main areas concerning customers in complaints received was certain aspects of doorstep selling technique. A number of customers complained that attempts had been made to trick them into entering into contracts and others complained that salesmen had provided misleading information.
The report continues:
In the light of these concerns, Ofgas modified the suppliers' licences to include rules covering marketing, which they then enforced after earlier attempts to secure effective self-regulation by the industry failed.
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That seems to be reassuring. Ofgas acted to modify the companies' licences and set minimum standards.
Not until 45 pages later do we read the more damning follow-up:
We found, however, that Ofgas carried out very limited monitoring of the new gas companies' compliance with their licence conditions. Ofgas explained that they had given priority to rolling out competition and now this was achieved they would give more attention to monitoring companies' compliance with their licence conditions. The Director General of Ofgas has indicated that he is committed to increasing the attention that gas suppliers give to their social obligations and to improve Ofgas monitoring of their performance in this area.
When the director general was brought before the Public Accounts Committee on 7 July last year, many hon. Members were keen to press him on that point. My hon. Friend the Member for Liverpool, Garston (Maria Eagle) asked him directly:
Can you explain to the Committee how it is that somebody who has never signed any piece of paper can have their gas supply transferred to a different supplier?
Mr. McCarthy responded by saying:
There are a number of possible explanations for incorrect transfer. Sometimes it is because there has been either an incorrect address or an incorrect individual meter number recorded. Sometimes it is because there has been a clerical mistake.
The innocence is almost touching. However, to give the director general his due, he added, almost as an afterthought:
I think sometimes in the early days of this marketing, it was undoubtedly dishonest marketing.
Undoubtedly, but not only in the early days. At the Public Accounts Committee meeting, the director general agreed with me that one of the reasons why error transfers took place was that no proof of contract was required by the supplier. All a supplier needs to do is to provide Transco with a meter reference number, or an "S" number, as it is known. When asked how many error transfers occurred each year, Mr. McCarthy conceded that there were
something in the order of 100,000.
However, when asked why Ofgas had not done anything to tackle the problem, such as using its position as the industry regulator to insist that some proof, such as a signed contract, should be supplied to Transco before a transfer could be effected, Mr. McCarthy responded:
Because I am not persuaded that the additional cost and delay that such a requirement would impose on the system would justify such action.
I have no doubt that Mr. McCarthy understands the gas industry better than those 100,000 people whose interests he is supposed to be protecting. However, what those 100,000 people do not understand is why the director general of Ofgem, the supposed regulator, thinks that mis-selling is a thing of the distant past and why, even when they draw his attention to specific cases of blatant abuse and downright fraud, Ofgem seems to be unable even to respond within three months.
On 27 October last year at 6.30 pm, my constituent Mr. Thrale of Kingsbury answered a knock at his door. I shall now give his account of what happened:
It was a man who said he was from Eastern Electricity. He had not been invited by me or any other member of my household.

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The man asked if I had heard about electricity competition. I said I had. He said that, as I had not moved to another supplier from Eastern Electricity that they would like to write to me about their services and deals. When he asked if I would like them to do that, I said yes (this impressed me as each and every representative from the other half-dozen or so companies that have knocked on my door have all declined to send me any details about their services and company).
The man asked for my address. I offered to write it down for him on his form. To save him, and me, time, I did so and returned the form and clipboard to him. He asked for my telephone number. I declined to give him this information. He said that his boss expected him to get this. Again I declined.
He asked me to sign the form. I asked him why and he said that it was so that they could send me the information. I replied that my signature was not necessary for that. They could send me information without it. He said that he must legally get it to send the information. I replied that this was nonsense and that the law of the land said that anyone could—and do—send me marketing information.
By now I was suspicious. I looked at the form whilst he was talking and saw the word "contract" on it. I asked to see the form and took the clipboard. It was clearly a contract and I noticed a box had been pre-ticked next to the small print statement I would like Eastern to supply my gas. I told him that I was being lied to.
I challenged him about this and he said that I shouldn't worry about that. It was a mistake. I took the contract and asked him to leave. Since then I have examined the form more closely and seen that the payment method of cheque/cash has also been pre-ticked. I enclose a photocopy of the form, of which I still possess the original.
Mr. Thrale sent that account in a letter of complaint to Ofgem and to me on 28 October. His letter began,
I wish to report a criminal offence.
Ofgem sent his letter to the eastern regional office, which sent it to the Gas Consumers Council, which sent it to Eastern Electricity. By 21 January, more than three months later, Mr. Thrale had received no response to the issues that he had raised. On that date, in response to my second letter, Eastern Electricity wrote to me advising that
Eastern Electricity, as one of the UK's largest integrated energy suppliers, demands the highest standards of professionalism from every sales adviser who works on our behalf. Immediately following Mr. Thrale's complaint, the sales adviser involved was suspended pending investigation by our marketing department. They have since informed me that the adviser involved has been re-trained, and will be monitored in future to ensure similar complaints do not arise. Furthermore, I confirm that we have cancelled any and all supply agreements relating to the above address.
There never were any supply agreements relating to that address.
I wrote back to Eastern Electricity saying that I was astounded that the salesman had been allowed to remain a member of its staff and had simply been asked to go through a period of retraining. I pointed out that in my original letter I had asked that Eastern Electricity check all the other contracts sold by the salesman, as it was unlikely to have been his only misrepresentation. Eastern Electricity did not say whether it had carried out that check or whether any other bogus agreements had been discovered. I said that I was sending a copy of its response to Ofgem to ask it to investigate Eastern Electricity's handling of the matter. That was three and a half months after the original issue of doorstep mis-selling.
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Ofgem's response is lengthy, containing 10 long paragraphs over three pages of dense writing, but it amounts to little. It seems to parrot what Eastern Electricity has told Ofgem, stating:
As a result of Ofgem's initial intervention, Eastern suspended and investigated the agent concerned.
We knew that. It continues:
Eastern state that the agent was then retrained and was due to be subjected to close monitoring in order to prevent further such incidents.
We knew that. It goes on to say that,
At the time of receiving Ofgem's initial complaint on behalf of Mr. Thrale, Eastern state that they had not received any previous complaints about the agent concerned; and for that reason they did not take sterner action against the agent at that time. However, since then Eastern have received further complaints regarding this agent, and as a result, have dismissed him.
Further complaints had been received, yet Eastern Electricity had not checked that every contract signed up by the agent had been done properly. The letter goes on in an unsatisfactory fashion.
I shall pass from the case of Mr. Thrale to the even more confusing case of Mr. and Mrs. Dolan. I pay tribute to my office staff—my case worker, Cathryn Evans, and my researcher on the issue, Brad Perilman—because it was a complicated situation. Seeboard thought that it had signed the Dolans up from Eastern Electricity and British Gas for its electricity and gas. It believed that it had a contract with Mr. Dolan, but he had no recollection of signing up with Seeboard. He could not have done so even if he had wanted to, because, according to British Gas, Mrs. Dolan had signed up with it from Eastern Electricity for the electricity supply. Therefore, it was no longer possible for Seeboard to sign up Mr. and Mrs. Dolan from Eastern Electricity. None of the parties knew that, however, because Mr. and Mrs. Dolan were not aware that they had entered into an agreement.
Mrs. Dolan is an elderly lady who has recently suffered a stroke and is still receiving medical attention. She was relaxing in her garden one afternoon, trying to recuperate from her illness, when a charming young man presented himself over the fence and started chatting to her. Apparently, on the basis of that conversation and without anything being signed, her supply was transferred. Mr. Dolan wrote to me in high dudgeon, stating that he could not understand how his supplies had been transferred to Seeboard. When people from Seeboard eventually responded to my calls they produced, after much pleading, a transcript of the conversation, which they said showed that a verbal contract had been entered into. What it showed in fact was that Mr. Dolan was extremely confused about the nature of the conversation that he was having with the person from Seeboard.
Ofgem, the regulator, is supposed to protect people such as the Dolans. Mr. Thale, an acute and intelligent young man, saw what was going on and took action. It took the regulator three and a half months to fail to do anything about compensation, or to investigate that case. The situation for Mr. and Mrs. Dolan is a lot worse. Let us not forget that 100,000 such error transfers happen every year. People may simply be confused about which company they have said that they might like to go with. When asked whether they know that there is competition and that they may be able to get gas

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and electricity more cheaply, they say, "Oh yes, we know that." They find out a few weeks later that they are being billed by a different supplier.
The Government must press Ofgem to do its job properly and to ensure that written evidence of a contract is required, so that there are no more cases of telephone conversations with confused, elderly individuals being adduced as the reason for a transfer of supply. Ofgem has done a good job in pressing for competition in the market and in trying to reduce the price of gas and electricity. However, it must take seriously its role of protecting the consumer and ensure that what has been a great boon—cheaper gas and electricity—does not become a nightmare for the 100,000 people every year who fail to understand why they are paying money to people of whom they have never heard.
12.48 pm
The Minister for Energy and Competitiveness in Europe(Mrs. Helen Liddell): I congratulate my hon. Friend the Member for Brent, North (Mr. Gardiner) on securing the debate and recognise the passion that he feels in relation to the cases that he has described. I have seen the correspondence relating to the case of Mr. Thrale, but not of the Dolans. I undertake personally to pursue the cases of Mr. Thrale and the Dolans, and I will ensure that the director general of Ofgem receives a copy of my hon. Friend's comments from this morning, to ensure that appropriate action is taken.
My hon. Friend began by saying that it is often a happy happenstance that one's roles as a constituency Member of Parliament and as a member of a Select Committee coincide. I have read his interrogation—if I may call it that—of the director general, and I recognise that his questioning came from a specific angle.
It is also a fortunate occurrence—perhaps happy is the wrong word—when as a Minister I handle issues that I confront as a constituency Member of Parliament. Few Members of the House will not have had cause to consider instances of doorstep mis-selling—not only of gas and electricity, although in those cases the issues involved are still fresh. Many of our constituents remain puzzled about how gas and electricity can be supplied by several different companies, because they are confused about whether the gas has to come through separate pipes. I understand that confusion, on which some people play.
My hon. Friend alleges criminal behaviour. It is important that companies pursue criminal action when there is clear evidence that agents acted in a particular way. I am sure that my hon. Friend recognises that in the first instance that is a matter for the Director of Public Prosecutions. I should like the DPP to prosecute in such cases, but it is not for me to say where the priority should lie in that department.
It is vital that action is taken. The issue has featured in many consumer television programmes. "Watchdog" made an interesting and rather frightening investigation into some of the selling techniques employed on the doorstep. As a consumer, I would not want to be confronted with some of the aggressive selling techniques that have been applied on the doorstep.
We should put the matter in context. I am grateful to my hon. Friend for drawing attention to the extent to which competition in gas and electricity supply has
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driven down prices. He and I are of a similar ethnic origin, and are well aware that people who look after the pennies find that the pounds look after themselves. Consumers can be something like £20 better off as a consequence of increased competition in gas and electricity supply. In the vast majority of cases, no problems are experienced in the transfer. However, today we must consider cases in which problems are encountered. Sometimes, such problems are the result of error, and we all recognise that errors are made. However, when I hear of cases such as those of Mr. Thrale and Mr. and Mrs. Dolan, it becomes more pressing to ensure that instances of unacceptable mis-selling are probed much more aggressively.
I am not trying to mitigate or pass the buck for the difficulties experienced by my hon. Friend's constituents, but we are introducing a Bill on the regulation of utilities that focuses on the consumer's role. Until the Bill receives Royal Assent, the legal requirement on the regulator continues to focus on the shareholder before the rights of the consumer. The Utilities Bill will change that, giving the consumer pride of place. A new Gas and Electricity Consumer Council will be created, which will have a much closer relationship with the regulatory authority.
Interestingly, my hon. Friend referred to the regulator by name. That is perfectly understandable, as at the moment the regulator is a single individual. Mr. McCarthy is a talented and experienced gentleman who has taken his work extremely seriously, as have other regulators. However, it is important to depersonalise regulation. The Utilities Bill will create a regulatory authority that will be responsible for consumer interests, backed up by and working with the Gas and Electricity Consumer Council. My right hon. Friend the Secretary of State for Trade and Industry will impose social and environmental guidelines that will dictate the work of the regulatory authority.
My hon. Friend is aware that by changing supplier—even if they did not know that they were doing so—Mr. Thrale and Mr. and Mrs. Dolan might have had an opportunity to benefit from lower tariffs. Sadly, many poorer consumers cannot benefit from better tariffs. My hon. Friend and I share a commitment to ensure that stories such as those of the Thrales and the Dolans should not discourage poorer people. The regulator should be able to help the fuel poor to benefit from competition by driving down their bills.
My hon. Friend will want concrete evidence of how the regulator and the Government can help constituents such as Mr. Thrale and the Dolans. In November last year, my right hon. Friend the Secretary of State for Trade and Industry announced an inquiry into gas and electricity competition, not least because the amount of switching that we had anticipated had not occurred. Other reasons were the lack of balance and the opportunity to examine instances of mis-selling. Ofgem extended its market licence conditions for a further two years and is currently considering responses to its proposal to develop the existing licence conditions for companies. Measures under consideration include a requirement for domestic gas and electricity companies

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to have effective management of the sales agents who act on their behalf. In some cases, Mr. Winterton, they are sub-contractors—
Mr. Deputy Speaker(Mr. Nicholas Winterton): Order. The chair is addressed as Mr. Deputy Speaker or Madam Deputy Speaker.
Mrs. Liddell: I apologise, Mr. Deputy Speaker. I am used to seeing you in another setting, in which you are always extremely helpful. I shall return to referring to you as Mr. Deputy Speaker.
The consultation will look at ensuring that gas suppliers provide customers who have entered into contracts over the telephone with a copy of the terms and conditions of the contract, which is along the lines that apply for electricity customers. It will also consider extension of the coverage of conditions to sales undertaken in public places, such as shopping centres and over the garden fence, which is relevant to Mrs. Dolan's case. Extension of the conditions will also cover certain aspects of internet sales. Ofgem has continued to seek supplier compliance with the marketing conditions and good market practice by suppliers.
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In addition to monitoring performance, Ofgem has been engaged in an active programme of review meetings with suppliers, identifying lapses in suppliers' arrangements and highlighting best practice. A recent industry workshop linked general electricity regulation with overall consumer regulation. That protects the consumer, not least by providing an opportunity for a cooling-off period on contracts that may be signed. Ofgem intends to put into the public domain data on consumer complaints against individual suppliers. That will be done on a monthly basis and for the year to date. It will allow customers and others to establish the relative performance of gas and electricity suppliers. If there is to be proper competition and effective operation of the market, information must be available about how companies conduct themselves. That is a powerful way of ensuring that they behave properly. In another setting, I found it to be of considerable use in concentrating companies' attention on customers with whom they are not dealing properly. A good experience of competitive gas and electricity markets is important in the first instance, which is often on the doorstep. It would be unacceptable if people were deprived of their rights, or lost out on the benefits of competition. I shall consider my hon. Friend's points, and I congratulate him on his contribution.
Question put and agreed to.
Adjourned accordingly at one minute to One o'clock.

CABINET OFFICE

  Regulatory Reform Bill
  Kali Mountford
  To ask the Minister for the Cabinet Office what progress has been made with the proposed Regulatory Reform Bill. [119824]

  Mr. Stringer
  The Regulatory Reform Bill has today been published in draft, in order to allow the two Parliamentary Deregulation Committees to report on it prior to its formal introduction to Parliament. The House of Commons Deregulation Committee and its counterpart in the House of Lords have great expertise on the existing deregulation order-making power under the Deregulation and Contracting Out Act 1994. Their views on the proposed extension of this power will clearly be of great interest to the House when it comes to consider the Bill. 'Publication of the draft Regulatory Reform Bill' (Cm 4713) contains the draft Bill, Explanatory Notes and other supporting material, and I have placed copies in the Libraries of the House, the Vote Office and the Printed Paper Office.

  In addition to the changes to the deregulation order-making power, the draft Bill includes provisions to replace section 5 of the Deregulation and Contracting Out Act 1994, which deals with enforcement of regulations. This policy was the subject of a public consultation exercise in Autumn 1999. The majority of those responding to the consultation document were supportive of the Government's proposals. I am today placing copies of the Government's response to that consultation exercise in the Libraries of the House, the Vote Office and the Printed Paper Office. Copies of the Government's response to the earlier consultation exercise on the proposed changes to the deregulation order-making power, published in September 1999, are already in the Libraries.

  Departmental Properties
  Mr. Don Foster
  To ask the Minister for the Cabinet Office what(a) number and (b) percentage of properties in her charge are empty; and what steps are being taken by her Department to reduce the number of such properties. [116909]

  Mr. Stringer
  The Cabinet Office had 168 properties in its charge on 1 April 1999, of which 30.4 per cent. were empty on 1 April 2000. The majority of the empty properties were office buildings held by the Property Advisers to the Civil Estate (PACE), a key responsibility of which has been to dispose of surplus occupied and empty office accommodation on the Government Estate. In many cases tenants have been found for previously empty properties to reduce the burden on the Exchequer and to make them more attractive for disposal to investors. The principal determinant for disposal is value for money 408W
  to the Exchequer. PACE and another two of the Cabinet Office's agencies transferred to HM Treasury on 1 April 2000. The figures include three office buildings on the Cabinet Office estate undergoing refurbishment.

FOREIGN AND COMMONWEALTH AFFAIRS

  Gibraltar
  Mr. Donald Anderson
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the result of the Government's latest discussions with the Spanish Government on the subject of Gibraltar. [117396]

  Mr. Vaz
  Discussions between Spain and the United Kingdom, in consultation with the Government of Gibraltar, to overcome difficulties which have arisen on a number of issues within the European Union concerning Gibraltar have been continuing for several months. I hope that it will be possible to bring them to a successful conclusion.

  Dr. Marek
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to consult the Gibraltar Government before making decisions on matters affecting the people of Gibraltar. [119610]

  Mr. Vaz
  We regularly consult the Government of Gibraltar on a wide range of matters affecting the people of Gibraltar. We do this routinely via the office of the Governor of Gibraltar and through meetings with Ministers and officials when the Chief Minister is in London.

  Works of Art
  Mr. Brake
  To ask the Secretary of State for Foreign and Commonwealth Affairs how much has been spent on(a) the upkeep and (b) the purchase of works of art in his Department for each financial year since 1992. [117481]

  Mr. Battle
  I refer the hon. Member to the answer given by the Minister for the Arts, 4 April 2000,Official Report, columns 392-93W.

  Most of the works of art on display in our missions abroad are on loan from the Government Art Collection. Some are purchased, as part of large capital projects, such as new Embassies. A comprehensive breakdown of expenditure on artwork purchased could be provided only at disproportionate cost as it has been recorded only as part of the overall capital project cost.

  We have no readily available information on the years prior to 1994. The best figures we have for the years 1994–95 to 1998–99 indicate that under £1 million was spent on artwork over that period, less than 0.5 per cent. of the overall programme of capital expenditure on the estate of £215.7 million for the same period.

  Upkeep costs are low, and not separately recorded. Expenditure on artworks will be separately identified in future under Resource Accounting and Budgeting.

  General Affairs Council, Luxembourg
  Mr. Hood
  To ask the Secretary of State for Foreign and Commonwealth Affairs what the outcome was of the General Affairs Council held in Luxembourg on 10 and 11 April; and if he will make a statement. [118898]
  409W
  Mr. Vaz
  The information is as follows:

  1. The General Affairs Council (GAC) in Luxembourg on 10 April adopted the A points listed in document No. 7592/00 and noted the resolutions, decisions and opinions adopted by the European Parliament in its session of 13-17 March in Strasbourg listed in document No. 6496/00. Copies of these documents will be placed in the House Libraries as soon as they become available.

  Council Formations

  2. The GAC reached agreement on a reduction in the number of Council Formations to 16 (General Affairs; Agriculture; Economic and Financial Affairs; Environment; Transport and Telecommunications; Employment and Social Policy; Fisheries; Industry and Energy; Justice, Home Affairs and Civil Protection; Internal Market, Consumer Affairs and Tourism; Research; Budget; Culture; Development; Education and Youth Affairs; and Health); and agreed to review this decision in 2002.

  Lisbon Follow-up

  3. The GAC heard a report from the President of the European Commission on the planned extensive follow-up to the Lisbon Special Council. The Presidency noted that it would also issue plans for follow-up. The GAC agreed that the Feira Council should adopt an e-Europe action plan, a small business charter, and plans for benchmarking the performance of EU economies.

  Conflict in Africa

  4. EU presidency Representative Senator Serri briefed the GAC on the negotiations in the Eritrea/Ethiopia Peace Process. The GAC expressed its deep concern at the humanitarian situation in the region and reaffirmed its strong support for the efforts of the OAU Presidency to end the conflict. It expressed concern at the level of arms sales to the region.

  5. The Commission briefed the GAC on the EU response to requests for humanitarian assistance. The GAC emphasised the need for a co-ordinated approach with the UN to ensure the efficient and speedy delivery of international aid. The GAC called on Ethiopia and Eritrea to facilitate such deliveries and to ensure the security of food and humanitarian assistance.

  Zimbabwe

  6. The GAC discussed the situation in Zimbabwe. Member states underlined their concern at the farm invasions and appealed to the Government of Zimbabwe to enforce law and order. The GAC also urged the Government of Zimbabwe to create the conditions for the holding of free and fair elections. Under such conditions, the Council agreed that the EU would be willing to support and monitor the elections provided a request for such support was made by the Government of Zimbabwe.

  China/WTO

  7. The GAC gave its full support to Commissioner Lamy's approach to the latest round of bilateral negotiations on China's accession to the WTO. The GAC noted that the EU had already shown flexibility in its few remaining requests, and that a similar attitude from China would pave the way for an agreement.
  410W
  IGC

  8. Foreign Ministers reviewed progress to date in the Government Representatives group and considered prospects for the second half of the Portuguese Presidency. Discussion focused on a Presidency paper on the extension of qualified majority voting.

  Burma

  9. In renewing its Common Position on Burma for another six months, the GAC agreed to the most substantial strengthening of the measures against the Burmese regime since the Common Position was first adopted in 1996. It will now incorporate a published list of those regime members and supporters subject to visa restrictions; a freeze on their funds held abroad; and a ban on the supply of equipment which could be used for internal repression or terrorism.

  10. The Council also agreed to send a second Troika mission to Rangoon to promote the EU's policy towards Burma; to consider the possibilities for increased humanitarian aid; to resume EU-ASEAN ministerial dialogue, in Asia, later in the year.

  Turkey

  11. The GAC agreed a Common Position for the following day's EC/Turkey Association Council and three-year funding regulation for Turkey worth 15 meuro.

  12. The Association Council agreed to start negotiations on the liberalisation of services and mutual opening of procurement markets. It also agreed to set up eight sectoral sub-committees of the Association Committee to promote harmonisation of Turkey's legislation with the EU acquis.

  Russia

  13. The GAC again deplored the suffering of the civilian population in Chechnya. It noted the recent decision by the Parliamentary Assembly of the Council of Europe to suspend the voting rights of the Russian Delegation and its recommendation to the Council of Ministers to move towards suspension of Russia's membership of the Council of Europe. The GAC observed that this reflected the deep concern of European public opinion about the continuing conflict in Chechnya. The GAC expressed its support for the Council of Europe's continuing co-operation with, and assistance to, Russia, provided Russia abides by its commitments. At the same time, the GAC acknowledged Russian co-operation in establishing a Council of Europe presence in the region and in agreeing to make public a report on Chechnya prepared by the Council of European Committee for the Prevention of Torture.

  14. The GAC supported the call by the UN High Commissioner for Human Rights for Russia to establish, according to international standards, a national broad-based and independent commission of inquiry into allegations of human rights violations.

  UNCHR/China

  15. The GAC discussed its approach to China at the current session of the UN Commission on Human Rights. It decided that EU member states would not co-sponsor the US resolution in China, but would oppose any "no-action motion" tabled by China.
  411W
  Western Balkans

  16. The GAC welcomed the intention of Secretary General/High Representative Solana and Commissioner Patten to visit the Balkans more frequently, following the mandate from the Lisbon European Council. It welcomed their intention to advance the dialogue with Serbian civil society and to make further proposals on trade and assistance, notably for Montenegro.

  17. The GAC heard a presentation by the EU Special Representative for the Stability Pact on the successful outcome of the regional funding conference.

  18. The GAC noted the holding of municipal elections in Bosnia and Herzegovina on 8 April. The GAC urged the relevant authorities to implement the election results speedily as a contribution to the full implementation of the Dayton and Paris Agreements and the New York Declaration.

  19. The GAC welcomed the decision by the Serb National Council to appoint representatives to the Interim Administrative Council and the Transitional Council of Kosovo.

  20. The GAC underlined the importance it attached to a strong coherent effort by the EU, the US and the Russian Federation on the Western Balkans.

  AOB: IRELA (Europe/Latin America Institute)

  21. The GAC discussed the funding of IRELA. Ministers urged the Commission to resolve its problems over the financial management of IRELA. The Commission indicated that results of an audit of IRELA's finances for 1997 had led to the recovery of 1 million euro and an audit for 1998 would be available in the autumn.

  Job Losses
  Mr. Mitchell
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 4 April 2000,Official Report, column 407W, on employment in Grimsby, if he will set out the methodology used in the calculation of aggregate job losses for all constituencies in the United Kingdom. [118867]

  Mr. Vaz
  Britain in Europe commissioned this survey from South Bank University. My hon. Friend should approach the organisations concerned for details of their research methodology.

  Energy Efficiency
  Mr. Brake
  To ask the Secretary of State for Foreign and Commonwealth Affairs what has been the percentage change compared to 1990–91 in his Department's energy efficiency in each year since 1990–91; and if he will make a statement. [118988]

  Mr. Hain
  I refer the hon. Member to the reply given by the then Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Mansfield (Mr. Meale), to my hon. Friend the Member for Bolton, South-East (Dr. Iddon) on 22 July 1999,Official Report, columns 580-84W, which reported progress for all central Government Departments by 31 March 1998. We hope that results for the period up to March 1999 will be published shortly.
  412W
  Mr. Brake
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is his Department's energy efficiency performance target, expressed as a percentage change in comparison to 1990–91, for each of the next five years; and if he will make a statement. [118989]

  Mr. Hain
  The FCO's energy efficiency performance target from April 2000 is the target set across the Government estate of an annual 1 per cent. reduction in greenhouse gas emissions against 1999–2000 levels.

  Middle East
  Dr. Starkey
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the impact of the construction of the planned bypass roads in the West Bank on the future economic viability of a Palestinian state. [118949]

  Mr. Hain
  Territory, and other issues which may have an impact on the viability of any future Palestinian state, should be determined in negotiation between the two parties, rather than predetermined by the unilateral acts of either.

  Dr. Starkey
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Israeli Government in response to their announcement of the re-activation of the building programme of bypass roads in the West Bank. [118985]

  Mr. Hain
  We consider all settlement activity in the West Bank to be illegal and unhelpful to the peace process. We frequently make this view clear to the Israeli Government, and will continue to do so.

  Dr. Starkey
  To ask the Secretary of State for Foreign and Commonwealth Affairs what safeguards are included in the second phase of the European Union's assistance programme to the Palestinian Authority in support of counter-terrorism to ensure that human rights are protected. [118968]

  Mr. Battle
  EU member states recognise the importance of human rights in their Counter-Terrorism Assistance Programme with the Palestinian Authority. Under Phase I of the programme, there was a dedicated human rights project run by the Wallenberg Institute of Sweden. This will continue under Phase II, although the EU member state(s) has/have not yet been chosen.

  The UK, along with all EU member states, regards human rights as an important and integral part of the programme and takes every opportunity to convey this message to the Palestinian Authority. Human rights aspects of all projects under the programme are carefully monitored.

  Geneva Conventions 1949
  Mr. Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs which countries have accepted the competence, without special agreement, of the International Fact-Finding Commission authorised under Article 90 of Additional Protocol I of 1977 to the Geneva Conventions of 1949. [119476]
  413W
  Mr. Hain
  The following countries have accepted the competence of the International Fact-Finding Commission in accordance with the provisions of Article 90 of Additional Protocol I:

  Algeria

  Argentina

  Australia

  Austria

  Belgium

  Bolivia

  Bosnia-Herzegovina

  Brazil

  Bulgaria

  Belarus

  Canada

  Cape Verde

  Chile

  Colombia

  Costa Rica

  Croatia

  Czech Republic

  Denmark

  Finland

  Germany

  Greece

  Guinea

  Hungary

  Iceland

  Ireland

  Italy

  Laos

  Liechenstein

  Luxembourg

  Macedonia

  Madagascar

  Malta

  Mongolia

  Namibia

  Netherlands

  New Zealand

  Norway

  Panama

  Paraguay

  Poland

  Portugal

  Qatar

  Romania

  Russia

  Rwanda

  Seychelles

  Slovakia

  Slovenia

  Spain

  Sweden

  Switzerland

  Tajikistan

  Togo

  Ukraine

  United Arab Emirates

  United Kingdom; and

  Uruguay.

  Ministerial Visits (Turkey and Malta)
  Mr. McCabe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what(a) Turkish and (b) Maltese Ministers are scheduled to visit the UK during the next 12 months; when the visits will take place; and if he will make a statement. [119290]

  Mr. Vaz
  We expect our close relations with both Turkey and Malta to be supplemented by visits to the UK from Turkish and Maltese Ministers over the next 12 months. However, at present, no dates have been fixed for any visits.

  A number of senior Turkish Ministers have recently visited the UK. The Turkish Foreign Minister, Defence Minister, Minister for Agriculture and Minister for Privatisation visited in 1999; the Labour and Social Security Minister and the Interior Minister have already visited this year.

  Both the Maltese Foreign Minister and Finance Minister visited the UK in 1999.

  Mr. McCabe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what ministerial visits are being planned to Turkey and Malta over the next 12 months; for what purposes; and if he will make a statement. [119291]

  Mr. Vaz
  We expect our close relations with both Turkey and Malta to be supplemented by visits from UK Ministers over the next 12 months. I hope to visit both countries during the next 12 months.

  A number of British Ministers have recently visited Turkey. My hon. Friend the Member for Cunninghame, North (Mr. Wilson), formerly the Minister for Trade, my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), formerly the Minister for the Armed Forces, and my right hon. Friend the Member for Gateshead, East and Washington, West (Ms Quin), formerly Minister of State, Foreign and Commonwealth Office, visited in 1999.

  In the same capacity, my right hon. Friend also visited Malta in 1999.

  Entry Waiting Times (Sub-continent)
  Mr. Ian Stewart
  To ask the Secretary of State for Foreign and Commonwealth Affairs what are the waiting times in each queue for entry to the United Kingdom in(a) Bombay, (b) New Delhi, (c) Islamabad and (d) Dhaka; and by how much each has (a) increased and (b) decreased in the last 12 months. [119243]

  Mr. Vaz
  The statistics requested are as follows:

  Days

  Weeks

  Tier 3

  Q1

  Q2

  Q3

  Q4

  Bombay

  31 March 2000

  0

  0

  6

  6

  6

  31 March 1999

  0

  0

  8

  8

  8

  Islamabad

  31 March 2000

  6

  9

  26.5

  35.5

  42

  31 March 1999

  17

  12

  33

  36

  40

  415W

  Days

  Weeks

  Tier 3

  Q1

  Q2

  Q3

  Q4

  Dhaka

  31 March 2000

  6

  14

  26

  15

  40

  31 March 1999

  2

  12

  18

  11

  37

  New Delhi

  31 March 2000

  0

  0

  8

  8

  8

  31 March 1999

  0

  0

  14

  22

  28

  Notes:

  Tier 3: Non-settlement (visit) applications

  Q1-Q4: Settlement applications

  Ql: Right of Abode cases and Dependent Relatives over 65

  Q2: Spouses and children under 18

  Q3: Fiance(e)s and other First Time Applicants

  Q4: Re-applicants

  Chechnya
  Mr. McCabe
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 30 March 2000,Official Report, column 267W, if he will ensure that United Kingdom and Russian efforts to work together to combat terrorism do not include assistance for the activities of the Russian security forces in Chechnya. [119591]

  Mr. Vaz
  Yes.

  Terrorism
  Mr. McNamara
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received concerning the proposed(a) International Convention for the Suppression of the Financing of Terrorism and (b) International Convention for the Suppression of Terrorist Bombings; what plans he has to seek the views of the Northern Ireland Commission on Human Rights; and what plans he has made to open the consultation process concerning the conventions to non-governmental organisations. [118974]

  Mr. Battle
  We have received no recent representations concerning these Conventions, both of which the UK signed on the day they were opened for signature in January 2000 and January 1998 respectively.

  The Government have no plans to seek the views of the Northern Ireland Human Rights Commission or re-open a consultation process to non-governmental organisations (NGOs) at this stage. The Terrorism Bill, which provides the vehicle for the implementation of both these conventions in UK domestic law, was subject to a long and comprehensive consultation process which included the views of the Northern Ireland Human Rights Commission and all interested NGOs. The Government have stated their intention to ratify both these Conventions. If organisations would like to comment on any aspect of the ratification process they are welcome to do so.

  European Court of Human Rights
  Mr. McNamara
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list those cases against the United Kingdom that have been lodged and are awaiting consideration by the European Court of Human Rights, indicating(a) which Articles of the
  416W
  Convention are cited as having been breached in the application and (b) those cases which have been ruled admissible. [118975]

  Mr. Hain
  In 1999, 429 applications involving the United Kingdom were registered before the European Court of Human Rights. Of these, 32 have been declared admissible. To list the situation regarding each of these cases would be too detailed for the Official Report. I shall write to my hon. Friend with further details and place a copy of my letter in the Library.

  Mr. McNamara
  To ask the Secretary of State for Foreign and Commonwealth Affairs how long it took to process each stage in each case brought against the United Kingdom in the last four years before the European Court of Human Rights; and what estimate he has made of when it will be possible to form an assessment of the impact of structural changes to the European Court mechanisms upon the length of proceedings. [118976]

  Mr. Hain
  Several hundred cases involving the United Kingdom have been brought before the European Court of Human Rights in the last four years. It would not be feasible to list how long each stage of the proceedings took in each of these cases. The procedure for each case is determined individually by the Court taking into account the particular facts and circumstances of the case. A proper assessment of the impact of the new procedures in Strasbourg will not be possible until a sufficient number of cases have been determined exclusively by the new Court. The European Commission on Human Rights ceased to consider cases only on 31 October 1999. It is still too early, therefore, to attempt such an assessment.

EDUCATION AND EMPLOYMENT

  New Deal (Disabled People)
  Mr. Pickles
  To ask the Secretary of State for Education and Employment how many people on Incapacity Benefit have, under the personal adviser section of the New Deal for the Disabled,(a) been contacted by a Personal Adviser, (b) attended an initial interview, (c) had a complete employability assessment, (d) had an agreed individual action plan, (e) found part-time employment as a result of the programme and (f) found full-time employment as a result of the programme. [118611]

  Ms Hodge
  We have been piloting the New Deal for Disabled People since autumn 1998. The latest available figures are those for the period up to 25 February 2000 covering the 12 personal adviser pilot areas.

  10,070 people have contacted and met a Personal Adviser to discuss their employment prospects. Some 6,650 people have developed an employment-focused action plan following a full assessment of their employment prospects.

  Our experience shows that for many in the client group the journey back to work will be lengthy. I am pleased therefore to be able to say that some 1,843 people had found work, representing 56 per cent. of those who had completed their action plans. Of these 1,081 were in full-time work and 551 in part-time work. A further 211 had become self-employed, entered supported employment or had been helped to retain their current jobs.
  417W
  In addition, 607 people had started work as a result of participating in innovative schemes.

  Value-added League Tables
  Mr. Willis
  To ask the Secretary of State for Education and Employment what plans he has to publish the research by Professor Jenson of York University into value-added league tables. [119253]

  Jacqui Smith
  The publication of research is a matter for the author.

  Special Schools
  Mr. Hancock
  To ask the Secretary of State for Education and Employment (1) if he will list those LEAs which make specific provision for special schools for voice output communication aids for children with speech problems; how many aids are supplied in each LEA(a) at present and (b) in each of the last five years; and if he will make a statement; [119225]

  (2) if he will make a statement on his Department's policy on the provision of voice output communication aids in special schools for children with learning disabilities and lack of verbal communication skills; and what his policy is in respect of allowing the use of such aids at home. [119229]

  Jacqui Smith
  Information on specific provision that local education authorities (LEAs) make to special schools in relation to communication aids is not collected centrally.

  The Education Act 1996, associated regulations, and guidance in the 'Code of Practice on the identification and Assessment of Special Educational Needs' places a statutory duty on LEAs to identify and assess children with special educational needs (SEN) for whom they are responsible. Where this leads to the issuing of a statement of SEN, the LEA has to ensure the child receives the special educational provision identified in the statement and the support required to ensure this provision fully meets the needs of the child. In cases where provision includes the use of communication aids many LEAs allow children to take such equipment home where it is appropriate, and we fully support that course of action.

  Mr. Hancock
  To ask the Secretary of State for Education and Employment (1) what steps his Department is taking to evaluate and analyse the benefits of voice output communication aids for children with communication difficulties in special schools; and if he will make a statement; [119226]

  (2) what steps his Department is taking to help special schools and LEAs to improve the provision of communication aids for children with speech and communication problems. [119228]

  Jacqui Smith
  The Department is not, at present, undertaking any evaluation or analysis of the benefits of voice output communication aids for children with communication difficulties in special schools.
  418W
  Local education authorities (LEAs) are responsible for identifying and making a statutory assessment of children with special educational needs (SEN) for whom they are responsible. Where this leads to the issuing of a statement of SEN, the LEA has a duty to ensure the child receives the special educational provision identified in the statement and the support required to ensure this provision fully meets the needs of the child. This includes support required by children with communication difficulties. We would expect LEAs to monitor and evaluate locally the provision and support they make available to meet fully children's SEN.

  The Department supports, through the British Educational Communications and Technology Agency (Becta), two national assessment centres for pupils with communication difficulties.

  These centres provide specialist assessments to identify where technology, in particular communication aids and computers with assistive technology, (such as speech output, switch and keyboard alternatives), can provide access to the curriculum. They provide a focus of information and experience that can be accessed by anyone who has an involvement with children who have communication difficulties, including special schools.

  Mr. Hancock
  To ask the Secretary of State for Education and Employment what representations he has received from local education authorities requesting central government ring-fenced financing for voice output communication aids, in special schools for pupils with communication difficulties; and if he will make a statement. [119227]

  Jacqui Smith
  There have been no representations from local education authorities (LEAs) requesting central government ring-fenced financing for voice output communication aids for pupils in special schools with communication difficulties.

  Recycling
  Mr. Dobbin
  To ask the Secretary of State for Education and Employment what is his policy on the recycling of materials produced by his Department. [107858]

  Mr. Wills
  The Department's policy is in line with the Government-wide waste minimisation strategy which promotes reduction, re-use and recovery through recycling. All of the Department's buildings have recycling schemes in place for paper, toner cartridges and fluorescent tubes. We also recycle computer equipment to schools.

  Capital Modernisation Fund
  Mr. Benton
  To ask the Secretary of State for Education and Employment what further plans he has for using Capital Modernisation Fund allocations in schools. [119722]

  Jacqui Smith
  We are pleased to announce that £60 million is being allocated from the Capital Modernisation Fund to tackle deficiencies in secondary school science over the next two years. The initiative will do this by funding the construction of imaginative and effective 21st century laboratories at those schools most in need.

HOME DEPARTMENT

  Commission for Racial Equality
  Mr. Rammed
  To ask the Secretary of State for the Home Department if he will announce further appointments to the Commission for Racial Equality. [119912]

  Mr. Mike O'Brien
  I am pleased to announce that I have appointed Beverley Bernard as Deputy Chair for the Commission for Racial Equality. The appointment is initially for three years on a part-time basis.

  Community Safety and Partnership Report
  Mr. Coaker
  To ask the Secretary of State for the Home Department if he will make a statement on the report by Her Majesty's Chief Inspector of Constabulary on Community Safety and Partnership. [119913]

  Mr. Charles Clarke
  Yes. I have today placed in the Library a note of the recommendations from the report, together with the Commissioner's responses and the police authority responses, which take into account the advice that my right hon. Friend the Home Secretary and I have received from the Metropolitan Police Committee.

  Motorcycle Theft
  Mr. Jenkin
  To ask the Secretary of State for the Home Department what motorcycle theft reduction targets he has recently set. [119602]

  Mr. Charles Clarke
  No targets have been set specifically for the reduction of motorcycle theft. Motorcycle theft, which is estimated to account for about 6 per cent. of all thefts of vehicles, is included within the national target to reduce vehicle crime by 30 per cent. by 2004.

  Terrorism
  Mr. McNamara
  To ask the Secretary of State for the Home Department what plans he has to seek external legal advice on the definitions of terrorism and terrorist act in proposed(a) domestic legislation and (b) the International Convention on the Suppression of Terrorism. [118977]

  Mr. Straw
  In developing proposals for the definition of terrorism and a terrorist act in the Terrorism Bill, the Government took account of the responses to its consultation paper "Legislation Against Terrorism", including those which provided legal advice. Since the introduction of the Terrorism Bill, the Government have received a number of submissions from bodies on the definition, including some which specifically provided legal advice on the matter. These have been carefully considered.

  The Government have no plans to seek further legal advice on the terms of the International Convention on the Suppression of the Financing of Terrorism or the International Convention on the Suppression of Terrorist Bombings.

  European Committee for the Prevention of Torture
  Mr. McNamara
  To ask the Secretary of State for the Home Department which organisations he has consulted concerning his proposed response to the 29 March 1998 420W
  communication from the President of the European Committee for the Prevention of Torture; if he will place a copy of the response in the Library; and what is the reason for the delay in responding to this communication. [118978]

  Mr. Mike O'Brien
  Outside Government, we have consulted the Metropolitan police, the Crown Prosecution Service, and the Government of the Isle of Man.

  The Government responded to the communication to which the Question refers on 16 October 1998. Delays in publication of the report are largely due to what appears to be a bureaucratic oversight by the Committee and then to its initial unwillingness to remove passages subject to legal professional privilege. It was published on 13 January 2000.

  We hope to send the Government's response to the Committee on 19 April, and that the Committee will publish it within two or three weeks. This delay has enabled us to respond more fully to the Committee's recommendations in the context of the Government's consideration of an independent police complaints system. I will place a copy of the response in the Library when it has been published.

  Fires
  Mr. Pickles
  To ask the Secretary of State for the Home Department how many deaths from fire there were in(a) residential and (b) non-residential property where a sprinkler system was fitted in each of the last 10 years. [119110]

  Mr. Mike O'Brien
  The information is given in the table.

  Number of deaths from fire in dwellings1 and non-residential properties where a sprinkler system2 was fitted, 1988–98, United Kingdom

  Year

  Dwellings

  Non-resindential properties

  1989

  —

  3

  1990

  —

  —

  1991

  —

  —

  1992

  —

  2

  1993

  —

  —

  1994

  —

  2

  1995

  —

  —

  1996

  —

  —

  1997

  —

  —

  19983

  —

  —

  1Includes caravans, boats and other non-building structures used solely as a permanent dwelling

  2 Includes drencher systems from 1988 to 1993

  3 Provisional

  Mr. Pickles
  To ask the Secretary of State for the Home Department how many deaths from fire in residential property there were where a freestanding smoke detector was(a) fitted and working and (b) fitted but not working in each of the last 10 years. [119111]

  Mr. Mike O'Brien
  The information for 1994 to 1998 only is given in the table. Figures for smoke alarm operation were not collected nationally for years prior to
  421W
  1994. The table has been split to show both numbers of deaths from fire where a smoke alarm was present, operated and raised the alarm, and deaths where smoke

  Number of deaths from fire in dwellings1 by presence and operation of smoke detectors, United Kingdom, 19942–984

  1994

  1995

  1996

  1997

  19984

  Smoke alarm presence and operation:

  Present, operated and raised alarm

  47

  58

  57

  45

  48

  Present, operated, but did not raise alarm3

  35

  28

  26

  27

  28

  Smoke alarm present but did not operate

  46

  71

  82

  84

  80

  Smoke alarm present (all)

  128

  157

  165

  156

  156

  Smoke alarm absent

  360

  389

  399

  406

  350

  Unspecified

  —

  13

  —

  —

  —

  Total

  488

  559

  564

  562

  5506(496)

  1Includes caravans, boats and other non-building structures used solely as a permanent dwelling.

  2 Prior to 1994 data was not collected.

  3Category includes instances where alarm was raised by people before smoke alarm operated; no-one was in earshot; alarm incorrectly installed etc.

  4Figures for 1998 are provisional.

  5Figures for 1998 are estimated to take account of revisions as later information is received.

  Police Vehicle Accidents
  Ms Osborne
  To ask the Secretary of State for the Home Department what recent arrangements he has made to ensure that emergency services adopt safe driving procedures. [119207]

  Mr. Charles Clarke
  This is an operational matter for the police service, the ambulance service and the fire service. The Association of Chief Police Officers (ACPO) reviewed training arrangements in their Police Pursuit Driving Training report of September 1998. The report has been accepted in principle by all of the 43 police forces in England and Wales and its recommendations are being taken forward on a national basis.

  Under the Fire Services Act 1947, it is the duty of each fire authority to provide the efficient training of the members of the fire brigade taking account of Home Office guidance and local circumstances.

  I understand that drivers of emergency ambulances are required to undertake a two-week practical and theoretical training course. This arrangement has been in place since the 1970s and driving standards are assessed by specially trained driving instructors.

  Female Circumcision
  Ms McCafferty
  To ask the Secretary of State for the Home Department what training is given to(a) police officers and (b) other law enforcement groups for the policing of the Prohibition of Female Circumcision Act 1985. [119187]

  Mr. Charles Clarke
  The training of police officers is ultimately the responsibility of individual chief constables who have discretion to provide training on any subject for which there is a local need.

  We are not aware of any other law enforcement groups which might be involved in policing the Act.

  Sentencing
  Ms McCafferty
  To ask the Secretary of State for the Home Department what measures the Government will 422W
  alarms were present, operated, but did not raise the alarm (ie although the alarm sounded the fire brigade was not called).

  put in place to respond to the findings of the Sentencing Advisory Panel on fairness and consistency in sentencing for environmental offences. [119209]

  Mr. Charles Clarke
  The role of the Sentencing Advisory Panel is to provide views to the Court of Appeal on particular offences or categories of offence to assist the Court in framing or revising guidelines. The Court of Appeal has discretion as to how it chooses to use those views. It would not be appropriate for the Government to interfere in this.

  Ms McCafferty
  To ask the Secretary of State for the Home Department what action the Government will take to implement the Sentencing Advisory Panel's recommendations that a higher level of compensation than £5,000 for environmental offences should be allowed in magistrates courts. [119191]

  Mr. Charles Clarke
  On 21 January 2000, the Chairman of the Sentencing Advisory Panel wrote to my right hon. Friend the Home Secretary suggesting an increase in the level of compensation available in magistrates courts for environmental offences. The Government are currently considering how to respond.

  Online Services
  Mr. Robert Jackson
  To ask the Secretary of State for the Home Department if he will list the services which(a) his Department and (b) the executive agencies responsible to his Department (i) provide online and (ii) expect to be deliverable online by 2002. [119439]

  Mr. Straw
  The Cabinet Office will shortly be publishing the spring 2000 report summarising progress towards the delivery of all Government services electronically by 2005. We are currently collecting data to contribute to that report. This will include our progress
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  towards delivering 25 per cent. of Government services electronically by 2002. We currently provide a range of services electronically which include the following:
  a 24 hour, seven day a week call centre within the United Kingdom Passport Agency, established in January this year, which is able to give members of the public responses to a wide range of inquiries, including progress of their passport applications;
  the online provision of Home Office research and statistical publications. This includes the Digest of Criminal Justice Statistics, enabling criminal justice practitioners, academics and other members of the public to carry out their own analysis of criminal justice statistics; and
  a comprehensive online information service, provided by the Home Office website, for all aspects of my Department's work.

  Extradition Powers
  Mr. McCabe
  To ask the Secretary of State for the Home Department what powers he has to seek the extradition of persons suspected of murdering British citizens abroad. [119289]

  Mr. Straw
  I have no powers to seek the return of persons suspected of murdering British subjects abroad unless the suspect is also a British subject. Under section 9 of the Offences Against the Person Act 1861, the extraterritorial jurisdiction of courts in England and Wales extends only to cases where a British subject is accused of committing murder or manslaughter abroad and not to those where the victim is a British subject.

  Dr. Harold Shipman
  Mr. Pendry
  To ask the Secretary of State for the Home Department if inquests will be held into the deaths of the 23 further alleged victims of Dr. Harold Shipman in connection with which the Director of Public Prosecutions has decided he should not be charged. [119723]

  Mr. Straw
  I understand that the relevant coroner is considering whether inquests ought to be held. Since the bodies have all been cremated in these cases, the coroner cannot proceed without my authority. If such consent is sought, I will consider very carefully whether inquests are desirable and whether to direct the coroner accordingly.

  Fire Service
  Kali Mountford
  To ask the Secretary of State for the Home Department if he has received the recommendations of the inquiry into the machinery for determining firefighters' conditions of service. [119127]

  Mr. Straw
  [pursuant to his reply, 12 April 2000, c. 226W]: The word "employees" was inadvertently substituted for the word "employers" in the first paragraph. The final sentence of the first paragraph should, therefore, have read:
  These include proposals which would involve the acceptance by the employers and the union of conciliation and arbitration, in the event of disputes, a clarification of procedures, a streamlining of the negotiation arrangements, and an independent Chair for the National Joint Council.

PRIME MINISTER

  Synchrotron
  Mr. Field
  To ask the Prime Minister if he will list the dates on which meetings were held between Her Majesty's Government and the French Government on the Synchrotron project; and if he will make a statement on the nature of the French Government's representations on the siting of the Synchrotron. [117103]

  The Prime Minister
  [holding answer 3 April 2000]: I am advised that officials from the UK Government and the French Government met on 15 September 1999, 4 November 1999 and 13 December 1999 to discuss the new synchrotron project. On 14 October 1999 my noble Friend the Minister for Science had a private discussion with the French Minister for Research and Education who stated that it would be more acceptable for the French if the synchrotron were to be located at the Rutherford Laboratory. My noble Friend had a further conversation with the French Minister on 9 March 2000, during which the French Minister said they would withdraw their support from the synchrotron project if the Wellcome Trust withdrew.

  Both partners expressed the view that the favoured the Rutherford site. The French Education Ministry state publicly that
  This site was strongly supported by the French partners in the project and we are delighted with this choice.
  The Wellcome Trust stated that they would withdraw from the partnership if the decision was taken to locate the project at Daresbury.

  Parliamentary Questions
  Mr. Field
  To ask the Prime Minister when he will reply to the question tabled on 28 March by the right hon. Member for Birkenhead on Government meetings in connection with the relocation of the synchrotron (reference 117103). [119693]

  The Prime Minister
  I have done so today.

  Personal Envoys
  Mr. Baker
  To ask the Prime Minister if he will make it his policy to ensure that all persons carrying out duties abroad on his behalf can be questioned in Parliament. [118425]

  The Prime Minister
  [holding answer 10 April 2000]: I refer the hon. Member to the answer given by the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Neath (Mr. Hain) to the right hon. Member for Horsham (Mr. Maude) on 12 April 2000, Official Report, column 180W.

  Pig Farmers
  Miss McIntosh
  To ask the Prime Minister what representations he has received from pig farmers on the compensation sought for the BSE-equivalent costs. [119448]

  The Prime Minister
  I have received a number of representations. But, as has been made clear by Agriculture Commissioner Fischler, payment of aid to pig producers linked to BSE is not possible under EU state aid rules. Helping the industry to meet the challenges it
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  faces is the way forward and this is the prime objective of the Pig Industry Aid Scheme I announced at my meeting with industry leaders on 30 March 2000.

  Correspondence
  Mr. Norman
  To ask the Prime Minister if he will reply to the letters of 5 and 13 April from the hon. Member for Tunbridge Wells. [119682]

  The Prime Minister
  I refer the hon. Member to the answer I gave him on 4 April 2000,Official Report, column 390W.

NORTHERN IRELAND

  Accumulated Service Medals
  Mr. Peter Robinson
  To ask the Secretary of State for Northern Ireland what procedure was followed by the Honours and Distinction Committee to ascertain the eligibility of members of the Royal Irish Regiment claiming accumulated service medals, but for whom the necessary records were not available. [119344]

  Mr. Spellar
  [holding answer 17 April 2000]: I have been asked to reply.

  The Royal Warrant for the Accumulated Campaign Service Medal specifies that the award to Royal Irish Regiment personnel is dependent upon completion of 1,080 operational duties for full-time members, and 1,000 operational duties for part-time members. In the absence of contemporary local records, the Ministry of Defence has introduced a protocol to assist applicants in providing evidence of their operational service. Dedicated teams have been established to help applicants with their cases and each applicant is allocated his/her own case officer. As the qualifying criteria for the medal remain unchanged, there has been no need for my Department to consult the Committee on the Grant of Honours, Decorations and Medals (known as the HD Committee).

PRESIDENT OF THE COUNCIL

  Action 2000
  Mr. Ben Chapman
  To ask the President of the Council what assessment she has made of the work of Action 2000 and the Government's Year 2000 programme. [118177]

  Mrs. Beckett
  The Government's year 2000 programme has been an outstanding success, with the UK almost untouched by the Bug. This is due to the hard work of many across the public and private sectors who worked in partnership with Government and Action 2000.

  The work done has also delivered far-reaching benefits. These are drawn out in a Command Paper entitled "Modernising Government in Action: Realising the Benefits of Y2K" that I am publishing today. The Paper explains how the lessons and benefits of tackling the Bug are being captured across government.

  Mr. White
  To ask the President of the Council what assessment she has made of the work of Action 2000 in tackling the year 2000 problem. [118182]
  426W
  Mrs. Beckett
  Action 2000's contribution in helping to tackle the Millennium Bug has been significant. The National Infrastructure Forum (NIF) alone was a remarkable achievement. The links which were forged in the NIF, and the work done to map the key processes of the national infrastructure, will be of lasting benefit.

HOUSE OF COMMONS

  Modernisation
  Kali Mountford
  To ask the President of the Council how many recommendations have been made by the Select Committee on Modernisation of the House of Commons; and how many have been implemented. [118176]

  Mrs. Beckett
  The Modernisation Committee reported at the beginning of this Session that of the 56 recommendations we have made, 47 have been approved by the House and implemented either in whole or in part. Since then, another one has been implemented by the use of a second Reading Committee for the Royal Parks (Trading) Bill.

  Mr. Bercow
  To ask the President of the Council if she will bring forward proposals to the Select Committee on Modernisation of the House of Commons to increase the amount of time available for oral questions. [118179]

  Mr. Tipping
  No. But any Member of the House may put proposals to the Modernisation Committee.

  Parliamentary Adjournments and Recesses
  Mr. Barnes
  To ask the President of the Council if she will make it her policy that hon. Members should be able(a) to have written questions answered and (b) to table and have published early-day motions during parliamentary adjournments; and if she will make a statement. [118178]

  Mr. Tipping
  The Modernisation Committee is currently looking at questions in the recess; until now, no Member has raised the matter of EDMs.

  Mr. Burns
  To ask the President of the Council if she will make a statement on the factors that she takes into account in determining parliamentary recesses. [118185]

  Mr. Tipping
  My right hon. Friend takes many factors into account in determining Parliamentary recesses, including the progress of business, Members' needs to have time for constituency business, and the desirability of arrangements which allow Members and staff to spend time with their families.

  Visitor Facilities
  Angela Smith
  To ask the President of the Council to ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what recent discussions the Commission has had on the provision of refreshment facilities for visitors to the House. [118180]

  Mr. Kirkwood
  This is primarily a matter for the Catering Committee, as my hon. Friend knows. In my reply to her on 26 July 1999,Official Report, columns 17-18, I indicated that provision of the Visitor Centre depended

  427W
  upon acquisition and conversion of Westminster Hall cafeteria once Portcullis House was functioning. Work towards establishing the Visitor Centre is accordingly expected to begin in 2001.

  Human Rights Committee
  Fiona Mactaggart
  To ask the President of the Council what plans she has to propose the establishment of a human rights committee. [118181]

  Mr. Tipping
  Draft Standing Orders for a Joint Committee on Human Rights are in preparation. The Government propose that the Committee should have a wide remit to study human rights in the United Kingdom. It remains the expectation that the Joint Committee will start its work before implementation of the Human Rights Act.

  Electronic Voting
  Ms Coffey
  To ask the President of the Council what representations she has received on electronic voting. [118183]

  Mr. Tipping
  I have received no written representations.

  Portcullis House
  Mr. Cox
  To ask the Chairman of the Accommodation and Works Committee when Portcullis House will be opened. [118820]

  Sir Sydney Chapman
  Hon. Members and their staff will start to be moved into the building in September.

DEFENCE

  Crossmaglen Gaelic Athletic Association
  Mr. John D. Taylor
  To ask the Secretary of State for Defence what amount of public funds was paid as compensation to Crossmaglen Gaelic Athletic Association for use of a portion of their playing fields; and if he will make a statement. [119019]

  Mr. Ingram
  I have been asked to reply.

  Responsibility for the matter in question has been delegated to the Compensation Agency under its Chief Executive, Mr. Denis Stanley. I have asked him to arrange for a reply to be given.

  Letter from Denis Stanley to Mr. John D. Taylor, dated 18 April 2000:
  The Secretary of State has asked me, as Chief Executive of the Compensation Agency in Northern Ireland, to reply to your recent Question about compensation paid to Crossmaglen Gaelic Athletic Association in respect of use of part of their land by the security forces.
  Land belonging to the Association was first requisitioned by the Secretary of State for Northern Ireland under the Emergency Provisions Act in 1974. In 1985 a sum of £150,000 was paid by way of compensation in respect of the period 1974 to February 1985. This compensation was a composite amount and covered both physical damage to the property and the requisitioning of land. For
  428W
  the period subsequent to February 1985 the amount of compensation payable in respect of requisitioned land has been the subject of an appeal to the County Court which is still on-going.
  I hope this explains the position.

  AWE Aldermaston
  Mr. Rendel
  To ask the Secretary of State for Defence, pursuant to his answer of 5 April 2000,Official Report, columns 486-87W, on AWE Aldermaston, against what criteria the parent companies were judged to ensure that they achieved full compliance on safety performance. [118561]

  Mr. Spellar
  [holding answer 10 April 2000]: The assessments of the competing consortiums' bids were made on the basis of a safety criterion with 28 components of which 20 were classed as critical. Compliance was required against each of the critical components in order for the bid to be processed further. The components are as shown—(C=Critical; NC=Non-critical):

  Policy, Strategy and General

  To maintain, and where appropriate improve, an effective policy and strategy for ensuring high health safety and environmental performance (c).

  Achievement of applicable standards and maintenance of company standards (c).

  Track Record (c).

  Co-operation with Authority's safety bodies (c).

  Safety QA and documentation (c).

  Provision of safety services (c).

  Measuring Safety Performance

  An effective safety performance measurement system to cover all significant and appropriate Environment Safety and Health matters on and off site (c).

  Effective accident and incident investigation, analysis and reporting (c).

  Planning, Implementing and Maintaining Safety

  Five year plan (c).

  Maintenance and improvement of an effective safety management system and improvement of performance as appropriate (c).

  Provision of management prospectus (c).

  Maintenance of site as safe place to be, safe working, justification of operations and facilities, peer review (c).

  Control of hazardous materials, including criticality safety and explosives, and control of all wastes (c).

  Nuclear weapon safety (c).

  Provision of emergency response (c).

  Restriction of access to designated premises (c).

  Effective planning and implementation (NC).

  Organisation for implementing Policy

  Senior personnel (c).

  The maintenance of effective communications on safety matters and provision of information (c).

  Competence (c).

  Safety culture (NC).

  Management Control (NC).

  Employee involvement (in Environment Safety and Health activity) (NC).

  Regulatory interface (NC).

  429W
  Audit, Review, Action tracking, Verification and Essential Services

  Effective corrective action including planning and verification of close out (c).

  An effective audit system with benchmarking (NC).

  Collective review of safety performance information and analysis for trends and causes (NC).

  Measures to maintain essential services (NC).

  Munitions
  Mr. Key
  To ask the Secretary of State for Defence if he will make a statement on progress with long-range precision munitions; and if he will make a statement. [117487]

  Dr. Moonie
  [holding answer 3 April 2000]: The Strategic Defence Review identified precision weapons as an increasingly important military capability. The value of long-range all-weather precision weapons was confirmed during Kosovo and they are a key capability in the NATO Defence Capabilities Initiative. Long-range weapons allow the UK armed forces to strike with less risk to UK personnel and equipment, and precision guidance reduces the risk of civilian casualties.

  Our current long-range precision strike capability is provided by the submarine-launched Tomahawk Land Attack Missile (TLAM) which entered service in 1998 and proved effective during Kosovo. From 2002 this capability will be complemented by the introduction of the air-launched Storm Shadow missile.

  Ministry of Defence Police
  Mr. Key
  To ask the Secretary of State for Defence if he will list the Royal Ordnance sites from which Ministry of Defence Police cover will be withdrawn; on what date this will take effect; and if he will make a statement. [117665]

  Dr. Moonie
  [holding answer 5 April 2000]: Ministry of Defence Police are currently deployed at the Royal Ordnance sites in Bridgwater, Chorley, Glascoed, Nottingham and Radway Green. Royal Ordnance has requested that they be withdrawn as a cost saving measure and replaced by alternative arrangements. We have concluded that there is not sufficient reason to insist on their retention and are commencing consultation on the withdrawal of MDP from the sites in question subject to certain physical security enhancements required by the licensing authorities.

  Mr. Key
  To ask the Secretary of State for Defence how many Ministry of Defence Police will be deployed to Kosovo in support of the UN International Police Force; what will be the length of their tour; what training they will receive; and if he will make a statement. [117667]

  Dr. Moonie
  [holding answer 5 April 2000]: Up to 60 Ministry of Defence Police officers are to be deployed to Kosovo in support of the UN International Police for a 12-month tour of duty. All officers are currently undergoing a four-week training course including advanced firearms tactics, explosives and weapon searches, conflict resolution, personal safety and conditions in Kosovo.
  430W
  Mr. Key
  To ask the Secretary of State for Defence if he will bring forward legislation to extend the jurisdiction of the Ministry of Defence Police to give them the same constabulary powers as Home Office police; and if he will make a statement. [117669]

  Dr. Moonie
  [holding answer 5 April 2000]: The Ministry of Defence Police already have constabulary powers in the places defined in Section 2 of the Ministry of Defence Police Act 1987. The adequacy of these powers is currently being reviewed.

  Procurement Projects
  Mr. Key
  To ask the Secretary of State for Defence if he will list the procurement projects worth £300 million or more for which, since 1996,(a) delivery dates, (b) stage payment dates and (c) in-service dates have been varied from those specified in the original contracts. [118264]

  Dr. Moonie
  The information requested is not readily available; however, I will write to the hon. Member and a copy of my letter will be placed in the Library of the House.

  Helsinki European Council
  Mr. Mitchell
  To ask the Secretary of State for Defence following the decisions made at the Helsinki European Council relating to a Common Defence and Security capability of the European Union, which tasks within the remit of armed forces acting on the authority of the Council are additional to those capable of being conducted by agreement of all members of the North Atlantic Treaty Organisation; and who is responsible for liaison between the Political and Military Committee of the European Council and the decision-making authority of NATO. [118866]

  Mr. Hoon
  At Helsinki, EU member states made a commitment to be able, by 2003, to deploy rapidly and sustain up to 60,000 troops capable of undertaking the full range of Petersberg tasks. The Petersberg tasks are defined as humanitarian intervention, rescue operations, peacekeeping, and crisis management (including peacemaking). NATO is capable of conducting all of these tasks.

  The mechanisms for liaison between the EU Political and Security Committee and the NATO North Atlantic Council are being developed in accordance with the conclusions of the Helsinki European Council and the NATO Washington Summit.

  Balkans (Equipment)
  Mr. Hancock
  To ask the Secretary of State for Defence what is the total cost to his Department of equipment lost, damaged, and no longer available for MOD use in(a) Bosnia and (b) Kosovo; and if he will make a statement. [119167]

  Mr. Spellar
  The estimated total cost of stock written off to date, in relation to operations in the Balkans, is:

  (a) Bosnia: £11.0 million (including £1.303 million for one Hercules aircraft)

  (b) Kosovo: £1.4 million.

  Northern Ireland Regiments
  Mr. McNamara
  To ask the Secretary of State for Defence what guidelines govern the involvement of part-time and serving members of the armed forces in political activities; if members of the(a) Ulster Defence Regiment and (b) Royal Irish Regiment are subject to separate guidelines for Northern Ireland; and how many soldiers have been dismissed for political activities in each year since the UDR was created. [118980]

  Mr. Spellar
  Guidelines on political activity for members of the armed forces, including full-time and part-time members of the Royal Irish Regiment, are contained in Queens Regulations for each service.

  The Ulster Defence Regiment (UDR) used to have a separate set of Regulations with guidelines on political activities, and these clearly stated that Queens Regulations also applied to UDR personnel.

  We have no records of the number of soldiers dismissed for engaging in political activities.

  Meteorological Stations
  Mrs. Ray Michie
  To ask the Secretary of State for Defence what assessment he has made of the social and economic impact on remote and island communities of the automation of meteorological stations; and if he will make a statement. [118969]

  Dr. Moonie
  [holding answer 14 April 2000]: This is a matter for the Chief Executive of the Meteorological Office. I have asked the Chief Executive to write to the hon. Member.

  Letter from Peter Ewins to Mrs. Ray Michie, dated 18 April 2000:
  I am replying to your question to the Secretary of State for Defence about the social and economic impact on remote and island communities of the automation of meteorological stations. This matter falls within my area of responsibility as Chief Executive of The Met Office.
  The Met Office is looking to improve efficiency and reduce costs in the delivery of weather services. The automation of meteorological stations is not a new initiative but an important part of this strategy.
  Trials are to commence shortly to assess the feasibility of extending the automation process into areas where, up to now, manual observations have been seen as necessary for our operations. Assuming a satisfactory outcome from the trials, we plan to automate the observing functions at several locations around the United Kingdom, including Tiree Airport.
  We recognise that the withdrawal of Met Office observers from Tiree, should this be the outcome, could have an adverse impact on the local community, and this I would very much regret. In particular, the services delivered by the Highlands and Islands Airport Ltd are likely to be affected. We are, therefore, discussing options with them to examine how they could continue to provide the Aerodrome Meteorological reports which are necessary for airport operations, in the absence of our observers.

TRADE AND INDUSTRY

  Post Offices
  Mrs. Fiona Jones
  To ask the Secretary of State for Trade and Industry if he has defined what is a reasonable distance when determining access to a post office. [119757]
  432W
  Mr. Alan Johnson
  Decisions on access criteria will be made in the light of the Performance and Innovation Unit's report on the post office network and subsequent consultations with interested parties.

  Mr. Worthington
  To ask the Secretary of State for Trade and Industry what agreement he has with the Post Office about the(a) number and (b) percentage of existing Crown post offices that should be maintained. [119002]

  Mr. Alan Johnson
  As set out in the White Paper "Post Office Reform: A World Class Service for the 21" Century", the Government agreed a strategy, reflecting proposals put by the Post Office to the trade unions, of retaining a core of directly owned and managed Crown offices. For the foreseeable future, the Post Office intends that at least 15 per cent. of the total business transacted by the counters' network is done at Crown offices.

  Mr. Worthington
  To ask the Secretary of State for Trade and Industry if changes have taken place since May 1997 in the restrictions on the activities of Crown post offices. [119003]

  Mr. Alan Johnson
  No.

  Mr. Truswell
  To ask the Secretary of State for Trade and Industry what steps he will promote to maximise the income of sub-postmasters from(a) benefit transactions and (b) other transactions following the introduction of automated credit transfers in post offices. [119205]

  Mr. Alan Johnson
  The Government have given a commitment that all benefit recipients who wish to access their benefits in cash at post offices will continue to be able to do so, both before and after the migration of benefit payments to automated credit transfer from 2003. By equipping the whole of the post office network with Horizon, a modern, automated IT platform towards the capital costs of which the Government are contributing £480 million, from spring 2001 the Post office will be able to improve its services to existing clients and take advantage of new business opportunities. In particular, Horizon offers the potential to move into automated network banking on an agency basis and to use the post office network as a delivery channel for electronic Government services.

  Companies House
  Mr. Gordon Marsden
  To ask the Secretary of State for Trade and Industry what targets he has set Companies House for 2000–01. [119987]

  Mr. Byers
  I have set Companies House the following targets for the year 2000–01.

  Operational Targets

  To process 99 per cent. of statutory documents within five days of receipt at Companies House.

  To achieve, on average, a monthly compliance rate for accounts submitted of 95 per cent.

  To ensure that there is a minimum of 98 per cent. error-free work in current processing.

  To ensure that 96 per cent. of all forms submitted to Companies House are captured error-free.

  To answer 90 per cent. of all incoming telephone calls within 20 seconds.

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  Questions delegated to the Chief Executive
  The Chief Executive to reply within 10 days to all letters from Members of Parliament delegated to him for reply.

  Complaints Handling
  To clear up 90 per cent. of complaints within five days.

  Financial Targets

  To maintain a unit cost reduction of 3 per cent. in real terms on document registration.

  To achieve, taking one year with another, a 6 per cent. average rate of return based on the operating surplus expressed as a percentage of average net assets.

  To pay bills due within 30 days, or other agreed credit terms, on receipt of goods or services or a valid invoice, whichever is later.

  I have placed copies of the Corporate Plan in the Libraries of the House.

  Council for Science and Technology
  Dr. Starkey
  To ask the Secretary of State for Trade and Industry if new appointments have been made to the Council for Science and Technology. [119985]

  Mr. Byers
  My right hon. Friend the Prime Minister has recently decided to increase the number of independent members to 16 and to appoint the following as new members:

  Mr. Javaid Aziz, CEO, Aspective

  Mr. Euan Baird, Chairman, Schlumberger Ltd.

  Professor Vicki Bruce, Deputy Principal of Research, University of Stirling

  Professor Sir Paul Nurse, Director General, Imperial Cancer Research Fund

  Professor Peter Schuddeboom, Vice President, Nortel Networks

  Professor David VandeLinde, Vice-Chancellor, University of Bath

  Mr. John Weston, Chief Executive, BAE Systems.

  These new members replace five previous members, namely:

  Dame Bridget Ogilvie, Chairman, COPUS

  Sir Robin Nicholson, Chairman, Rolls Royce plc

  Professor Sir Stewart Sutherland, Principal and Vice-Chancellor, University of Edinburgh

  Mr. J. Martin Taylor, Chairman, W. H. Smith Group

  Professor Sir Keith O'Nions, Chief Scientific Adviser to the Ministry of Defence (from January 2000).

  The Prime Minister also decided to re-appoint:

  Sir Richard Sykes, Chairman, Glaxo Wellcome plc (until March 2003)

  Professor Sir Aaron Klug, President of the Royal Society (until the end of his Presidency of the Royal Society later this year)

  Professor Kumar Bhattacharyya, Director, Warwick Manufacturing Group, University of Warwick (until March 2003).

  I am most grateful for the support and advice we have received from Council members so far and very much look forward to working with the new Council.

  Collum Report
  Mr. Stunell
  To ask the Secretary of State for Trade and Industry what action he plans to take on the Collum report on BNFL; and if he will make a statement. [118798]
  434W
  Mrs. Liddell
  [holding answer 14 April 2000]: I have now received an outline of the proposed changes from the BNFL Chairman and Chief Executive, following their initial review of BNFL management. It will be for the company to implement the proposed changes, which will be achieved over a period of time. Where relevant, these will need to be fully consistent with the company's site licence obligations and agreed by the Government as shareholder. More detailed announcements related to the Review will be made in due course.

  Mr. Stunell
  To ask the Secretary of State for Trade and Industry if he will publish the Collum report on BNFL. [118790]

  Mrs. Liddell
  [holding answer 12 April 2000]: I understand that Hugh Collum, the BNFL Chairman, intends shortly to make an announcement about the conclusions of his review.

  Online Services
  Mr. Robert Jackson
  To ask the Secretary of State for Trade and Industry if he will list the services which(a) his Department and (b) the executive agencies responsible to his Department (i) provide online and (ii) expect to be deliverable online by 2002. [119435]

  Ms Hewitt
  So that the Cabinet Office can publish the Spring 2000 report monitoring progress towards delivery of all Government services electronically by 2005, we are currently collecting data which will include our progress on delivering 25 per cent. of Government services electronically by 2002. I do not wish to pre-empt that report but I can say that we currently provide a range of services electronically which includes information and advice to small and medium enterprises via the Small Business Service Internet 'gateway', and other websites covering science and technology, information on 1.4 million companies (and facilities to register changes to company status), plus the award winning consumer gateway. By 2002, we shall be providing and contributing to more services in these areas and others such as trade promotion, company formations, oil well consents and applications for research grants.

  Enterprise Fund
  Mr. Redwood
  To ask the Secretary of State for Trade and Industry when he sought clearance from the EU Commission for the Enterprise Fund; and when he expects to reach agreement with the EU Commission on it. [119311]

  Mr. Byers
  [holding answer 17 April 2000]: The Enterprise Fund consists of a number of elements.

  The existing Small Firms Loan Guarantee Scheme element of the Enterprise Fund continues to operate under "de minimis" arrangements, apart from in the agriculture and fisheries/aquaculture sectors, which have been separately notified and cleared. The "de minimis" arrangements allow for schemes that contain aid falling below a minimum threshold level to be accepted without State Aid notification.

  With regard to the venture capital elements of the fund, my Department's officials are working with Commission officials to assist them in their development of a

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  framework for dealing with venture capital schemes on a community-wide basis. We expect this framework to be in place by summer 2000.

  We expect the full amounts previously announced to be committed within this spending round.

  Mr. Redwood
  To ask the Secretary of State for Trade and Industry when he announced the establishment of the Enterprise Fund; and when the first payments will be made from it. [119310]

  Mr. Byers
  [holding answer 17 April 2000]: The Enterprise Fund was announced in the December 1998 Competitiveness White Paper (Cm 4176). Payments are already being made under the fund.

  Mr. Redwood
  To ask the Secretary of State for Trade and Industry what changes the EU has asked for to his Department's scheme for an Enterprise Fund. [119312]

  Mr. Byers
  [holding answer 17 April 2000]: The EU has not asked for any changes to be made to my Department's scheme for the Enterprise Fund.

  KONVER
  Dr. Tonge
  To ask the Secretary of State for Trade and Industry, pursuant to the answer of 16 March 2000,Official Report, column 274W, on KONVER, for what reason the KONVER Programme II Initiative was not renewed. [119051]

  Mr. Caborn
  [holding answer 17 April 2000]: The European Commission proposed to reduce the number of Community Initiative programmes from 13 to three as part of the Agenda 2000 package. There is no proposal to continue with the KONVER initiative.

  Member

  Occupation

  Alex Stephenson

  Task Force Chair and Chairman of Advantage West Midlands

  Sue Battle

  Chief Executive Officer of Birmingham Chamber of Commerce

  Colin Beardwood

  Councillor. Worcestershire County Council and Chair of the Regional Chamber of the Local Government Association

  Kumar Bhattacharyya

  Director, Warwick Manufacturing Group, Warwick University

  Albert Bore

  Leader of Birmingham City Council and university lecturer

  Gerard Coyne

  TGWU Regional Industrial Organiser and Birmingham City councillor

  David Cragg

  Chief Executive of Birmingham and Solihull TEC

  Tom Watson

  Policy Adviser to the AEEU

  Nick Paul

  Chair of CBI and also Deputy Chief Executive of IMI PLC

  Mike Wright

  Vice Chancellor of Aston University

  David Ritchie

  Regional Director, Government Office for the West Midlands

  Rosemary Thew

  Regional Director, West Midlands Employment Service

  Mr. Graham Broome

  Chief Executive Officer, Society of Motor Manufacturers and Traders

  Richard Burden MP

  MP, Northfield constituency in Birmingham

  Rt. Revd Mark Santer

  Bishop of Birmingham

  David Botterill

  Chief Executive, Engineering Employers Federation

  Ian Pearson MP

  MP, Dudley South constituency

  Sir Norman Fowler MP

  MP, Sutton Coldfield constituency

  Bill Holmes

  Midlands Secretary of Manufacturing, Science and Finance Trades Union and regional Chair of the TUC

  David Nicholas

  Managing Director, Unipart

  Keith Hirst

  Chief Executive of Metsec PLC and Chair of Black Country Consortium

  Nuclear Energy
  Mr. Llew Smith
  To ask the Secretary of State for Trade and Industry if he has received a copy of the report by ERM Ltd. for the European Commission on the
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  Although Community Initiatives provided benefits in many areas of the country it was often the case that effort involved by all concerned in implementing their relatively small programmes was out of all proportion to the amount of money involved.

  Mobile Phone Networks
  Mr. Willis
  To ask the Secretary of State for Trade and Industry what plans he has to include the recommendations of the Stewart report in the contract requirements for the new mobile phone network contracts. [119689]

  Ms Hewitt
  The Government regulate mobile phone networks via licences granted under the Wireless Telegraphy Act 1998 and the Telecommunications Act 1984.

  The Report of the Independent Expert Group on Mobile Phones chaired by Sir William Stewart is expected to be published in May. It would not be appropriate for the Government to comment on it until that time.

  Longbridge Task Force
  Mr. Denzil Davies
  To ask the Secretary of State for Trade and Industry what the names and occupations are of the members of the Longbridge Task Force. [119016]

  Mr. Alan Johnson
  The members of the Rover Task Force have been drawn from a wide range of organisations and between them represent the regional key partners in the West Midlands region.

  The original membership has expanded to 20 under the chairmanship of Alex Stephenson, who also chairs the Regional Development Agency, Advantage West Midlands.

  The current members and their occupations are:

  prospective future demand for nuclear energy and the commitment by the member states of the European Unionto the Kyoto Climate Change agreement. [119137]

  Mrs. Liddell
  [holding answer 13 April 2000]: The Department has not yet received a copy of this report.

  Hawk Exports (Zimbabwe)
  Mr. Hilary Benn
  To ask the Secretary of State for Trade and Industry, pursuant to his written answer of 17 February 2000,Official Report, column 629W, if Zimbabwe has repaid the full cost of the Hawk aircraft. [118633]

  Mr. Caborn
  [holding answer 11 April 2000]: Yes.

  Patent Office
  Dr. Iddon
  To ask the Secretary of State for Trade and Industry what targets he has set the Patent Office for 2000–01. [119986]

  Mr. Byers
  I have set the Patent Office the following targets for 2000–01.

  Patents
  1. To issue 14,500 patent search reports or combined search and examination reports on average within three months from the date of request, with 90 per cent. of those within four months from the date of request.
  2. To grant 8,500 valid patents on average within two years from the date of filing of the request for substantive examination, with 90 per cent. of those within three years from the date of request.

  Designs
  3. To register 7,700 designs on average within five months from the date of filing of the application, with 90 per cent. of those within 12 months.

  Trade Marks
  4. To process 70,000 trade mark class applications with a target to register within nine months, 90 per cent. of those to which no substantive objections are raised or oppositions filed.

  Finance
  5. To pay 100 per cent. of bills within 30 days of receipt of goods or services or a valid invoice, whichever is the later.

  Questions designated to the Chief Executive
  6. The Chief Executive will reply within 10 working days to all letters from Members of Parliament delegated to her for reply.

  Efficiency Targets
  7. To increase output in relation to current expenditure by an average of at least 2 per cent. per annum over the period 1998–99 to 2002–03.
  8. I have placed copies of the Corporate Plan in the Libraries of the House.

TREASURY

  Tax Law Rewrite Project
  Mrs. Lawrence
  To ask the Chancellor of the Exchequer what progress has been achieved by the Tax Law Rewrite project in the last year; and what plans it has for the coming year. [119823]

  Dawn Primarolo
  I am pleased to announce that the Tax Law Rewrite project is making excellent progress and continues to enjoy wide support. The Inland Revenue have today published a report which reviews the recent progress of the project and outlines its work programmes for 2000–01.

  The rewritten legislation produced by the project has been very well received by the main users in the tax community and they are enthusiastic that the project
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  should continue. I am very pleased to tell the House that the project plans to have its first rewrite Bill ready for introduction in Parliament later this year.

  Budget Calculations
  Mr. Hunter
  To ask the Chancellor of the Exchequer when it became his policy to base increases in fuel duty on a forecast of the likely rate of inflation in the following September. [118747]

  Mr. Timms
  The increase in fuel duties has been based on a forecast of inflation since July 1997. The methodology for calculating the inflation indexed basis for changes in excise duties was set out in that Budget and in all subsequent Budgets.

  Insurance
  Mr. Cousins
  To ask the Chancellor of the Exchequer what plans he has(a) to review the regulatory and core structure of low contribution home service endowment insurance policies and (b) to propose amendments to the Industrial Assurance Act 1923. [119215]

  Mr. Timms
  The Government announced plans in June 1999 to amend the Industrial Assurance Acts 1923 and 1948. There has been useful recent consultation with the Association of British Insurers and the Association of Friendly Societies on the extent of the amendments. Following the amendments the FSA will regulate all home service business using its powers under the Financial Services and Markets Bill.

SOCIAL SECURITY

  Pensions
  Jackie Ballard
  To ask the Secretary of State for Social Security how many pensioners in the UK(a) received their pension every four weeks, (b) received 12 pension payments and (c) received 13 pension payments in 1999–2000. [118834]

  Mr. Rooker
  The administration of retirement pension is a matter for Peter Mathison, the Chief Executive of the Benefits Agency. He will write to the hon. Member.

  Letter from Peter Mathison to Jackie Ballard, dated 17 April 2000:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question asking how many pensioners in the UK (a) received their pension every four weeks, (b) received 12 pension payments and (c) received 13 pension payments in 1999–2000.
  At March 2000, a total of 3,873,606 pensioners were receiving their retirement pension by four weekly payments. The payments were made four weeks in arrears and paid by Automated Credit Transfer (ACT) direct into the pensioners bank or building society accounts. All customers who were paid retirement pension by four weekly payments throughout the year would receive 13 four weekly pension payments.

  Mr. Flynn
  To ask the Secretary of State for Social Security by what percentage the basic retirement pension could be increased in April without reducing the expected balance of the National Insurance Fund at the end of the year 2001–02 below the minimum level recommended by the Government Actuary. [117588]
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  Mr. Rooker
  The information is in the table.

  The basic pension and linked benefits could be increased by 11.8 per cent. in April 2000 without reducing the National Insurance Fund below the minimum level recommended by the Government Actuary in 2001–02. However, funding this level of increase even in that year only and with a return to uprating in line with prices thereafter would lead to a large shortfall in the next year and in subsequent years. This would lead to an increase in rates of National Insurance Contributions. Thus it can be seen that allocation of a surplus to an immediate increase has consequences for future years by wiping out this surplus.

  Effects on national insurance fund if basic retirement pension and linked benefits are increased by 11.8 per cent. above April 2000 rate

  £ billion

  NI fund balance at end of year

  Minimum recommended

  Excess/shortfall

  1999–2000

  13.8

  7.7

  6.1

  2000–01

  12.1

  8.6

  3.5

  2001–02

  9.0

  9.0

  0.0

  2002–03

  4.6

  9.4

  -4.8

  2003–04

  -1.3

  9.8

  -11.1

  Source:

  Government Actuary's Department

  Minimum Income Guarantee
  Shona McIsaac
  To ask the Secretary of State for Social Security how many pensioners will benefit from the minimum income guarantee in the(a) Cleethorpes, (b) Great Grimsby, (c) Scunthorpe and (d) Brigg and Goole constituencies. [118653]

  Mr. Bayley
  The information is in the table.

  Minimum income guarantee recipients by parliamentary constituency

  Constituencies

  Number of pensioners

  Cleethorpes

  2,800

  Great Grimsby

  3,300

  Scunthorpe

  2,200

  Brigg and Goole

  2,500

  Notes:

  1. Figures have been rounded to the nearest hundred.

  2. MIG pensioners include those in residential care or nursing homes.

  3. Numbers have been allocated by parliamentary constituency using the ONS postcode directory version 2.

  Source:

  Income Support Quarterly Statistical Enquiry, November 1999

  Helen Jones
  To ask the Secretary of State for Social Security how many pensioners in(a) Warrington and (b) Warrington, North constituency are in receipt of the minimum income guarantee. [118851]

  Mr. Bayley
  This is a matter for Peter Mathison, the Chief Executive of the Benefits Agency. He will write to my hon. Friend.

  Letter from Peter Mathison to Helen Jones, dated 17 April 2000:
  The Secretary of State has asked me to reply to your recent Parliamentary Question asking how many pensioners in (a) Warrington and (b) Warrington North Constituency are in receipt of the minimum income guarantee.
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  The minimum income guarantee relates to Income Support pensioners aged 60 and over. The information is given in the table.

  Thousand

  Area

  Minimum income guarantee recipients

  Warrington North parliamentary constituency

  2.3

  Warrington local authority

  4.7

  These figures are from the Income Support Quarterly Statistical Enquiry of November 1999. Please note the sample size of 5% and therefore, subject to sampling error. They have been rounded to the nearest hundred.
  I hope this reply is helpful.

  SEMA Medical Services
  Mr. Pickles
  To ask the Secretary of State for Social Security, pursuant to the recent survey conducted by his Department into SEMA Medical Services' doctors, concerning the following of scrutiny guidelines by doctors, how many doctors(a) were subject to the survey and (b) have been identified as needing any remedial training. [119140]

  Mr. Bayley
  Medical Policy Group audited 200 scrutiny decisions of 23 doctors from one medical centre. Twelve doctors were found to have given advice below the standard required by the Medical Services Scrutiny Guidelines and appropriate remedial training will be given.

  It is important to recognise that this survey was not based on a representative sample and we shall therefore be carrying out further audit of the scrutiny process to check whether or not a wider problem exists.

  Mr. Pickles
  To ask the Secretary of State for Social Security, pursuant to the survey conducted by his Department into SEMA Medical Services' doctors, concerning incorrect awards of Incapacity Benefit, how many awards have been(a) disallowed and (b) increased. [119141]

  Mr. Bayley
  The Department's Medical Policy Group recently conducted a survey of a sample of 200 claims for Incapacity Benefit which had been subjected to scrutiny by SEMA Medical Services' doctors to determine whether medical examination of claimants should be undertaken. The survey revealed that some Medical Services doctors had not followed the new scrutiny guidelines introduced in February 1999. Had the guidelines been followed claimants in the sample who may have continued in receipt of Incapacity Benefit would have been further assessed by medical examination. It is not possible to predict the outcome of the Benefits Agency's decision-maker's determination of eligibility for Incapacity Benefit in an individual case if evidence provided in the form of an examining doctor's report had been made available.

  A report of a medical examination by a Medical Services doctor is but one piece of evidence alongside other information provided by the claimant and from other sources, which may include other medical evidence from the claimant's General Practitioner, that the decision-maker will consider in determining eligibility for an award of benefit.
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  As part of normal claims processing, those claimants in the sample upon whom advice was given by Medical Services' doctors to award benefit without medical examination will have their claims reassessed by strict adherence to the scrutiny guidelines and, where applicable, further evidence will be gathered.

  No award from the survey sample was disallowed, although some may have been approved on insufficient evidence.

  Mr. Pickles
  To ask the Secretary of State for Social Security, pursuant to the recent survey by his Department into SEMA Medical Services' doctors, if he will list the principal failures in relation to doctors who were found not to be following scrutiny guidelines. [119138]

  Mr. Bayley
  The Department's Medical Policy Group's audit of the 200 Incapacity Benefit cases subjected to scrutiny by SEMA Medical Services' doctors highlighted three areas where Medical Services' doctors had not followed scrutiny guidance:Acceptance of the claimed level of disability with insufficient medical evidence.
  Inappropriate requests for further medical evidence when the case is re-referred.
  Inappropriate advice given on the period in time following which the claim should be reassessed.

  Mr. Pickles
  To ask the Secretary of State for Social Security if he will deposit in the Library a copy of the letter from the Benefits Agency to SEMA Group's Director of Medical Services instructing Medical Services to ensure compliance with the medical quality standards specified by his Department. [119102]

  Mr. Bayley
  A copy of the letter from the Benefits Agency to Sema Group's Director of Medical Services will not be deposited in the Library in accordance with paragraph 7 of "The Code of Practice on Access to Government Information". However, I am able to tell the hon. Member that the letter sought assurances that Medical Services would ensure compliance with the medical quality standards in the contract and take corrective action where appropriate.

  Benefits (Mortgage Rate)
  Miss Geraldine Smith
  To ask the Secretary of State for Social Security how the mortgage rate for benefit payments is calculated. [119743]

  Mr. Bayley
  Mortgage payments for benefit claimants are based on a Standard Interest Rate, which is calculated by the Building Societies Commission and is based on the weighted average of basic rates charged by the main building societies.

  Child Support (Mortgages)
  Mr. Cousins
  To ask the Secretary of State for Social Security what his policy is on the termination of pre-existing endowment mortgages in order to establish a right to include payments towards the purchase of a new home in assessments of child support. [119321]

  Angela Eagle
  Housing costs, including those from repayment and endowment mortgages, are currently taken into account in the calculation of child support maintenance liability. However, if they are considered to 442W
  be excessive, the amount allowed in the assessment may be restricted. Where a non-resident parent moves house, his new housing costs will be taken into account, although the existing assessment will be changed only if the effect of the new housing costs is to increase or reduce the liability by more than a fixed minimum amount.

  Pensioners (Benefit Entitlement)
  Mr. Flynn
  To ask the Secretary of State for Social Security, pursuant to his answer to my hon. Friend the Member for Knowsley, South (Mr. O'Hara) of 13 January 2000,Official Report, column 232W, what change there has been to the estimate that between 530,000 and 870,000 pensioner benefit units are entitled to but not receiving Income Support; and what are the reasons for the change. [118883]

  Mr. Bayley
  [holding answer 17 April 2000]: The take-up statistics are published annually; the last edition, covering the period 1997–98, was published on 24 September 1999 and showed that there were between 530,000 and 870,000 pensioner entitled non-recipients (ENRs) of Income Support. The statistics are drawn from around 8,500 pensioner benefit units interviewed in the annual Family Resources Survey (FRS), which collects information on incomes and benefit receipt, and details of all income and savings.

  As part of the programme of poorer pensioner research a sample of pensioners who appeared to be ENRs in the FRS were visited with a view to asking about barriers to claiming Income Support and about ways of encouraging them to claim. Respondents were first asked about changes in their financial circumstances since their original FRS interview. This suggests that the allowance for misreporting, made by the Department's statisticians when producing take-up statistics, merits review. Statisticians are reviewing this evidence and will incorporate it in the next set of statistics on take-up of income related benefits which are due to be published in the summer.

  Industrial Injury Benefit (Asbestosis)
  Mr. Cox
  To ask the Secretary of State for Social Security how many people receive industrial injury benefit as a result of having contracted asbestosis. [119244]

  Mr. Bayley
  The information is not available in the form requested. Such information as is available is in the tables. It should be noted that prescribed disease D1 is referred to as pneumoconiosis, but that this term covers a range of lung diseases caused by dust, including coal-workers' pneumoconiosis and silicosis, as well as asbestosis.

  The number of current assessments for pneumoconiosis (D1)

  Thousand

  IIDB current assessments for pneumoconiosis (D1)1

  Total

  Year ending 4 April 1998

  11.4

  Year ending 5 April 1997

  11.9

  Year ending 30 March 1996

  12.0

  Year ending 1 April 1995

  12.9

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  The number of first diagnosed assessments attracting benefit, for pneumoconiosis (D1) associated with the asbestos agent, in each of the last five years

  IIDB first diagnosed assessments for pneumoconiosis2(DI with the asbestos agent)

  Number

  January to September 19993

  303

  Year ending December 1998

  305

  Year ending December 1997

  344

  Year ending December 1996

  479

  Year ending December 1995

  427

  1Industrial Injuries Disablement Benefit current assessments are based on a 10 per cent. clerical sample. An adjustment has been made for late statistical returns (except for 1996–97), but figures may still be subject to a small degree of undercount due to non-response.

  2 Industrial Injuries Disablement Benefit first diagnosed assessments is based on a 100 per cent. count.

  3Figures for 1999 are for nine months only. December 1999 quarterly figures are not yet available.

  Source:

  Information Centre.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Rail Services
  Mr. Barry Jones
  To ask the Secretary of State for the Environment, Transport and the Regions what is his estimate of the amount of money earmarked for refurbishment of the(a) Holyhead-Chester-Crewe and (b) Wrexham to Bidston rail routes; and if he will make a statement. [118192]

  Mr. Hill
  The Department understands from Railtrack that:(a) around £3 million is committed for renewals on the Holyhead-Chester-Crewe rail route, principally to increase the line speed from 75mph to 90mph where practical and install Train Protection and Warning System (TPWS). Additionally, it is expected that around half of the £62m of new rolling stock being delivered to First North Western Trains over the next few months will be running in and around this area.
  (b) around £1 million is committed for renewals on the Wrexham to Bidston rail route, principally to install TPWS and improve stations and track.

  Species Legislation
  Mr. Green
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to implement the recommendations of the Joint Nature Conservation Committee on species legislation; and if he will make a statement. [118426]

  Mr. Meacher
  [holding answer 10 April 2000]: In autumn 1998, my Department requested the Joint Nature Conservation Committee (JNCC) to review the effectiveness of the species protection Schedules to the Wildlife and Countryside Act 1981. The JNCC has recently concluded its review and advises that the Schedules have been generally effective in deterring persecution of the species listed, that they should be retained to give legal protection to appropriate animals and plants, and also makes a number of recommendations.

  I am already actively considering all of the issues raised in the JNCC's recommendations. Some, like the recommendation concerning enforcement of wildlife
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  legislation, are already being addressed through the Countryside and Rights of Way Bill. With other aspects, I recognise that improvements to protection for threatened species in the wider countryside beyond the provisions of this Bill may be warranted and am considering what might be appropriate. Some measures may not necessarily require primary legislation, including JNCC's recommendation concerning the Quinquennial Review of the Schedules. I look forward to receiving JNCC's advice at the next Quinquennial Review in due course.

  I also agree the problem caused by invasive alien species does need to be addressed and we plan to review the effectiveness of policy concerning non-native species which can present an ecological threat to the United Kingdom's indigenous wildlife.

  Departmental Inquiries
  Mr. Loughton
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 3 April 2000,Official Report, column 311W, on departmental inquiries, what was the cost of each of his Department's commissioned reviews listed in his answer; what reports have been published to date; and what subsequent recommendations have been acted on. [118754]

  Ms Beverley Hughes
  [holding answer 11 April 2000]: Information for reports and recommendations from the reviews listed in the Answer of 3 April have been placed in the Libraries of the House. Information on the cost of each review is not held centrally and could be provided only at disproportionate cost.

  UK/USA Meetings
  Mr. Tyler
  To ask the Secretary of State for the Environment, Transport and the Regions what meetings have been held between United States Government officials and his Department in(a) the USA and (b) the UK in the last 12 months, indicating the dates and locations of the meetings and the subjects discussed. [118626]

  Ms Beverley Hughes
  [holding answer 11 April 2000]: Ministers and officials of the Department are in regular contact with officials of the United States Government and discuss a wide range of subjects. In addition to bilateral contracts, we often meet them in the margins of other international meetings.

  Detailed information of meetings is not held centrally and could be obtained only at disproportionate cost.

  Greater London Authority
  Mr. McDonnell
  To ask the Secretary of State for the Environment, Transport and the Regions if he will publish the staffing structure of the units established to prepare for the establishment of the Greater London Authority. [118836]

  Mr. Hill
  The Government announced on 31 March 1999 the appointment of a Head of Transition for the Greater London Authority (GLA) and on 27 July 1999, the issuing of a consultation paper—"The Shape of Things to Come"—on the initial organisation of the GLA. Following the consultation period, I announced, in response to a question from my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on 7 December 1999,Official Report, column 482W, the publication of a

  445W
  response document to the consultation—"Shaping up for the Mayor and Assembly". This highlighted some minor changes to the organisational structure originally proposed. Copies of both documents were placed in the House Library.

  Work has since proceeded to put in place an initial staffing structure, along the broad lines set out in the consultation paper. The future structure of the GLA, including permanent appointments for senior posts, will, of course, be a matter for the GLA itself, once it is established.

  Mr. McDonnell
  To ask the Secretary of State for the Environment, Transport and the Regions (1) if he will list the staff posts which have been created to prepare for the establishment of the Greater London Authority, indicating the salaries of those posts and the length of their contracts; [118837]

  (2) how many staff have been (a) appointed and (b) seconded by the Government to prepare for the establishment of the Greater London Authority. [118838]

  Mr. Hill
  The Government announced in response to a question from my hon. Friend the Member for Eltham (Mr. Efford) on 31 March 1999,Official Report, column 76W, the setting up of a Transition Team to make the arrangements for the establishment of the Greater London Authority (GLA) and to enable the Mayor and Assembly to operate effectively from 8 May 2000. The Transition Team currently comprises 52 temporary staff, of whom 17 are on secondment from local government, the Civil Service and other organisations, 15 have been appointed on short-term contracts and 20 are agency staff.

  To date, 55 new permanent GLA staff have been appointed. These comprise secretarial, administrative, receptionist, human resources, legal, financial and best value staff, on salaries ranging from £18,800 to £49,000. In addition, 135 staff from the former London Research Centre, London Ecology Committee and London Planning Advisory Committee are reporting to the Secretary of State from 1 April and will transfer to the GLA on 8 May 2000 (or, in the case of a small group of London Research Centre staff, to Transport for London on 8 July 2000).

  As well as the Transition Team, some 50 civil servants in the Government Office for London are currently working on aspects of the establishment of the GLA and its functional bodies, including the drafting of secondary legislation and transfer orders and schemes, support to the Greater London Returning Officer, and arrangements for the payment of grant.

  Mr. Geraint Davies
  To ask the Secretary of State for the Environment, Transport and the Regions what guidance he intends to issue to the Greater London Authority on ethical standards under section 66 of the Greater London Authority Act 1999. [119825]

  Mr. Hill
  I have today placed copies of the Secretary of State guidance to the Greater London Authority on ethical standards in the Library of the House.

  Lorry Weights
  Mr. Mitchell
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 4 April 2000,Official Report, column 427W, on 44 tonne lorries, what studies he has (a) carried out
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  and (b) commissioned on the effect on (i) rail freight and (ii) the environment of allowing the use of 44 tonne lorries; if he will publish data on the expected level of direct transfers between road and rail freight following the introduction of such lorries; and if he will list the measures the shadow Strategic Rail Authority is planning to support rail freight. [118841]

  Mr. Hill
  In its interim report "Permitting 44 tonne lorries for general use in the UK", the Commission for Integrated Transport considered carefully the impact of 44 tonne lorries on the rail freight market.

  The Government accept the Commission's view that the overall environmental advantage lies in allowing 44 tonne lorries to operate generally. Not only will the efficiency savings result in a substantial reduction in lorry mileage but the use of 6-axle lorries, with a lower drive axle weight, will cause less wear to roads and bridges than existing 40 tonne, 5-axle vehicles already on our roads. This is based on research carried out by the US Highways Research Board, and confirmed by the UK Transport Research Laboratory and by work carried out in Germany.

  The Commission concluded that further work to estimate the precise effect on rail freight's market share would be unlikely to produce reliable results in the light of the Rail Regulator's forthcoming review of track access charges and other factors.

  The Government set up the shadow Strategic Rail Authority (sSRA) with a remit to develop detailed recommendations on measures to promote the growth of rail freight. That work will help inform our 10-year plan for transport, due to be published in the summer, and the Commission's final report on 44 tonne lorries, expected in the autumn.

  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions when the Commission for Integrated Transport will make its final report on the case for allowing 44 tonne vehicles on to UK roads; and what assessment his Department has made of the impact of permitting 44 tonne lorries on the carriage of goods by rail. [119157]

  Mr. Hill
  I understand that the Commission for Integrated Transport (CfIT) hope to produce their final report on 44 tonne lorries and the development of rail freight in late autumn this year. I also understand that the report will concentrate on options for rail freight and will not revisit the case for 44 tonne lorries.

  My Department relied on CfIT's very thorough analysis of the effects on rail freight of the introduction of 44 tonne lorries, and has not carried out separate studies.

  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions when his Department's announcement on raising the maximum general lorry weight limit to 44 tonnes was made to the House. [119279]

  Mr. Hill
  My noble Friend the Minister for Transport wrote to my hon. Friend on 11 April explaining that this announcement was included in the Budget Red Book.

  Airport Slots
  Mr. Mitchell
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his
  447W
  answer of 4 April 2000, Official Report, columns 427-28W, concerning airport slots, which airports other than Heathrow are within the jurisdiction of ACL Ltd; to whom ACL is accountable for its operation of the EC Regulation; who pays the company; and if details of (a) ACL's contract and (b) the fees paid are available for public inspection. [118868]

  Mr. Mullin
  In addition to Heathrow, ACL has been appointed as co-ordinator under the EC Regulation for Gatwick, Stansted and Manchester airports. The company also acts on a non-statutory basis for Aberdeen, Birmingham, Edinburgh, Glasgow, Jersey, London City, London Luton, and Newcastle airports.

  ACL's contract is with the airport operators; it is therefore in the first instance accountable to the airport. At the four fully co-ordinated airports, grievances could also be taken to the airport co-ordination committee, on which the airport operators, air carriers and air traffic control providers are represented. In addition, the Airport Slots Allocation Regulations 1993 place a statutory duty on airport co-ordinators to operate in accordance with the EC Regulation; their actions are challengeable in court. The Secretary of State has the power to withdraw his approval of the appointment of a co-ordinator if satisfied that the co-ordinator has acted other than in an independent manner.

  75 per cent. of ACL's income comes from the fees that it charges to the airports where it acts as co-ordinator. About 21 per cent. comes from the 11 UK airlines that own the company, and the remainder from data sales, training and consultancy, and similar activity.

  ACL's contracts are commercially sensitive and not available for public inspection. Its Annual Report and Accounts are available for inspection at Companies House.

  London Underground
  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions (1) if he will conduct the test involving the public sector comparator for London Underground funding in public; [119020]

  (2) if he will (a) place the report by his financial advisers on the funding of London Underground in the Library and (b) ensure that the public sector comparator is published before any contracts are signed. [119021]

  Mr. Hill
  I refer to the answers given to my hon. Friend the Member for Ealing, North (Mr. Pound) on 21 December 1999,Official Report, columns 525-26W, and to the hon. Member for Carshalton and Wallington (Mr. Brake) on 20 December 1999, Official Report, column 337W.

  We have already placed in the Library of the House a detailed note describing the methodology London Transport has used to construct the public sector comparator against which bids for infrastructure improvement and maintenance contracts under the Public Private Partnership (PPP) will be tested. This methodology has been reviewed by KPMG as London Underground's independent, external auditors. They have confirmed that it accords with the relevant Treasury guidance and is appropriate to the circumstances of the PPP.
  448W
  We will release the actual values produced by the comparator only once negotiations with bidders have been completed. To publish these any earlier would expose the taxpayer's negotiating position, and thus jeopardise our chances of securing best value.

  Similarly, when Pricewaterhouse submitted their report on the options for London Underground, we produced a summary of the facts and analysis that underpinned the decision to proceed with the PPP. This was published and placed in the Library of the House in March 1998. To release the Pricewaterhouse report in full would have compromised our negotiating position.

  Rail Freight
  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions what extra grants he plans to offer to rail freight companies to enable them to increase the carriage of goods by rail. [119184]

  Mr. Hill
  This financial year we have set a Freight Grants budget of £50 million for companies who choose to move goods by rail rather than road.

  Under the Transport Bill, administration of the grants will pass to the Strategic Rail Authority. The shadow SRA is looking at whether the existing schemes fit its objectives and strategies. It will be able to develop the existing schemes and to introduce new ones.

  Budget (Transport Schemes)
  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions what the breakdown is of the £280 million for transport schemes announced in the press notices from his Department after the Budget; and how many of those schemes are for(a) road and (b) rail improvements. [119014]

  Mr. Hill
  Details of the allocation of £250 million additional resources for transport in England were set out in a reply to a question from my hon. Friend the Member for Leicester, South (Mr. Marshall) on 24 March 2000,Official Report, columns 702-03W.

  Ribble Estuary
  Mr. Fearn
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the effect on wildfowl in the Ribble Estuary, Lancashire of global warming. [119100]

  Mr. Mullin
  My Department supports the UK Climate Impacts Programme at the University of Oxford to help organisations assess vulnerability to climate change. Three national projects concerning climate change impacts on biodiversity are currently in progress within the Programme, two of which are supported by my Department and MAFF. The first study is a general review of implications of climate change for nature conservation policies in the UK. The second is a project involving integrated assessments in two regions, NW England and East Anglia. The third is a modelling assessment of impacts on species and habitats in Britain and Ireland, including wildfowl in river estuaries. All three projects are in progress and the results have not yet been assessed. This is wider than, and would be applicable to, the Ribble Estuary, but no specific assessment has been made in the Ribble Estuary.
  449W
  Mr. Fearn
  To ask the Secretary of State for the Environment, Transport and the Regions what plans his Department has to increase monitoring of wildfowl in the Ribble Estuary, Lancashire. [119099]

  Mr. Mullin
  The Ribble Estuary has been monitored since 1970 through the Wetland Bird Survey (WeBS). The WeBS is a joint scheme of the British Trust for Ornithology (BTO), the Wildfowl and Wetlands Trust (WWT), the Royal Society for the Protection of Birds (RSPB) and the Joint Nature Conservation Committee (JNCC) to monitor the non-breeding birds in the United Kingdom. Counts are made annually at around 2,000 wetland sites in the United Kingdom; estuaries and large still waters predominate. The Department believes the current monitoring of the Ribble Estuary to be sufficient.

  Mr. Fearn
  To ask the Secretary of State for the Environment, Transport and the Regions what advice his Department has received from the Royal Society for the Protection of Birds and other wildlife organisations concerning the Ribble Estuary and global warming. [119098]

  Mr. Mullin
  Research contractors working for the Department, MAFF and the UK Water Industry have held consultations with a large number of stakeholders in NW England in connection with an on-going study of climate change impacts in NW England. However, the Department is not aware of any specific concerns raised about the Ribble Estuary.

  Biosafety Protocol
  Mr. Alan Simpson
  To ask the Secretary of State for the Environment, Transport and the Regions when the United Kingdom plans to ratify the Biosafety Protocol agreed in Montreal. [118939]

  Mr. Meacher
  The United Kingdom intends to sign and ratify the Biosafety Protocol to the Convention on Biological Diversity at the earliest opportunity consistent with our European Community obligations. The Protocol will be open for signature at the United Nations Office at Nairobi, Kenya, by states and regional economic integration organisations from 15-26 May, and at the United Nations Headquarters in New York from 5 June 2000 to 4 June 2001. The implications of the Protocol on the overall EU legislative framework must be fully assessed before ratification can be completed. As made clear in the Environment Council conclusions agreed on 30 March, we will be working with our European partners to ensure ratification as early as possible to ensure entry into force of the Protocol at an early stage.

  Radioactive Waste Management Advisory Committee
  Mr. Llew Smith
  To ask the Secretary of State for the Environment, Transport and the Regions what resources are available to the Radioactive Waste Management Advisory Committee to commission independent scientific, technical and other support studies from institutes and academic establishments; and what powers the Chairman of the Committee has to second relevant experts to assist the committee or its sub-committees. [119135]
  450W
  Mr. Meacher
  The Radioactive Waste Management Advisory Committee generally spends very little on supporting studies for its work. When it has, the sums involved have typically been of the order of £10,000 to £20,000 per annum. Under the Committee's agreed operational arrangements, the Chairman can, as appropriate, co-opt members with expertise relevant to particular work items.

  Waste Dumping
  Mr. Fearn
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what action he is taking to ensure that waste is not illegally dumped; and what assessment he has made of the impact of the landfill tax on the illegal dumping of waste; [119242]

  (2) what recent assessment he has made of the danger to the public posed by illegally dumped waste. [119241]

  Mr. Meacher
  The Government have put strict controls in place to ensure that waste is disposed of without danger to the public. The Environment Agency is responsible for their enforcement. It is a criminal offence to contravene these controls and there are severe penalties for anyone convicted of doing so. We have asked the Environment Agency to continue a vigorous policy of prosecuting, where it has the evidence, anyone who illegally disposes of waste on sites which have neither a waste management licence nor a licensing exemption registered with the Agency.

  We have also commissioned research into the effects of the landfill tax and a copy of the research report "Effects Of Landfill Tax—Reduced Disposal Of Inert Waste To Landfill" has been placed in the Library of the House. One of the aims of the research was to establish whether there is evidence of illegal waste disposal by abuse of licensing exemptions. The allegations of abuse centre on two of the current licensing exemptions and we are reviewing these exemptions in the light of the report's findings.

  Land and Property Budget
  Mr. Tony Lloyd
  To ask the Secretary of State for the Environment, Transport and the Regions what recent representations he has received concerning the Land and Property Budget from regional development agencies in England. [119025]

  Ms Beverley Hughes
  [holding answer 14 April 2000]: None.

  Electric Goods
  Mr. Gummer
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had with the UK's EU partners about altering the potentially misleading energy use measurement for domestic refrigerators. [119292]

  Mr. Meacher
  The European Commission and member states have held discussions with manufacturers' representatives about methods for more consistent reporting of the efficiency performance of several product types covered by the EU energy label regime, including domestic refrigerators, and this has resulted in a protocol applied by the industry since the end of 1998. In the particular case of domestic refrigerators, a further
  451W
  important development has been the introduction of minimum standards requiring the removal of less efficient appliances (with an energy label rating of "D" or below) from the EU market from September last year.

  Road Safety
  Mr. Hunter
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the measures which he is taking to reduce the number of road accidents; what is his evaluation of the impact of these measures; if it is his policy to increase the maximum penalties for drivers who cause death and injury to others; and what further measures he proposes to take to promote road safety. [119695]

  Mr. Hill
  The new road safety strategy "Tomorrow's roads—safer for everyone" sets out the measures the Government are taking to improve road safety. The strategy was published on 1 March 2000 and copies are available in the House Library.

  In terms of the expected impact of the strategy, new casualty reduction targets have been set. By 2010, we are aiming to reduce the overall number of people killed or seriously injured in road accidents by 40 per cent; to reduce the number of children killed or seriously injured by 50 per cent. and to reduce the rate of slight injuries by 10 per cent, compared with the average for 1994–98.

  As the strategy document explains, the Government are undertaking an urgent review, led by the Home Office, of penalties for a wide range of road traffic offences, including those involving the death and injury of other road users. In the light of this review, we will decide whether penalties need to be changed to provide a greater deterrent against bad driving.

  Hedges
  Dr. Lynne Jones
  To ask the Secretary of State for the Environment, Transport and the Regions when he will report on responses to the consultation paper on high hedges; and if he will make a statement. [119708]

  Mr. Mullin
  We are currently analysing the responses to this consultation. We hope to make a statement, setting out our decisions on the way forward on this issue and the reasons for them, by the summer.

  EU Structural Fund
  Mr. Pike
  To ask the Secretary of State for the Environment, Transport and the Regions what progress has been made with programme agreement for those areas that have lost Objective 2 status but have entitlement to transitional funding; and if he will make a statement. [119560]

  Ms Beverley Hughes
  Following the formal approval of the UK Objective 2 map on 30 March, the UK can now submit draft Objective 2 programmes to the European Commission. We formally lodged with the Commission on 14 April the Objective 2 programme documents for Yorkshire and the Humber; North East; West Midlands; East Midlands; North West; London; East of England and South East. (The programme for the South West will be lodged at a slightly later date.) This should ensure that 452W
  these programmes will be eligible for funding to be backdated to 1 January 2000, and will help in meeting financial commitments in the first year of the programme.

  These programmes documents include details of plans for transitional areas in each region. We fully anticipate that, subject to negotiations with the European Commission, all the English Objective 2 programmes will be approved before the end of the year.

  Mobile Homes
  Mr. Robertson
  To ask the Secretary of State for the Environment, Transport and the Regions what is the maximum amount of commission which can be claimed by the site owner on the sale of mobile homes; and if he will make a statement. [119659]

  Mr. Mullin
  The maximum amount of commission payable to the site owner on the sale of a mobile home is currently 10 per cent. of the sale price. I expect to receive shortly a report by the Park Homes Working Party covering the statutory framework of controls over the park homes industry.

  Deprivation (London)
  Mr. Cox
  To ask the Secretary of State for the Environment, Transport and the Regions how many applications he has received for funding from London borough councils to tackle local deprivation within their borough in the last 12 months for which figures are available. [119588]

  Ms Beverley Hughes
  The following applications have been received from the London boroughs for funding from the Single Regeneration Budget, which tackles local deprivation, in the last 12 months.Single Regeneration Budget Round 5-18 local authority-led final bids received in April 1999.
  Single Regeneration Budget Round 6-18 local authority-led Expressions of Interest received in March 2000.

  Other bids may have contained local authorities as partners in the schemes, but not formally leading those bids.

  Zoo Licensing Act 1981
  Mr. Gill
  To ask the Secretary of State for the Environment, Transport and the Regions if he will take steps to exempt farm attractions from the provisions of the Zoo Licensing Act 1981. [119699]

  Mr. Mullin
  The Zoo Licensing Act 1981 requires any establishment where wild animals are kept for exhibition (other than a circus or pet shop) to which members of the public have access, with or without charge for admission, on more than seven days in any period of 12 consecutive months, to be licensed.

  Farm attractions which keep wild animals would qualify as zoos under the Act. There are no plans to exempt them from its provisions.

  Health and Safety
  Mr. Clapham
  To ask the Secretary of State for the Environment, Transport and the Regions what initiatives
  453W
  are being taken by the Health and Safety Executive and his Department to increase health and safety awareness among young workers. [119596]

  Mr. Meacher
  My Department fully supports the current programme of the Health and Safety Commission and the Health and Safety Executive (HSE) to make young people aware of health and safety risks in preparation for work from an early age. HSE is collaborating with the Department for Education and Employment in embedding health and safety throughout the education system and has recently published guidance for organisers of work experience. Research is planned into the particular problems of young people new to work and the most effective means of communicating with them. HSE continues to work with organisations such as the Royal Society for the Prevention of Accidents and the TUC in initiatives to get messages across to young people at, or about to start, work.

  Mr. Clapham
  To ask the Secretary of State for the Environment, Transport and the Regions how many people under the age of 25 years have been killed or seriously injured at work in the last year for which figures are available. [119595]

  Mr. Meacher
  Provisional data for 1998–991 as reported to all enforcing authorities are set out in the table. This excludes 86 fatalities and 5,329 major injuries where the age of the injured person was not recorded.

  Fatal injuries

  Non-fatal or major injuries2

  Employees

  20

  3,845

  Self employed

  1

  42

  Members of the public3

  80

  13,067

  Total

  101

  16,954

  1Data are for 1 April 1998 to 31 March 1999

  2As defined by the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995, according to the employment status of the injured person

  3Included suicides and trespassers on railways

  Cornish
  Mr. Andrew George
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to complete his Department's assessment of the status of the Cornish language before ratification of the European Charter for Regional or Minority Languages in November this year. [119348]

  Ms Beverley Hughes
  We will consider carefully the Government's position on Cornish, taking account of the findings of an independent academic study commissioned by the Government Office for the South West and in consultation with other Departments. The Government expect to be in a position to ratify the Charter later this year. The timing of ratification does not depend on the outcome of our consideration of the issue of Cornish.

  Mr. Andrew George
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to publish the recently completed study report into the status and usage of the Cornish language in Cornwall. [119347]
  454W
  Ms Beverley Hughes
  Copies of the report of the independent academic study on Cornish, commissioned by the Government Office for the South West, will be published shortly and copies will be placed in the Libraries of both Houses. The report will be available on the Government Office's website www.gosw.gov.uk and on request.

  Ministerial Statements
  Mr. Jack
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his Department's letter of 5 April to the right hon. Member for Fylde, signed by the Private Secretary to the Parliamentary Under-Secretary, if it is the policy of his Department not to provide explanations of ministerial statements if the source for the facts contained therein is party political briefings. [119594]

  Mr. Hill
  I understand that this question arises from an exchange during oral questions on 13 April 1999,Official Report, column 13. I assume that my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) was making reference to Sir Horace Cutler's internal report for the Tory Group on the GLC, which found that the only way the Tube could be privatised would be to reduce off-peak services to no more than two trains an hour.

  Motorcycles
  Mr. Jenkin
  To ask the Secretary of State for the Environment, Transport and the Regions if he will assess the benefits of reducing vehicle excise duty to zero for motorcycles under 125cc. [119598]

  Mr. Hill
  In November 1998, the Government consulted on a range of options for the environmental reform of Vehicle Excise Duty, including the creation of a new low VED band for motorcycles with engines up to 125cc. The benefits of motorcycle use are currently being examined in support of the work of the DETR's Advisory Group on Motorcycles. The outcome of those considerations will inform future decisions on Vehicle Excise Duty, which are a matter for the Chancellor of the Exchequer.

  Mr. Jenkin
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make it his policy to encourage more commuters to travel into London by motorcycle. [119597]

  Mr. Hill
  As London is shortly to have a Mayor, this issue will be for his or her consideration in drawing up an integrated transport strategy. Section 142 of the Greater London Authority Act 1999 makes it clear that the Mayor's integrated transport strategy should encompass all forms of transport.

  The Government's policy on transport was set in the White Paper "A New Deal for Transport: Better for Everyone" which, among other things, included a commitment to establish an advisory group on motorcycling. My noble Friend the Minister of State set up this group in May 1999.

  The Government have also published guidance, which encourages local authorities to take account of motorcyclists when preparing their local transport plans.
  455W
  Mr. Jenkin
  To ask the Secretary of State for the Environment, Transport and the Regions if he will issue guidance to local authorities on developing their own motorcycle strategy. [119600]

  Mr. Hill
  Local authorities are due to submit five-year local transport plans (LTPs) to Government by 31 July 2000. LTPs will give local authorities the discretion to devise integrated transport strategies at the local level in partnership with the local community. Last month my Department issued local authorities with guidance on producing LTPs. This encouraged local authorities to take account of the contribution that powered two-wheelers can make in delivering integrated transport—for example their use in congested traffic conditions or as an alternative to the car in remote areas—and the needs of motorcyclists, including parking, interchange facilities and appropriate road maintenance. A copy of the guidance—"Guidance on Full Local Transport Plans"—has been placed in the Library of the House.

  Mr. Jenkin
  To ask the Secretary of State for the Environment, Transport and the Regions how many road accidents(a) involving motorcyclists and (b) in total were caused by spilled diesel fuel in each of the last three years; and if he will revise construction and use Regulations for goods vehicles and PSVs to ensure that spillage from diesel fuel tanks is prevented by tamper-proof physical measures within the tank itself. [119599]

  Mr. Hill
  In 1999 information on the presence of oil or diesel on the road surface at the site of road accidents was collected for the first time and the data are not yet available. However, early indications are that accidents involving oil or diesel are 0.2 per cent. of all accidents; of which, 30 per cent. involved motorcycles (less than 1 per cent. of motorcycle accidents). Vehicle construction standards are agreed at a European level. A recently agreed amendment to the European fuel tank Directive includes measures to minimise fuel spillage due to missing or insecure fuel caps. We will be implementing all the mandatory provisions of the Directive, and will be considering whether the optional provisions are likely to strengthen our current construction and use requirements.

  Mr. Jenkin
  To ask the Secretary of State for the Environment, Transport and the Regions if he will encourage local authorities to exempt motorcycles from road user and workplace levy charging schemes. [119601]

  Mr. Hill
  Our response to our consultation paper, "Breaking the Logjam", which we published on 22 February, set out our policy on exemptions for motorcycles from road user charges and the workplace parking levy.

  We intend to leave decisions on exemptions from road user charges to local discretion. Including motorcycles in a road user charging scheme would require practical difficulties to be overcome. We will explore these further with those local authorities that are actively considering a charging scheme as part of our Charging Development Partnership.

  As to workplace parking levies, we propose that motorcycles should generally be exempt from counting towards a workplace parking licence total, but we will consider proposals from local authorities on their merits.

  North Wales Main Line
  Dr. Marek
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what assessment he has made of the reliability of the private commercial study produced by Virgin trains on the electrification of the North Wales main line; [119612]

  (2) if he will commission an independent public study on the viability of the electrification of the North Wales main line. [119611]

  Mr. Hill
  There are no plans to commission an independent public study as the former Office of Passenger Rail Franchising, now the shadow Strategic Rail Authority, had no reason to doubt the reliability of the study produced by Virgin Trains in March 1999.

  Road Schemes
  Mr. Moore
  To ask the Secretary of State for the Environment, Transport and the Regions (1) if he will list the(a) deferred road schemes by authority featured in the Local Transport Settlement for 2000–01 and (b) road schemes contained in the provisional local transport plans for 2001–02 to 2004–05; [119716]

  (2) if he will ensure that road schemes costing more than £5 million contained in full local transport plans will not be accepted by the Government unless there is clear evidence that alternative solutions to traffic problems have been considered first, along with a statement of why such solutions have been rejected. [119717]

  Mr. Hill
  A decision to defer consideration of the following major road schemes until the Full Local Transport Plans are received this year was announced last December in the Provisional Local Transport Settlement for 2000–01:

  Area

  Scheme

  Barnsley

  Cudworth Bypass

  Birmingham

  Northfield Regeneration

  Birmingham

  Selly Oak Access Road

  Bristol

  A4 Bath Road to Callington Road Link

  Cheshire

  A34 Alderley Edge Environmental Bypass

  Cumbria

  Carlisle Northern Development Route

  Darlington

  Darlington Cross Town Route Eastern Section

  Derby

  Derby Spur Extension

  Derbyshire

  Markham Employment Growth Zone

  Devon

  Barnstaple Western Bypass

  Dorset

  Weymouth Transportation and Regeneration Project

  East Sussex

  Newhaven Port Access Road

  Kent

  East Kent Access (Phase 1)

  Kent

  East Kent Access (Phase 2)

  Leeds

  East Leeds Link Road

  Leeds

  Leeds Inner Ring Road (Stage 7)

  Lincolnshire

  Future Major Economic Regeneration Scheme

  Liverpool

  Hall Lane Area Improvement

  Medway

  A228 Chattenden to Ropers Lane

  Middlesbrough

  East Middlesbrough Transport Corridor

  North East Lincolnshire

  South Humber Bank Link Road (Stage 2)

  Rotherham

  West Bawtry Road Improvement

  Rutland

  Oakham/(Langham) Bypass

  Sandwell

  Cradley Heath Town Centre Strategy (A4100)

  Sheffield

  Inner Relief Road—Stages II and III

  Staffordshire

  Biddulph Bypass

  Staffordshire

  Rugeley Eastern Bypass Stage 2

  Stoke-on-Trent

  Hanley Bentilee Link

  Suffolk

  South Lowestoft Relief Road

  Surrey

  A244 Cross Thames Transport Corridor

  Wiltshire

  Western Wiltshire Regeneration Corridor

  Wirral

  Birkenhead Town Link Division

  Worcestershire

  Wyre Piddle Bypass

  457W
  The following decisions were reached on the remaining major road schemes contained in the Provisional Local Transport Plans:

  Area

  Scheme

  Accepted:

  Essex

  A131 Great Leighs Bypass

  Leicestershire

  Ashby Bypass Stage 2

  Norfolk

  Broome and Ellingham Bypass

  Nottingham (G.N.)

  A6002/A6007 Coventry Lane Improvement

  Shropshire

  A53 Hodnet Bypass

  Somerset

  Bridgewater Northern Distributor

  Staffordshire

  Burntwood Bypass

  Stockton-on-Tees

  South Stockton Link

  Provisionally accepted:

  Barnsley

  Coalfields Link Road Phases 2 and 3

  Bedfordshire

  A507 Ridgmont Bypass and Woburn Link

  Bedfordshire

  Bedford Western Bypass

  Buckinghamshire

  A4146 Stoke Hammond and Linsdale Western Bypass

  Cambridgeshire

  A142 Fordham Bypass

  Doncaster

  A6023 Denaby Main Division

  Hertfordshire

  Baldock Bypass

  Manchester, Salford

  Manchester/Salford Inner Relief Road (Regent Road/Gore Street)

  North Yorkshire

  Scarborough Integrated Transport Scheme

  Nottinghamshire

  A617 Mansfield Ashfield Regeneration Route

  Suffolk

  Stowmarket BI115 Relief Road

  Rejected:

  Birmingham

  Dudley Road Traffic Management Phase 2

  Cornwall

  Grampound Bypass

  East Sussex

  Bexhill and Hastings Link Road

  Norfolk

  Great Yarmouth A47/A149 Link Road

  Reading

  Cow Lane Bridges/Oxford Road Relief Road

  Rotherham

  A57(T) Todwick Crossroads to M1 J31

  Stoke-on-Trent

  Tunstall Northern Bypass

  Stoke-on-Trent

  City Centre Link

  Warwickshire

  Barford Bypass

  West Sussex

  Angmering Bypass

  The "Guidance on Full Local Transport Plans" which was published in March of this year makes it clear that before major road schemes can be accepted for funding if bid for in the Full Local Transport Plans, local authorities will need to demonstrate that there is a problem that needs addressing and that they have looked for alternative solutions, in accordance with the principles of New Approach to Appraisal.

  Shadow Strategic Rail Authority
  Mr. Nicholls
  To ask the Secretary of State for the Environment, Transport and the Regions when he expects the shadow Strategic Rail Authority to reach a decision on the plans sent to them by Railtrack. [118691]

  Mr. Hill
  The shadow Strategic Rail Authority is consulted frequently about Railtrack's plans. Regulation of Railtrack is, however, the responsibility of the Rail Regulator.

  Climate Change Levy
  Dr. Kumar
  To ask the Secretary of State for the Environment, Transport and the Regions when he expects the European Commission to approve the UK's state aid notification in respect of proposed reductions to the climate change levy for companies which agree with energy efficiency arrangements. [119156]

  Mr. Timms
  I have been asked to reply.
  458W
  Officials have had helpful discussions with the Commission about the UK's state aids notification. We expect further useful progress to be made over the summer.

  Dr. Kumar
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the compatibility of the proposed climate change levy rebates and exclusions for a 10-year period with the latest draft of the European Commission's guidelines on state aid. [119154]

  Mr. Timms
  I have been asked to reply.

  The UK regards the revised draft Community guidelines on state aid for environmental protection as a helpful step forward. However, the UK and other member states have made suggestions for improvement. As such, any assessment of their application in particular instances would be premature.

HEALTH

  Dental Services
  Mr. Beard
  To ask the Secretary of State for Health how many children(a) under five and (b) under 10 years old have been treated for dental decay in the NHS in each of the last 10 years. [117946]

  Mr. Hutton
  Information is available for the number of fillings and extractions for which General Dental Service dentists make a payment claim. This is shown in the table for the age groups 0 to four years and five to nine years for England and Wales in 1998–99.

  Data on the number of children receiving treatment for fillings and extractions are not available. Some children may have more than one treatment within the year.

  Thousand

  Aged 0-4 years

  Aged 5-9 years

  Fillings

  104

  1,059

  Extractions

  27

  225

  Comparable figures for earlier years are not available.

  Mr. Llwyd
  To ask the Secretary of State for Health what estimate he has made of the relative cost of the use in dentistry of(a) mercury-based amalgams and (b) non-metal-based amalgams; and if he will make a statement. [118403]

  Mr. Hutton
  The table provides the number and cost of general dental services treatments using different restorative materials in England in 1998–99. Dental amalgam is more durable and easier to insert than the other materials.

  Treatment

  Number(Million)

  Cost (£ million)

  Amalgam fillings

  8.3

  91.6

  Composite resin fillings

  4.9

  52.2

  Glass ionomer fillings

  1.9

  20.0

  Total

  15.0

  163.8

  Modernisation Action Teams
  Mr. Amess
  To ask the Secretary of State for Health how many members of the NHS Modernisation Action Teams are(a) Ministers, (b) civil servants, (c) representatives of professional or staff bodies, (d) front-line NHS staff and (e) representatives of patients' organisations. [118694]

  Mr. Hutton
  We set out full membership details in press notice 2000/208 on 4 April. This indicated that the National Health Service Modernisation Action teams have 134 members. The membership was chosen to ensure wide representation from interested parties and individuals have been selected from a variety of backgrounds. There are five Ministers; 19 civil servants; 15 representatives of professional or staff bodies; thirty nine front-line NHS staff; and 16 representatives of patients' organisations. Additionally there are 40 members who, while not fitting into these precise categories, include leading commentators and senior managers.

  Vulnerable Adults
  Mr. Martyn Jones
  To ask the Secretary of State for Health what plans he has to institute police checks on employees in the National Health Service working with vulnerable adults. [118740]

  Mr. Hutton
  I refer my hon. Friend to the reply given by the Minister of State, Home Office, my hon. Friend the Member for Norwich, South (Mr. Clarke) on 17 April 2000,Official Report, column 377W, and his response in relation to police checks.

  The Care Standards Bill will establish a new scheme to identify health and care workers who have harmed vulnerable adults and ban them from such work in the future.

  Under the Protection of Vulnerable Adults scheme, providers of prescribed services within the National Health Service and in independent healthcare settings will be required to refer individuals for inclusion in the list. There will be a duty of providers of these services to check that prospective employees are not on the list and to refuse employment in that field to any person found to be on the list.

  Initially the list will be operated by my right hon. Friend the Secretary of State for Health. Once the Criminal Records Bureau is established, the Bureau will be able to supply an individual with a criminal record certificate or enhanced criminal record certificate which would indicate whether they were included in the Protection of Vulnerable Adults list.

  While police checks can identify individuals who have come to the attention of the police, clearly there is no substitute for employers undertaking thorough checks into the background and employment history of applicants for all vacancies.

  Treatment Out of Area
  Mr. Lilley
  To ask the Secretary of State for Health what was the percentage of treatments carried out in hospitals in(a) health authority areas and (b) health regions other than that in which the patient was resident in each year from 1980 to date. [118829]
  460W
  Ms Stuart
  The information requested is shown in the table for the years 1990–91 to 1998–99. Data for previous years are unavailable centrally.

  Percentage of treatments carried out in National Health Service hospitals in health areas other than that in which the patient was resident, by health authority and region, England 1990–91 to 1998–991

  Health authority

  NHS region

  1990–91

  25.4

  9.0

  1991–92

  24.7

  7.9

  1992–93

  23.3

  7.4

  1993–94

  22.1

  7.7

  1994–95

  21.5

  7.1

  1995–96

  21.6

  7.4

  1996–97

  22.7

  6.4

  1997–98

  24.7

  8.9

  1998–99

  22.6

  6.8

  1Includes overseas residents

  Energy Efficiency
  Mr. Brake
  To ask the Secretary of State for Health what is his Department's energy efficiency performance target, expressed as a percentage change in comparison to 1990–91, for each of the next five years; and if he will make a statement. [118995]

  Ms Stuart
  I refer the hon. Member to the reply given by my right hon. Friend the Minister for the Environment on 22 March 2000,Official Report, columns 548-49W. It was explained then that a new target had been set across the Government estate to apply from 2000–01, of a 1 per cent. per annum reduction in greenhouse gas emissions.

  The Department will aim to meet this target which represents a change against the previous cross-Government target to 31 March 2000, which was expressed in terms of reductions in energy expenditure. Measurement in greenhouse gas emissions provides a much better fit with the current climate change programme and the United Kingdom's Kyoto targets. The base year will be 1999–2000 as it was the final year to which the previous target applied. Figures will be released when they are available on performance in 1999–2000 against the target to 31 March 2000 with 1990–91 as the base year.

  Mr. Brake
  To ask the Secretary of State for Health what has been the percentage change compared to 1990–91 in his Department's energy efficiency in each year since 1990–91; and if he will make a statement. [118994]

  Ms Stuart
  I refer the hon. Member to the reply given by the then Parliamentary Under-Secretary of State, my hon. Friend the Member for Mansfield (Mr. Meale) on 22 July 1999,Official Report, column 582W, which reported progress for all central government departments by 31 March 1988. It is hoped that results for the period up to March 1999 will be published shortly.

  Patient Records
  Mr. Sawford
  To ask the Secretary of State for Health (1) what steps he is taking to phase out the use of Lloyd George envelopes and promote the use of A4 folders as the standard means of storing patient records; [118954]
  461W
  (2) what steps he is taking to harmonise paper-based records within the National Health Service; and if he will instigate a review of current systems. [118953]

  Ms Stuart
  National Health Service paper record-keeping systems have previously been submitted to extensive review, and there are no current plans to instigate further examinations. The replacement of Lloyd George envelopes with A4 folders as the standard means of holding paper records is not under consideration.

  Future developments in record-keeping will be driven by the information strategy "Information for Health", which is committed to the vision of electronic record-keeping, as befits the modern NHS.

  Mr. Sawford
  To ask the Secretary of State for Health how many different computer-based records systems are in use by general practitioners; and if they are compatible. [118952]

  Ms Stuart
  There are 18 companies with clinical computer systems in use by general practitioners. In general there is little direct compatibility between the products of these companies. However, current policy, which is supported by the system suppliers, is to migrate these products to industry standard software which will create open and inter-operable systems which in turn will facilitate more automated sharing of information.

  Mr. Sawford
  To ask the Secretary of State for Health what steps he is taking to ensure the compatibility of computer systems used in hospitals with those used by general practitioners. [118951]

  Ms Stuart
  The information strategy for the Modern National Health Service 1998–2005 "Information for Health" is aimed at focusing the development of information technology systems to facilitate the delivery of integrated care. A number of specific initiatives are taking place to ensure compatibility of computer systems used in hospitals with those used by general practitioners:The establishment of a national clinical information standards board with responsibility to deliver agreed standards for communicating clinical information between clinicians in primary and secondary care;
  The development of an agreed framework for helping to structure the thousands of clinical communications which are sent and received every day. A multi-professional group of clinicians have developed a draft framework of headings and accompanying definitions that are being evaluated for this purpose;
  The Electronic Record Development and Implementation Programme is currently agreeing a comprehensive programme of work which will address the national requirement for standards to ensure the compatibility of clinical computer systems used in hospitals and primary care;
  Work over the next 12 months to support the development of clinical messages to support GP to GP record transfer, referral and discharge.

  Insomnia
  Mr. Stinchcombe
  To ask the Secretary of State for Health how many(a) specialist sleep clinics and (b) specialist consultants in sleep deprivation there are in the NHS; and what is their geographical distribution. [119031]

  Mr. Hutton
  Specialist sleep clinics may fall under the remit of several different specialties including General Medicine, Chest/Respiratory Medicine and 462W
  Otolaryngology. Information is not collected centrally on either the number of specialist sleep clinics nor those clinicians who sub-specialise in sleep problems.

  Genetic Data
  Mr. Cohen
  To ask the Secretary of State for Health if he will introduce legislation to protect anonymous genetic data obtained in confidence from being exploited by commercial companies without the consent of the patient; and if he will make a statement concerning the Source Informatics judgment. [119524]

  Ms Stuart
  Genetic data provided in confidence should not normally be disclosed to third parties without the consent of the individual to whom they relate. However, the Court of Appeal ruled in December 1999—the Source Informatics judgment—that once data have been effectively anonymised they are no longer confidential. Although we have no plans to introduce legislation in this area at the present time, the Department is considering whether patient interests and the broader public interest are adequately protected.

  We remain concerned about the use of anonymised health data for commercial purposes that may not be in the public interest and have directed the Department to seek leave from the House of Lords to appeal against the Court of Appeal judgment.

  Social Services Departments
  Mr. Ian Stewart
  To ask the Secretary of State for Health how many social services departments remain under special monitoring by the Social Services Inspectorate. [119282]

  Mr. Hutton
  There are 12 councils with social services responsibilities subject to special measures by the Social Services Inspectorate.

  Bed Availability
  Mr. Burstow
  To ask the Secretary of State for Health, pursuant to his answer of 10 April 2000,Official Report, column 12W, on bed availabilities, how soon after 15 May he will announce targets; and if the base line will be set at 1998–99. [119302]

  Ms Stuart
  [holding answer 17 April 2000]: We shall issue planning guidance for the National Health Service when we publish our response to the National Beds Inquiry consultation. This is likely to be during the summer. The consultation continues until 15 May. No decision has yet been taken about whether to set specific targets for beds as part of the planning guidance.

  Prescribed Drugs
  Mr. Flynn
  To ask the Secretary of State for Health what estimate he has made of the number of children aged(a) under 10 and (b) under 16 years who have been prescribed (i) Ritalin and (ii) Prozac in the past 12 months. [118891]

  Ms Stuart
  Information on the number of children prescribed Ritalin and Prozac is not collected. Ritalin should be used only in cases where there is a clear diagnosis of Attention Deficit Hyperactivity Disorder following comprehensive assessment by a specialist in childhood behavioural disorders. Given some concern
  463W
  over the clinical evidence and current levels of prescribing, the National Institute for Clinical Excellence is to consider Ritalin later this year and will issue authoritative advice on its use in routine practice.

  Prozac is not licensed for use in children as the safety and efficacy has not been established. Doctors may prescribe medicines outside their licensed indications if they consider that this is in the patient's best interests.

  Mr. Flynn
  To ask the Secretary of State for Health when he expects the National Institute for Clinical Excellence to report on Ritalin; and if his Department has given evidence to its inquiry into Ritalin. [118921]

  Ms Stuart
  The National Institute for Clinical Excellence (NICE), a Special Health Authority independent of the Department of Health, is expected to disseminate its guidance on Ritalin to the NHS in October 2000. The Department has not submitted evidence to inform NICE's appraisal, although in accordance with usual practice it has commissioned an independent systematic review of the research evidence on behalf of NICE. The Department of Health will be consulted along with other stakeholders on NICE's draft recommendations.

  GM Salmon
  Joan Ruddock
  To ask the Secretary of State for Health (1) what recent reports he has received on the safety of genetically modified salmon; and what his policy is on the sale of genetically modified salmon in the UK; [119420]

  (2) what information has been received concerning genetically modified salmon bred by A/F Protein Inc.; what European marketing consent exists for such salmon; and what his policy is on licensing the import of genetically modified salmon eggs to the UK. [119421]

  Ms Stuart
  [holding answer 17 April 2000]: No information has been received concerning genetically modified salmon bred by A/F Protein Inc. nor has any application been made to import these salmon or their eggs.

  Neither the salmon or their eggs could be imported into the European Community without approval having first been given under either the EC contained use Directive (90/219), the EC deliberate release Directive (90/220) or the EC novel food regulation (258/97).

  Cleft Lip and Palate Patients
  Mr. Wilkinson
  To ask the Secretary of State for Health what provisions he has made for the integration into the reorganised treatment facilities of current cleft lip and palate patients. [119318]

  Ms Stuart
  [holding answer 17 April 2000]: Changes in the delivery of services for cleft lip and/or palate patients will need to take place in a managed way. All surgery will be carried out in the new designated centres when they are established and staff have been appointed. A number of existing units may become "spokes" or "outreach" centres and continue to provide some cleft services in discussion with designated centres.

  Meat Hygiene Service
  Mr. Malcolm Bruce
  To ask the Secretary of State for Health when he last met the Chief Executive of the Meat Hygiene Service; and if he will make a statement. [117724]

  Ms Stuart
  [holding answer 13 April 2000]: The Meat Hygiene Service (MHS) transferred from the Ministry of Agriculture, Fisheries and Food to become a next steps agency of the Food Standards Agency (FSA) when the FSA was established on 1 April. I have not met the chief executive and have no current plans to do so. I am advised by the FSA however, that the MHS Chief Executive has regular meetings with the Chairman of the FSA (Sir John Krebs).

INTERNATIONAL DEVELOPMENT

  St. Helena
  Dr. Marek
  To ask the Secretary of State for International Development if the people of St. Helena will be consulted in the decision-making process on the viability of an airstrip on St. Helena. [119607]

  Mr. Foulkes
  The St. Helena Government, Councillors, civil society organisations and other stakeholders on the island will be consulted during the comparative study of air and sea access that is expected to start in the middle of this year. The study will identify the most cost-efficient permanent solution to the island's international passenger and cargo transportation needs.

  Dr. Marek
  To ask the Secretary of State for International Development what the cost will be of the airstrip feasibility study on St. Helena; who will undertake it; and how long it will take to complete. [119608]

  Mr. Foulkes
  The comparative study of air and sea access, which will identify the most cost-efficient permanent solution to the island's international passenger and cargo transportation needs, is expected to cost some £150,000. Consultants to undertake the study will be appointed following a competitive tendering exercise. Completion of the study is expected to take an elapsed time of some 14 weeks following mobilisation of the consultants.

  Dr. Marek
  To ask the Secretary of State for International Development when a decision will be reached on the viability of an airstrip on St. Helena. [119609]

  Mr. Foulkes
  Discussions with the St. Helena Government on the findings of the comparative study of air and sea access will begin once a final report has been produced. Draft Terms of Reference for the study are currently being considered by the St. Helena Government and it is expected that the study, which will have an elapsed time of some 14 weeks, will start in July or August.

  Asbestos
  Mr. Clapham
  To ask the Secretary of State for International Development if she will encourage UK firms engaged in overseas construction projects to prohibit the use of asbestos or materials containing it in their current and future schemes. [119606]
  465W
  Mr. Foulkes
  The prohibition of dangerous substances such as asbestos is a matter for Governments rather than private firms. We are committed to working with our partner countries in their efforts to improve standards of environmental regulation and reverse trends in environmental degradation. This may include advice on the prohibition, use and handling of asbestos.

  We also support a proposal from the EC to bring asbestos fibres within the scope of the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade. At present only blue asbestos is covered by the Convention.

  Mr. Clapham
  To ask the Secretary of State for International Development if she will take steps to ensure that no asbestos or materials containing it are used in(a) current and (b) future projects funded by her Department; and if she will make a statement. [119605]

  Mr. Foulkes
  Construction standards for buildings built with the Department's assistance in developing countries do not permit the use of asbestos. Occasionally we have assisted with projects involving the modification of buildings which are found to contain asbestos. One such case occurred with the Zimbabwe Department of Civil Aviation (DCA) in the upgrading of air traffic control systems. We introduced specialist technical assistance for DCA staff and contractors to deal with this problem in the short term and be aware of it for the future.

  We have also funded research to develop alternatives to asbestos sheets as roofing materials.

  Period

  Agency

  Area

  Food (MT)

  Non-food

  Total cost(£)

  June 1999-June 2000(Extension for capacity building and rubbhall erection)

  SCF-UK

  Belg producing areas of North and South Wollo,Amhara region

  6,000 cereal, 486 famix

  6 rubbhalls (mobile storage),4 nutritional monitoring teams, training

  1,498,482

  October 1999-February 2000

  SOS Sahel

  Kindo Koisha Woreda,North Omo Zone, SNNPR

  3,000 cereal, 1,000 cereal

  No

  1789,403

  January-August 2000

  Interaide France

  Kindo Koisha Woreda SNNPR

  150 famix

  Nutritional assessment Capacity building, nutritional training.

  92,405

  March-August 2000

  SCF-UK

  Gubaiafto and Wadla Wored as, North Wollo,Amhara region

  6,240 cereal

  Emergency seed provision

  1,482,240

  January-July 2000

  FARM Africa

  Konso Special Woreda, SNNPR

  3,700 cereal

  Emergency seed provision Woreda and regional level emergency response capacity building

  1,098,621

  April-September

  SOS Sahel

  Borana Zone (Yabello, Liben, Arero)

  2,500 cereal, 300 pulses, 200,000 litresoil

  Emergency water tankering. Set up temporary water storage facilities. Emergency seed provision

  1,134,525

  April-December 2000

  SOS Sahel

  Kindo Koisha Woreda, SNNPR

  2,900 cereal

  Emergency distribution of seeds and planting materials

  927,086

  April-October 2000

  Action Contre La Faim (ACF)

  Korahai Zone, SNRS

  128.7 supplementary food

  —

  389,179

  2 months April-May 2000

  WFP

  Bale Zone, Oromiya State

  —

  To provide truck maintenance and to contribute to road clearance

  12,500

  2 months April-May 2000

  WFP

  Beyada Woreda, Amharastate

  —

  Construction of a road bridge and to improve access for relief supplies

  11,250+

  1Purchased from funds remaining from 1999 allocation

  Ethiopia
  Mr. Streeter
  To ask the Secretary of State for International Development what recent estimate she has made of the length of time it takes for food aid from Britain to reach those in need in Ethiopia. [118812]

  Mr. Foulkes
  Food aid for Britain is provided through NGOs and the World Food Programme. The length of time between purchase and delivery depends considerably on where the food is sourced (much is purchased locally and some comes from the in-country Food Security Reserve) and the accessibility of those in need. The advantages of local produce are mostly in the speed of delivery and the low transport costs.

  Mr. Streeter
  To ask the Secretary of State for International Development what recent representations she has received from the United Nations concerning the drought in Ethiopia. [118819]

  Mr. Foulkes
  The United Nations launched an appeal on 28 January 2000 for US$190 million, requesting relief assistance for some 8 million Ethiopians and 250,000 refugees. This included the provision of approximately 250,000 metric tonnes of food aid to assist 2.3 million beneficiaries. Catherine Bertini, the UN Secretary-General's Special Envoy on Drought in the Horn of Africa, is visiting Ethiopia from 11-19 April. We await her report.

  Mr. Streeter
  To ask the Secretary of State for International Development what aid agencies operating in Ethiopia are funded by her Department. [118817]

  Mr. Foulkes
  The following table shows DFID Emergency Funded Interventions through Non Governmental Organisations and international organisations since April 1999.

  Ethiopia and Mozambique (Aid)
  Mr. Streeter
  To ask the Secretary of State for International Development what factors underlay her decision to reduce aid for(a) Ethiopia and (b) Mozambique. [118815]

  Mr. Foulkes
  Ethiopia's military expenditure has steadily increased since war broke out with Eritrea in May 1998. This has led to macro-economic strains and a breakdown in relations with the IFIs. In common with other donors, we are meeting existing commitments under our bilateral development programme, but not taking on any new activities, with the exception of food security. Humanitarian assistance is not affected.

  We have not decided to reduce aid to Mozambique. This year's Departmental Report estimates spending on the country programme at £21.41 million in 1999–2000. This does not include £15 million provided to help Mozambique to reach Heavily Indebted Poor Countries completion point, or humanitarian aid in response to the floods, for which £20 million has been committed. We expect to increase our spending on the country programme in the current financial year.

  Background

  Ethiopia
  Britain's bilateral development programme is currently running at about £4 million-£5 million a year. We are supporting activities in food security; the roads sector; revenue-raising; preparation of the interim PRSP; and the police. Before the war with Eritrea, we had been ready to deepen our development partnership with the Government of Ethiopia because of their commitment to poverty eradication. Our aim was to provide direct budgetary support to the Government to implement their own plans in the social sectors. We intended to start this with a new contribution of £25 million to help the improvement and extension of primary education throughout the country.
  However, since May 1998 when the hostilities broke out and military expenditure increased we have, in common with other donors, not taken on any new activities, with the exception of work on food security. Our planning figures have been adjusted to reflect this: £6 million in each of 2000–01 and 2001–02. Actual expenditure will vary in line with Ethiopia's capacity to end the war and return to the reform agenda it has pursued so strongly in the past. Humanitarian assistance is not affected by this decision. It is provided in response to need and reflects the opportunity to reach those in need and to monitor interventions.

  Natural Disasters
  Mr. Streeter
  To ask the Secretary of State for International Development what procedures have been put in place after 1 March to improve the British Government's response to natural disasters abroad. [118814]

  Mr. Foulkes
  We already have well established and effective procedures to deal with disasters overseas. These are kept under review. We do not consider that any changes are necessary at present.

  Online Services
  Mr. Robert Jackson
  To ask the Secretary of State for International Development if she will list the services which(a) her Department and (b) the executive agencies responsible to her Department (i) provide online and (ii) expect to be deliverable online by 2002. [119438]
  468W
  Mr. Foulkes
  We are collecting data which will include our progress on delivering 25 per cent. of Government services electronically by 2002. We currently provide a range of services electronically that include: a website containing information on Departmental publications, research data, contract opportunities and vacancies; a Public Inquiry Point staffed by a dedicated team able to provide a direct response or route the inquiry to the most appropriate respondent; all press releases and speeches, publications and publicly available research data issued by the Department which may be ordered electronically or downloaded directly from the website; guidelines and application forms for several DFID funding programmes.

  In the public arena we use electronic means to support payment of pensions to ex-colonial pensioners and dependants. Future plans include the introduction of electronic invoices and e-tendering, subject to a successful trial by the Office of Government Commerce. These initiatives are planned to be introduced by 2002 and progress will be monitored as part of the Department's Public Service Agreement. We do not have responsibility for any external agencies.

  AIDS 2000 Conference, Durban
  Dr. Tonge
  To ask the Secretary of State for International Development if members of her Department will be attending the AIDS 2000 conference in Durban in July. [119048]

  Mr. Foulkes
  We attach great importance to the first World AIDS conference to be held in Africa. Officials from the Health and Population Department and advisers based in our Southern Africa office will be attending the conference.

  Multilateral Debt Relief
  Mr. Streeter
  To ask the Secretary of State for International Development if she will list the countries she expects to qualify for multilateral debt relief at the end of April, indicating the amount of bilateral debt they each owe to the Exchequer. [118098]

  Mr. Timms
  I have been asked to reply.

  The countries that have already qualified for relief under the enhanced HIPC initiative are: Bolivia, who owes approximately £17.5 million to the UK's Export Credits Guarantee Department (ECGD); Mauritania, (who owes approximately £7 million to ECGD); Mozambique, (who owes approximately £91 million to ECGD); Tanzania, (who owes approximately £115 million to ECGD); and Uganda (who owes approximately £5.5 million to ECGD).

LORD CHANCELLOR'S DEPARTMENT

  European Court of Human Rights
  Mr. David Heath
  To ask the Parliamentary Secretary, Lord Chancellor's Department what assessment he has made of the implications of recent judgments in the European Court of Human Rights for the role of the Lord Chancellor. [118162]

  Mr. Lock
  The position of the Lord Chancellor is unaffected by the McGonnell judgment. It is confined to the special position of the bailiff of Guernsey and to his
  469W
  role in that particular case. The Lord Chancellor has always maintained that the question in every case is whether Article 6 is complied with on the facts. The European Court confirmed this saying:
  The question is whether, in a given case, the requirements of the Convention are met.

  Also, the court accepted the Government's submission that neither Article 6 nor any other provision of the Convention required
  states to comply with any theoretical concepts as such.

  Safe Cells
  Mr. Bob Russell
  To ask the Parliamentary Secretary, Lord Chancellor's Department how many safe cells were installed in courts in the last financial year; and how many will be installed in the current financial year. [118163]

  Jane Kennedy
  Custody areas in courts are not designed for holding individuals overnight. They do not reflect, therefore, the design requirements of HM Prison Service's improved standard cell. No cells to the improved standard cell design were installed in courts in 1999–2000 or are planned to be installed in 2000–01.

  Public Trust Office
  Mr. Barnes
  To ask the Parliamentary Secretary, Lord Chancellor's Department what representations he has received concerning the investments made on behalf of individuals by the Public Trust Office. [118164]

  Jane Kennedy
  My officials have consulted widely on all aspects of potential change in the Public Trust Office, including the changes to be made to the investment function. Representations have been received from the Public Trust Office's major stakeholders, the Law Society, the judiciary, members of the public, the trade unions and staff. My noble and learned Friend the Lord Chancellor made a statement on the future of the Public Trust Office on 11 April.

  Magistrates
  Angela Smith
  To ask the Parliamentary Secretary, Lord Chancellor's Department what steps he is taking to ensure that magistrates are drawn from all social and economic classes. [118165]

  Jane Kennedy
  My hon. Friend will know from previous answers I have given her that the local Advisory Committees are requested by my noble and learned Friend the Lord Chancellor actively to encourage applications from people from all backgrounds, and his officials to monitor with care their success in doing so. A considerable amount of effort in particular is directed towards encouraging people from those sections of the community who historically have not applied. My noble and learned Friend is resolved to ensure that local benches reflect the communities they serve.

  Judges
  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department on how many occasions since May 1997 the Lord Chancellor has had cause to reprimand members of the judiciary for inappropriate comments made in court. [118166]
  470W
  Jane Kennedy
  The Lord Chancellor, as Head of the Judiciary, is responsible for dealing with all matters of judicial conduct. He takes a firm line with any Judge whose behaviour falls short of what both he and the public expects. Since May 1997 there have been five instances where he has had cause to reprimand a Judge for comments made in court.

  Ms McCafferty
  To ask the Parliamentary Secretary, Lord Chancellor's Department what plans the Government have to institute a complaints procedure against Judges. [119192]

  Jane Kennedy
  Procedures for investigating complaints about the personal conduct of Judges are well established. The Lord Chancellor will ask the Judge to comment on the complaint and will study those comments very carefully before sending a full reply. He may also obtain the tape recording or transcript of proceedings or seek the views of others who were present. The Lord Chancellor expects all Judges to uphold the standards of courtesy and consideration which generally exist in British public life. He therefore takes the handling of complaints very seriously.

  Given the independence of the judiciary the Lord Chancellor cannot investigate complaints about judicial decisions. If a litigant is dissatisfied with the outcome of a hearing, the remedy is to take legal advice and appeal to a superior court if so advised.

  Social Security Commissioners
  Mr. Swayne
  To ask the Parliamentary Secretary, Lord Chancellor's Department what progress has been made in publishing decisions of the social security commissioners. [118167]

  Jane Kennedy
  A meeting between representatives from the DSS, Appeals Service and the Court Service Agency took place on 28 March 2000. At the meeting it was agreed that the DSS publications team in Leeds would arrange for publication and distribution of decisions in loose-leaf format with storage binders. Thereafter all decisions will be published and distributed as a package on a quarterly basis with an updated table of contents.

  Community Legal Service
  Mr. Ben Chapman
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on progress with the establishment of the Community Legal Service. [118168]

  Mr. Lock
  The Lord Chancellor officially launched the Community Legal Service (CLS) on 3 April, and it marked:the unveiling of the CLS Quality Mark, which is the public symbol of quality assured legal service providers, and has already been awarded to over 6,000 providers;
  the publication of the CLS Directory of legal services, which provides details of 15,000 service providers;
  the launch of the new CLS website "Just Ask", which carries the CLS Directory of legal services, and has links to several hundred advice sites;

  471W
  the start of the CLS telephone helpline for those seeking details of local providers;
  the announcement that there are now 70 CLS Partnerships covering a third of the population of England and Wales;
  the publication of the "Guidance for CLS Partnerships" in draft form for consultation
  the publication of the consultation paper "Performance Indicators for CLS partnerships"; and
  the announcement that a further £46 million will be spent on legal help, including £23 million of new funding. The extra funds will mean that the Legal Services Commission will expand contracting to enable providers to help more clients.

  Criminal Trials
  Mr. Mackinlay
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on the use of the dock in criminal trials. [118169]

  Jane Kennedy
  Docks provide security for those in the courtroom as well as adding a degree of formality to the hearing. They provide a practical system that has worked over the years. There are no plans to make any changes to the existing arrangements for adult cases. In the youth court a more informal style may be appropriate such as that in the Inner London Youth Courts where there is no dock. The defendant normally sits with his parent or youth justice worker and lawyer. All parties are at the same level. This can help communication and engage the defendant in the proceedings. That is why my Department and the Home Office have sponsored the youth demonstration projects in Leicestershire with Rutland and in Rotherham. They are independently evaluated programmes that investigate ways in which young offenders, and those responsible for them—parents and family—can be engaged more effectively in the court process. The programmes are also exploring the potential benefits of greater transparency in the youth justice process, physical and environmental changes, and more feedback to justices on the effect of their sentencing. The projects are being evaluated by Sheffield University, and the findings will be used to inform good practice advice for all youth courts later this year.

  Trial by Jury
  Mr. Bercow
  To ask the Parliamentary Secretary, Lord Chancellor's Department what assessment he has made of the impact of proposed reforms of trial by jury on the operation of magistrates courts. [118170]

  Jane Kennedy
  We estimate that there will be an additional 12,000 cases to be handled in the magistrates courts as a result of the Criminal Justice (Mode of Trial) No. 2 Bill.

SCOTLAND

  Drug Deaths
  Mrs. Spelman
  To ask the Secretary of State for Scotland what action his Department is taking in relation to the increase in the number of drug deaths in Scotland. [118132]

  Mr. Clifton-Brown
  To ask the Secretary of State for Scotland what measures his Department is undertaking to combat the increase in drug deaths in Scotland. [118138]
  472W
  Mr. Wilson
  Responsibility for action to prevent drug-related deaths lies with the Scottish Executive, working within the common UK-wide statutory framework.

  Reduction of drug-related deaths is a key objective of Scotland's drug strategy.

  Shipbuilding (Apprenticeships)
  Dr. Godman
  To ask the Secretary of State for Scotland what estimate he has made of the number of apprenticeships in the shipbuilding industry(a) currently, (b) in April 1990 and (c) in April 1980. [118133]

  Dr. Reid
  Information from the Engineering and Marine Training Authority indicates that there are currently 134 Modem Apprentices training in the shipbuilding industry in Scotland compared with approximately 200 in 1990 and a similar number in 1980.

  Responsibility for the development of training programmes in Scotland, including the Modern Apprenticeship scheme, is a matter for the Scottish Executive.

  Minimum Wage
  Mrs. Fyfe
  To ask the Secretary of State for Scotland how many enforcement actions have been taken in Scotland to ensure that employers pay the national minimum wage. [118134]

  Dr. Reid
  Since the introduction of the national minimum wage on 1 April 1999, National Minimum Wage inspectors in Scotland have received 279 complaints and issued 12 enforcement notices.

  Ms Squire
  To ask the Secretary of State for Scotland if he will make a statement on the enforcement of the minimum wage. [118137]

  Dr. Reid
  Enforcement of the national minimum wage has been a success. Since the introduction of the national minimum wage on 1 April last year, minimum wage inspectors in Scotland have received 279 complaints and issued 12 enforcement notices. The Inland Revenue's national minimum wage inspectors have recovered some £1.25 million of underpayments for low-paid workers across the UK. The message is getting across that inspectors will use their powers to pursue non-complying employers. However, I am pleased that the majority of employers have responded well to the introduction of the minimum wage which benefits some 100,000 workers in Scotland.

  Employment
  Mr. Tynan
  To ask the Secretary of State for Scotland if he will make a statement on employment levels in Scotland. [118135]

  Dr. Reid
  Latest data show that employment in Scotland stood at 2,324,000 as at November 1999 to January 2000, around its highest level since 1966.

  Mr. McFall
  To ask the Secretary of State for Scotland if he will make a statement on the prospects for employment in Scotland. [118143]

  Mr. David Marshall
  To ask the Secretary of State for Scotland if he will make a statement on the prospects for employment in Scotland. [118150]
  473W
  Dr. Reid
  The prospects for employment in Scotland are good. The three main independent forecasters (Fraser of Allander Institute, Business Strategies Ltd. and Cambridge Econometrics) expect employment in Scotland, which is currently at around its highest level since 1966, to rise in each year between 2000 and 2002.

  Asylum Seekers
  Mr. Viggers
  To ask the Secretary of State for Scotland if he will make a statement about the discussions he has had with the Secretary of State for the Home Department regarding the dispersal of refugees and asylum seekers throughout the United Kingdom. [118136]

  Dr. Reid
  I have regular discussions with my right hon. Friend the Home Secretary to discuss various matters.

  Mr. Chope
  To ask the Secretary of State for Scotland if he will make a statement on the current number of asylum seekers and refugees placed in Scotland. [118146]

  Dr. Reid
  As at 28 January 2000, the most recent date for which figures are available, 610 asylum seekers were being supported by local authorities in Scotland.

  In addition, about 250 of the refugees from Kosovo who came to Scotland in 1999 under the Kosovo Humanitarian Evacuation Programme currently remain in Scotland.

  Mr. Lidington
  To ask the Secretary of State for Scotland how many asylum seekers have registered with each local authority in Scotland at the most recent date for which figures are available. [117658]

  Dr. Reid
  [holding answer 4 April 2000]: As at 28 January 2000, the most recent date for which figures are available (from claim forms submitted by local authorities), the number of asylum seekers being supported by local authorities in Scotland were as follows:

  Local authority

  Number of asylum seekers

  Aberdeen City

  18

  Aberdeenshire

  2

  Argyll and Bute

  1

  Dumfries and Galloway

  2

  Dundee City

  8

  East Renfrewshire

  6

  Edinburgh, City of

  308

  Fife

  11

  Glasgow City

  225

  Midlothian

  2

  North Lanarkshire

  15

  Renfrewshire

  3

  South Ayrshire

  1

  South Lanarkshire

  2

  Stirling

  4

  West Dunbartonshire

  1

  West Lothian

  1

  East Ayrshire, East Dunbartonshire, Falkirk and Highland also assisted asylum seekers during the year, but were not doing so at 28 January.

  Student Finances
  Mr. Clappison
  To ask the Secretary of State for Scotland what recent representations he has received about student finances and tuition fees. [118139]
  474W
  Mr. Wilson
  I have received representations on a wide range of issues including student finance and tuition fees.

  Winter Fuel Payments
  Mr. Savidge
  To ask the Secretary of State for Scotland how many Scottish pensioners will benefit from the new rates for winter fuel payments. [118140]

  Dr. Reid
  Over 900,000 Scottish pensioners will benefit from the increase in the Winter Fuel Payment from £100 to £150. In addition the age of eligibility for payments is being equalised at 60. We estimate that in Scotland up to an extra 150,000 people will be eligible for the payments from next winter.

  Coalfields
  Mr. Eric Clarke
  To ask the Secretary of State for Scotland what action he is taking to regenerate coalfield communities in Scotland. [118141]

  Dr. Reid
  The Coalfields Regeneration Trust was established following the recommendations of the Coalfields Task Force Report, commissioned by my right hon. Friend the Deputy Prime Minister.

  Implementation of the Task Force's recommendations in Scotland is a matter for the Scottish Executive. The Scottish Executive Deputy Minister for Communities announced an allocation of £4.5 million funding over three years for Scotland last month.

  Postal Services
  Mr. David Stewart
  To ask the Secretary of State for Scotland what steps are being taken to improve postal services in Scotland; and if he will make a statement. [118142]

  Mr. Wilson
  This Government remain determined to ensure that the Post Office is better equipped to serve all its customers in every part of the country, as signalled in the Postal Services Bill.

  The Government are also committed to helping the Post Office to meet the changing needs of its customers. All post offices, including those in Scotland, will benefit from the £480 million computerisation programme due to be completed by 2001.

  Harris Tweed Industry
  Mr. Macdonald
  To ask the Secretary of State for Scotland if he will make a statement on his recent discussions with other Departments about assistance for the Harris Tweed industry. [118144]

  Mr. Wilson
  I am in regular discussion with the Scottish Executive and British Trade International about assisting the Harris Tweed industry in promoting and marketing its product, particularly overseas. We are also planning a major PR event for the industry to be held at Dover House later this year.
  475W
  In the meantime, the consultants retained by Western Isles Enterprise on duty rates have spent the last few months lobbying influential US business organisations to enlist support for the Harris Tweed Authority's bid to amend their preferential tariff to encompass double-width cloth. They have encountered no objections to this move.

  Student Support
  Mr. Boswell
  To ask the Secretary of State for Scotland what consultations he has had with colleagues in England concerning student support following the publication of the Quigley report. [118145]

  Mr. Wilson
  I have regular contact with colleagues in other Departments about a wide range of issues.

  Representation
  Mr. Donohoe
  To ask the Secretary of State for Scotland if he will bring forward plans to change the system of representation on the added members list. [118147]

  Dr. Reid
  We have no plans to change the system of representation on the added members list. The purpose of the additional members is to ensure that the number of seats won by each party in the Parliament more accurately reflect the votes cast for those parties. That can only be done when both constituency and regional votes are cast on the same day.

  NHS Computer Records
  Mr. Ian Bruce
  To ask the Secretary of State for Scotland what measures he has taken to ensure that computer records held by the NHS in Scotland are compatible with records held throughout the United Kingdom. [118148]

  Dr. Reid
  The administration of the NHS in Scotland is a devolved matter for the Scottish Executive. My role is to ensure that, where necessary, good and effective liaison takes place between the Executive and the Department of Health.

  Economy
  Mr. Browne
  To ask the Secretary of State for Scotland when he last met representatives of the trade unions and the business community to discuss the Scottish economy; and if he will make a statement. [118149]

  Dr. Reid
  I meet regularly with representatives of the trade unions and the business community to discuss a wide range of issues. I had the pleasure of attending and addressing the Annual Congress of the STUC in Edinburgh yesterday.

  Forth Railway Bridge
  Mr. Dalyell
  To ask the Secretary of State for Scotland if he will list his Department's responsibilities in relation to the care and maintenance of the Forth railway bridge. [118131]

  Mr. Wilson
  Responsibility for care and maintenance of the Forth Railway Bridge rests with Railtrack. The Rail Regulator is responsible for ensuring that Railtrack complies with its obligations under the Railways (Safety Cases) Regulations 1994 and with other legal obligations in relation to the safety of the bridge and its operations.

ADVOCATE-GENERAL FOR SCOTLAND

  Devolution
  Miss Begg
  To ask the Advocate-General how many devolution-related issues have been raised with her in the last month; and what subjects they have been concerned with. [118153]

  The Advocate-General for Scotland
  During the month from 11 March to 11 April there were 102 devolution notices intimated to me. Broadly the notices can be divided into nine subjects—delays in trials, lack of access to a solicitor, legal aid questions, temporary sheriffs, cases under the Road Traffic Act, hearsay evidence, covert police operations, confiscation proceedings and civil cases.

  European Convention on Human Rights
  Mr. Savidge
  To ask the Advocate-General what steps she is taking to inform UK Government Departments of Scottish experience in applying the European convention on human rights since devolution. [118154]

  The Advocate-General for Scotland
  I have already visited a number of Government Departments to discuss matters, including the Scottish experience of Convention rights, with their legal advisers; and intend to continue to do so. Lawyers in my Department also have frequent discussions at official level with their counterparts in UK Departments on these issues.

  Mr. Dalyell
  To ask the Advocate-General if she will visit The Hague to discuss the operation of the European convention on human rights. [118155]

  The Advocate-General for Scotland
  At present I have no plans to do so.

AGRICULTURE, FISHERIES AND FOOD

  GM Materials
  Mr. Breed
  To ask the Minister of Agriculture, Fisheries and Food what recent research his Department has carried out into the effects on the food chain of animals eating foods containing genetically modified materials. [119015]

  Ms Stuart
  I have been asked to reply.

  I am advised by the Food Standards Agency that there is no evidence to suggest that animals digest feed containing modified genetic material any differently from animal feed containing non-modified genetic material. Relevant work has considered the effects of the processing of materials used in animal feed to determine the extent to which genetic material is disrupted. One such project is due to be reported to the Food Standards Agency in the next few weeks. We also understand that the Ministry of Agriculture, Fisheries and Food is considering a proposed project to establish the pathways of DNA from genetically modified material.

  Pork (Labelling)
  Mr. Rendel
  To ask the Minister of Agriculture, Fisheries and Food what steps he has taken since March
  477W
  1999 to ensure that British pork is labelled so that it can be distinguished from imported pork packaged in the United Kingdom. [117397]

  Ms Stuart
  [holding answer 3 April 2000]: I have been asked to reply.

  On 1 February the Minister for Agriculture, Fisheries and Food issued tough new guidance to industry and enforcement authorities emphasising the need to ensure that country of origin markings on food labels are unambiguous. The guidelines make it clear that, under current legislation which protects consumers from misleading presentation of foods, imported pork packaged in Great Britain should not be labelled as "British".

  Fishing
  Mr. Andrew George
  To ask the Minister of Agriculture, Fisheries and Food what rules he has set Financial Fisheries Guidance grant and European Agricultural Guidance and Guarantee Fund applicants from Objective 1 regions. [119346]

  Mr. Morley
  The European Commission has yet to agree the Single Programming Document for the Cornwall and the Scilly Isles Objective 1 area, including the proposed priorities and measures funded through the European Agricultural Guidance and Guarantee Fund 478W
  (Guidance). Rules for applicants will be finalised following Commission approval and consistently with the relevant European Regulations.

  Personal Documentation
  Mr. Caton
  To ask the Minister of Agriculture, Fisheries and Food for what purposes his Department and its executive agencies require a birth certificate to be furnished by(a) employees, (b) contractors, (c) those applying for employment or contracts and (b) other persons. [118773]

  Mr. Morley
  I refer my hon. Friend to the reply given to the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) on 8 June 1999,Official Report, columns 252-53W.

  Organic Food
  Mr. Tyler
  To ask the Minister of Agriculture, Fisheries and Food what the annual turnover of the organic food sector was in the last financial year for which figures are available and what percentage this represented of(a) the turnover of the agricultural sector and (b) GDP. [118567]

  Mr. Morley
  The farmgate value of organic food production in the UK in the period April 1998 to April 1999 is estimated to have been around £51 million. This represented 0.3 per cent. of the UK agricultural gross output and 0.003 per cent. of GDP.

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

Lord Grenfell of Kilvey
Julian Pascoe Francis St. Leger Lord Grenfell, having been created Baron Grenfell of Kilvey, in the County of Swansea, for life, took the oath.
Lord Mitford
Rupert Bertram Lord Redesdale, having been created Baron Mitford, of Redesdale in the County of Northumberland, for life, took the oath.

Prisoners: Rehabilitation
2.40 p.m.
Lord Juddasked Her Majesty's Government:
Whether, in view of recent reports by the Chief Inspector of Prisons on the effects of solitary confinement and on the treatment of young offenders, and following two suicides in Leicester prison on 21st March, they will now instigate a policy review of the role of prisons in the rehabilitation and well-being of prisoners in the United Kingdom.
Lord Bach: My Lords, the Government work with the Prison Service to review and update policy continually in respect of the role of prisons in the rehabilitation and well-being of prisoners. The Chief Inspector of Prisons' inspection reports and thematic reviews provide a valuable input to that process. As part of the comprehensive spending review the Government provided £226 million over three years for constructive regimes aimed at reducing re-offending. There is still some way to go, but significant improvements in regimes and rehabilitation are being delivered across the prison estate.
Lord Judd: My Lords, I thank my noble friend for that reply. Does he agree that whatever good work is being carried out by many dedicated people within the service, there is a disturbing situation? Whenever the chief inspector makes a devastating report, we hear accounts of what has been done to address the situation and, all too soon, sometimes literally within days, the next disturbing situation arises. Does my noble friend agree that there appear to be cultural problems within the Prison Service?
Many people who are in prison should not be there at all but should probably be in psychiatric care. Many young prisoners have had absolutely nightmarish social and family experiences which have led to their
552
imprisonment. While punishment, where appropriate, is important, does the Minister agree that there is urgent need for leadership in establishing the biggest challenge of all, which is rehabilitation into positive citizenship? Does he also agree that there can be no complacency whatever about any suicides or any psychological damage to young people or any prisoners in custodial care?
Lord Bach: My Lords, we believe that the Prison Service carries out, under great pressure, an excellent job, but failures gain the most publicity. In recent years, the performance on security has improved markedly. Many excellent things happen in our prisons. However, the Government agree with my noble friend's statement that rehabilitation is absolutely critical. Increasingly, rehabilitation is emphasised within prisons. The Government are determined to improve regimes. Of course, those who have committed serious offences must be locked up for the protection of others, but it is equally important that they should not offend when released. The role of rehabilitation in that respect cannot be over emphasised.
Lord Dholakia: My Lords, in relation to two inmates who committed suicide, does the Minister accept that both had the same tendency and were put in the same cell? What aftercare and advice are available to prison officers, particularly when prisoners are taken off "at risk" registers? Having made a statement about the need to divert young people away from custody, can the Minister explain why, under the Crime and Disorder Act 1998, the matter relating to reparation and training orders for young people comes into force in June as against new custodial powers that are being introduced in April, giving the message that custody comes before any reparation matters?
Lord Bach: My Lords, on the deaths in custody raised by the noble Lord, the whole House will want to convey personal condolences to the families of the two young men who died so tragically. It was a particularly tragic event. Perhaps I may speak personally for a moment. I know Leicester prison extremely well. In my professional career I have visited it much more than any other prison. In my experience, the staff and the governor are of the highest quality. That is my personal recollection.
Every suicide in prison is a tragedy and every one is taken extremely seriously by Ministers. As the noble Lord knows, the prison department investigates each one and there is an independent coroner's inquest. It is too early to be able to give more details on the points the noble Lord raises about these particular tragedies. Perhaps I can make one further point about deaths in prisons—
Noble Lords: Oh!
Lord Bach: I shall leave the matter as the House is against me.
The Lord Bishop of Rochester: My Lords, is the Minister aware of the concern expressed in this House, not least by the right reverend Prelates the Bishops of Lincoln and Southwark, and also in the press, regarding the reluctance of prison staff and prison chaplains to report abuse by colleagues for fear of victimisation? How is that grave problem to be addressed? Is the Minister aware also of the need to involve leaders of faith communities in the care of prisoners belonging to those communities? Are any initiatives being taken in that respect?
Lord Bach: My Lords, the right reverend Prelate is right to make his point in relation to examples of victimisation. If there are such cases, I hope that in one way or another the authorities hear of them so that they can be dealt with seriously and speedily. Of course the faiths have a huge part to play in looking after those in custody and the Government are behind the increased involvement of the faiths in our penal institutions.
Viscount Bridgeman: My Lords, does the Minister realise that the number of purposeful hours per prisoner fell from 26.4 hours per week in 1994–95 to 22.8 in 1998–99? Does he agree that a programme producing 1¼ million pairs of socks over the past three years, not for sale but for the use of a prison population of around 60,000, is neither productive nor, for the prisoners, a fulfilling use of their time?
Lord Bach: My Lords, this is not an issue that should be between parties; it is much too serious a matter. The tone of the noble Viscount's question suggested that somehow his government did better than ours. That is not true. The figures indicate that prisoners are being given more active time and more purposeful activities outside their cells. But the noble Viscount will know as well as I do that this is a difficult issue which must be coped with in the best way possible.
Baroness Stern: My Lords, is the Minister aware that the number of children in prison—children, as defined in the Convention on the Rights of the Child, being under 18—has doubled since 1993? Those children come from the most damaged backgrounds. In the light of that, does he expect government policy to lead to a reduction in the number of children in prison? If so, when can we expect it to happen?
Lord Bach: My Lords, we hope that those of tender ages and from underprivileged backgrounds do not end up in prison. If they do, it is important that such children are educated in basic skills, which may lead to work when they are released. There is then more chance that they will not re-offend. It is critical that education regimes in prison are increased, as is currently happening.

Housing Benefit Fraud
2.46 p.m.
Lord Campbell of Croyasked Her Majesty's Government:
Whether, in order to reduce fraud, they will in future require all local authorities to arrange with the Post Office for housing benefit correspondence not to be redirected to other addresses, as already arranged in the present voluntary scheme.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, the powers we inherited in the March 1997 Fraud Act do not allow us to compel local authorities, even if that were desirable. However, 272 local authorities have now adopted the scheme; most of the rest should do so shortly.
Lord Campbell of Croy: My Lords, I am grateful to the noble Baroness for her reply, which is encouraging. As the Chancellor of the Exchequer announced a severe crackdown on welfare fraud, why do not the Government get tough on housing benefit deception, which is known to be widespread, instead of concentrating on changes to disablement benefits? The noble Baroness has confirmed more than once in this House that there is very little fraud in relation to the claiming of disability benefit.
Baroness Hollis of Heigham: My Lords, I am happy to confirm again that there is little or no evidence of fraud in relation to disability benefit. A great deal of error occurs in payment primarily because, fortunately, people get better and, as a result, they should be in receipt of less disability benefit. However, they do not always report the change in circumstance and therefore continue to misdraw that benefit.
The noble Lord is right that serious fraud takes place in relation to housing benefit. Fraud, or a strong suspicion of fraud, is responsible for the loss of around £840 million in that regard. One in six housing benefit claims is probably paid in error. We are tackling this situation in three ways. We are building a verification framework with local authorities to ensure that fraud is, as far as possible, built out of the system at the point of the original claim. Secondly, given that most errors occur after the initial claim when people's circumstances change, we are aiming for a weekly benefit savings scheme with local authorities so that they have an incentive to eradicate and prosecute fraud. Thirdly, we are going for the "Do not redirect" procedures with the Royal Mail. So we have a strategy in place. We hope that, as a result, we will see a significant reduction in housing benefit fraud.
Baroness Maddock: My Lords, I believe that there is general agreement that the complexity of the housing benefit system is what makes tackling fraud so difficult. Indeed, the Minister's Answer this afternoon demonstrated that fact. In view of that difficulty, can the noble Baroness tell the House how the

555
Government calculate the level of housing benefit fraud and other fraud; in other words, can she give us a figure in that respect?
Baroness Hollis of Heigham: My Lords, the noble Baroness is absolutely right. It is very difficult to put a figure on fraud that has not yet been uncovered. One has to multiply it by the number of weeks that it would have continued had one not intervened and stopped it. More generally, we believe that benefit fraud runs between £2 billion and £4 billion a year and if, we include cases where there is mild suspicion of fraud, we believe the figure to be £7 billion.
Housing benefit fraud runs at about £840 million, but there is a 30 per cent possibility of error either way. As the noble Baroness said, our difficulty is that we do not know the level of fraud that we have failed to uncover. However, from talking to experienced investigators, that is the best estimate available. It is certainly supported by the research report of 1997–98 on housing benefit accuracy. I agree that the statistics are flaky and that they should carry a health warning.
Baroness Gardner of Parkes: My Lords, can the Minister comment on the logistics involved? I understood that correspondence regarding housing benefit is not meant to identify that fact on the envelope, so as not to embarrass the recipient. Therefore, if local authorities are to instruct the Post Office not to re-direct such correspondence, how can they mark such correspondence so as to ensure that it is not re-directed?
Baroness Hollis of Heigham: My Lords, the noble Baroness has put her finger on one of the reasons that so many local authorities have been slow to take up the "Do not re-direct" scheme. It means that they have to separate their housing benefit mail from the rest of their correspondence. But, basically, with the aid of government grant—indeed, this is entirely funded by the DSS, with £350,000 a year being spent on new envelopes—local authorities must have a "return to sender" address printed which allows the envelopes to be returned. However, even where local authorities are using their best efforts to ensure that housing benefit giros are returned to them, all the evidence suggests that it is likely that the Post Office fails to intercept perhaps 50 per cent of such correspondence.
Lord Higgins: My Lords, can the Minister say whether or not the original envelopes are identifiable as such?
Baroness Hollis of Heigham: My Lords, they come from the local authority's housing section and will have a "return to sender" address printed on the front. However, local authorities print their own envelopes and, therefore, every set of envelopes from each local authority can be different. There is no standard envelope in use across the system. Local authorities take responsibility for this because they have different forms and they may wish to include different information in the correspondence; for example, they
556
may wish to include council tax benefit, and so on. I am afraid that that is one of the problems which arise when working with a pluralist regime.
Lord Rotherwick: My Lords, can the Minister say whether or not it would be possible to have a common envelope that could be printed by the Government so as to solve this problem?
Baroness Hollis of Heigham: My Lords, I suppose so. At present, every local authority has its own envelope which may contain different types of information. But, given the fact that this is a matter of concern to your Lordships, I shall ask my colleagues to mention this suggestion at the next meeting with local authority associations to ascertain whether this is an avenue that should be pursued. However, once all local authorities are in the scheme, we have no reason to believe that this should not effectively help us to reduce fraud by some £5 million a year.

Missile Defence System: US Decision
2.52 p.m.
Lord Chalfontasked Her Majesty's Government:
Whether they have entered into any arrangement to provide support for an American national missile defence system if the United States Government should decide to establish such a system.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): No, my Lords. The United States has not put any such request to us, nor would we expect it to do so until, and unless, it has decided to proceed with the deployment of a national missile defence system. No such decision is expected before later this summer at the earliest.
Lord Chalfont: My Lords, I thank the noble Baroness for that only moderately enlightening Answer. Does she agree that this is part of a much wider issue and a very serious one? Given that strategic policy nowadays involves the frequent use of expeditionary forces and the fact that many countries around the world which might be involved have weapons of mass destruction and the missiles to deliver them—they are sometimes capable of being delivered from surface vessels—does the noble Baroness also agree that such forces are becoming more and more vulnerable to counter-attack as time goes on? Further, can she give the House an assurance that that assessment of the threat is included in the long-term defence and strategic planning of the Government?
Baroness Scotland of Asthal: My Lords, I can give the House such an assurance. As we made clear in the Strategic Defence Review, that is indeed the focus of the research work we are undertaking in the United

557
Kingdom. It is also the focus of the feasibility study that we and our allies commissioned in NATO earlier this year. At this stage, we still judge that it would be premature to decide on acquiring a ballistic missile defence capability either for our deployed forces or for homeland defence. However, our involvement in the NATO study and our own national programme will enable us to make an informed judgment on whether to invest in ballistic missile defences in the future. This is obviously a matter that we must take into account and consider seriously. We are not disregarding it; indeed, we understand the concerns highlighted by the noble Lord.
Baroness Williams of Crosby: My Lords, I am sure that the Minister will agree that the prospect of a new arms race as a result of the NMD proposals does exist. However, can the noble Baroness comment on the very interesting link made by President Putin on his recent visit to London about the possibility of linking a Start II treaty ratification and, possibly, the ratification of other unratified nuclear treaties by Russia with an agreement about an NMD that Russia could accept? Will the Government explore the possibilities that arise from President Plain's remarks?
Baroness Scotland of Asthal: My Lords, I can reassure the noble Baroness that Her Majesty's Government are doing everything to encourage both our Russian partners and the United States seriously to consider the anti-ballistic missile treaty. Those two parties are the ones negotiating it. I can also assure the noble Baroness that we very much wish to encourage them to reach a decision about which both can feel comfortable so that our security is enhanced thereby.
Lord Jenkins of Putney: My Lords, will the Minister urge the Government to discourage the American Government from proceeding along the lines of a national defence system? Further, does she agree that it would be a step towards nuclear armament and away from nuclear disarmament? Consequently, should not such a step be viewed with less enthusiasm and, indeed, as a step that could lead us in a direction in which we ought not to be going?
Baroness Scotland of Asthal: My Lords, we understand the concerns expressed by my noble friend. I should point out that the signing of Start II on Friday was a very helpful indicator that the Russians are participating in a way that we must all feel is very productive. We hope that this is not a step forward that will be taken without the full implications of the international consequences being taken fully into account. In our conversations with our partners, these are of course issues that are explored quite extensively.
Lord Marsh: My Lords, the noble Baroness has accepted the fact that there are very real dangers in the spread of anti-missile systems of this type, particularly in the Far East. Is she aware that, for the first time in my life, I find myself agreeing with a great deal of what the noble Lord, Lord Jenkins, said?
Baroness Scotland of Asthal: My Lords, I hope that that is a comfortable position for the noble Lord.
Viscount Cranborne: My Lords, perhaps the noble Baroness can enlighten the House in one respect. As the object of the American scheme, as I understand it, is primarily to guard against the increasing missile capability of rogue states, can she tell the House to what extent that danger was explored in recent conversations between her right honourable friend the Prime Minister and the President-elect of Russia? Further, can the noble Baroness say whether the President-elect saw the force of those arguments and whether there might therefore be some means of bringing such conversations forward to enable him to become more sympathetic to the idea of a breach of the ABM treaty?
Baroness Scotland of Asthal: My Lords, I can certainly tell the House that Mr Putin did discuss the issue with my right honourable friend the Prime Minister. Mr Putin made clear the Russian concerns about the US national missile defence plan. The Prime Minister made clear our view that this is a matter best pursued through patient negotiation between the US and the Russians. The concerns of both sides need to be fully addressed. That issue was discussed and it will continue to attract much attention in Russia and America which are aware of each other's respective positions and concerns.
Baroness Rawlings: My Lords, one of the main actors on the US stage in this area, former Secretary of State for Defence, Donald Rumsfeld, says that one of the biggest threats comes—several noble Lords have mentioned this—from the proliferation of weapons of mass destruction. Has Mr Hoon pledged our support, not just held regular dialogues as he said in the other place yesterday, for the US ABM treaty, even if President Clinton said he was committed to development and not deployment, so that we too can benefit from it?
Baroness Scotland of Asthal: My Lords, we have not had a formal request. As I believe I have said on a number of occasions from this Dispatch Box, the situation is not fixed. If the matter goes forward and the Americans are determined upon it, further discussions about merits, demerits, and where we would fit in, would, of course, take place.

Refugees: Status
3.2 p.m.
Lord Rentonasked Her Majesty's Government:
Whether they will negotiate with those governments which signed the 1951 Geneva Convention Relating to the Status of Refugees with a view to its revision.
Baroness Scotland of Asthal: My Lords, we have no plans to advocate revision of the convention which, with its 1967 protocol, continues to provide a vital framework for the international protection of refugees. However, we are concerned at abuse of the asylum system by unfounded applicants and traffickers. We aim to act against the traffickers and return quickly those who have no right to stay in the United Kingdom. We shall continue to work with EU partners and the Office of the United Nations High Commissioner for Refugees to develop an approach to international protection in line with today's requirements.
Lord Renton: My Lords, while thanking the noble Baroness for that largely helpful reply, perhaps I may remind her that, when the 1951 convention was negotiated by the United Nations 50 years ago, it was contemplated that if there was a change of circumstances it would be necessary to revise the convention; and that is why Clause 45 of the convention enables revision to take place. In view of the tremendous change of circumstances and the vast numbers of people involved causing expense and trouble of various kinds to the countries concerned, would it not be wise now to have it properly revised?
Baroness Scotland of Asthal: My Lords, we have considered whether it would be appropriate to revise the convention. The clear view expressed was that it was not. The convention is an important instrument. We still feel that it has great value in its current unamended form.
The Lord Bishop of Portsmouth: My Lords, I thank the Minister for her reply. Does not she agree that the complexity and scale of the refugee situation have so escalated since 1951 that there is a case for revising the Geneva convention along more inclusive and humanitarian lines? I refer to some of the habits into which we have slipped in the past years in this country by detaining refugees in moderately adapted prisons.
Baroness Scotland of Asthal: My Lords, we certainly accept that there is a need for a greater degree of international discussion in relation to this matter. We are working with our other partners to reach an agreed position. We shall continue to pursue that. We have in no way sought to water down our commitment to genuine refugees, who have for many years obtained proper succour from this country. We are deeply proud of that history and will do nothing to besmirch our position in that regard.
Earl Russell: My Lords, will the Minister confirm that, as a result of the Treaty of Amsterdam, the UN
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convention of 1951 is now enshrined in Article 63(1) of the consolidated Treaty of the European Union? Will she further confirm that that means it can be changed only by unanimity among all the members of the European Union? Under those circumstances does she agree that the objective of the noble Lord, Lord Renton, is somewhat improbable of success?
Baroness Scotland of Asthal: My Lords, I certainly agree with the sentiment that has been expressed. As a point of fact—I always tremble when I correct the noble Earl—Article 63(1) of the treaty establishing the European Community requires the Council to adopt within five years of the entry into force of the Treaty of Amsterdam measures on asylum which are in accordance with the Geneva convention. Therefore Article 63 does not incorporate the 1951 Geneva convention on refugees into Community law; it merely requires the new EU measures on asylum to accord with the convention. The 1951 convention could therefore be amended without requiring EC treaty change. The noble Lord is right in terms of the import of his question; namely, that our EU partners have made a commitment to us on this matter. Whether the 1951 convention is revised or not, the sentiment which underlies it will remain in being.
Lord Cope of Berkeley: My Lords, when talking about discussions with partners, does the Minister include the possibility of a revision of the Dublin convention? Given that France and some other countries are now officially regarded as unsafe in terms of returning asylum seekers to them from this country, although France operates under the same 1951 convention, does that not seem an extremely unsatisfactory situation?
Baroness Scotland of Asthal: My Lords, it is somewhat ironic that the party opposite signed the Dublin convention in the first place. We are already involved in negotiations within the EU on a replacement for the Dublin convention. We shall press for a quicker and more robust mechanism for returning asylum seekers to the member state which is responsible for them. In the meantime the 1990 Act strengthens the operation of the Dublin convention by providing that all EU member states will be considered as a safe destination.
Lord Dubs: My Lords, does my noble friend agree that three principles should underlie our approach to asylum and refugee policy: that we should have calmness rather than hysteria; that we should have a fair way of determining each individual application; and that these decisions should be made quickly? I hope that my noble friend will confirm that the Government are applying those principles.
Baroness Scotland of Asthal: My Lords, I have great pleasure in confirming that that is precisely the Government's approach. Speaking for myself, I am becoming increasingly concerned at the tone of some of the rhetoric which is being voiced in relation to

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refugees where refugee status seems to be considered as synonymous with being somehow unsuitable or unsound.

Deputy Chairmen of Committees
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Viscount Falkland and the Lord Geddes be added to the Panel of Lords appointed to act as Deputy Chairmen of Committees for this Session.—(The Chairman of Committees.)
On Question, Motion agreed to.

Powers of Criminal Courts (Sentencing) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Financial Services and Markets Bill
3.9 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Clause 17 [The general prohibition]:
Lord Kingslandmoved Amendment No. 47A:
Page 8, line 6, leave out from ("person") to end of line 7.
The noble Lord said: My Lords, Clause 17(2) defines the prohibition contained in Clause 17(1) as the "general prohibition". As your Lordships are aware, the Bill provides in Clause 36(1) that exempt persons are,
"to be exempt from the general prohibition".
This applies to "exempt persons", whether specified in exemption orders or exempted under various provisions in the Bill—for example, under Clause 37. However, if we look back at Clause 17(1), we see that the general prohibition only prohibits the person carrying on the activity unless he is authorised or exempt. Accordingly, the general prohibition in terms does not apply to an authorised person or an exempt person, and therefore an exempt person cannot be
"exempt from the general prohibition".
It may be that the general prohibition is supposed to stop after
"or purport to do so",
but, as a matter of construction, it does not.
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It is quite clear what is meant; but, given how long the Bill has been in Parliament and how complicated it is, we ought at least to get this part of it right. This is what the amendment seeks to achieve. I beg to move.
Lord Newby: My Lords, in this group we have three amendments which relate to Clause 322. They seek to deal with a problem which arises for lawyers who give financial advice as a part of their business. There are two categories of such advice: the first category relates to major blocks of investment advice in terms of the management of funds; the second category relates to ancillary financial advice given by solicitors in the course of their day-to-day business.
The fear expressed by a number of legal firms dealing in this area is that the Bill as presently drafted is over-onerous for those firms which give advice purely as an ancillary function, rather than providing, as it were, mainstream investment advice in respect of major funds which they manage on behalf of their clients. These three amendments seek to avoid a double burden of regulation and to make it easier for solicitors to continue to give such ancillary advice without feeling the pressure of over-regulation, with which the Bill as it stands threatens them.
Lord McIntosh of Haringey: My Lords, as we indicated at Committee stage, the Bill was amended at Report stage in another place to incorporate Government proposals under which professional firms which are, among other things, subject to regulation by a designated professional body and which provide financial services as an incidental and complementary part of their professional practice, will not require authorisation by the FSA. These amendments were broadly welcomed by the Law Society and by the Institute of Chartered Accountants.
A member of a designated professional body needs to consider the regime established under Part XX, to which Amendments Nos. 173 to 175 relate, only if he is carrying on activities which fall outside the exclusions which will be contained in the regulated activities order, a draft of which was published for consultation last year. That order will be finalised after the Bill has received its Royal Assent and the Government have taken into account comments made during the consultation process. Of course, the proceedings of your Lordships' House are assumed to be part of that consultation process.
I turn now to Amendments Nos. 173 to 175, which were spoken to by the noble Lord, Lord Newby. Amendment No. 175 proposes the deletion of subsection (7) of Clause 322, with a consequential adjustment to Clause 322(1)(a). This subsection makes it clear that, in order for the Part XX exemption to apply, the financial services activities carried on incidentally by a professional firm must be the only regulated activities carried on by that firm.
In Committee, the noble Lord, Lord Taverne, referred to:
"the problems faced by solicitor investment managers who may now find themselves at a disadvantage because they are subject to regulation by both the FSA and one of the Law Societies".—[Official Report, 30/3/00; col. 1003.]

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It is not clear to me that the amendments of the noble Lord, Lord Newby, would make any difference to that situation. Allowing a professional firm to carry on regulated activities other than exempt regulated activities would not remove the FSA's ability to regulate all the regulated activities—both mainstream and non-mainstream—carried on by the firm if the firm was authorised. I am afraid that we cannot accept these amendments.
It is only right and proper that firms carrying on mainstream investment business should require permission from the FSA to carry on those activities. It is a recipe for ineffective regulation to tie the FSA's hands so that it is unable to look at the whole of a firm's financial service business where that is appropriate. It is in the interests of consumers that an authorised firm's overall fitness to conduct financial services be assessed in the light of its activities as a whole. Such oversight by the FSA is what any firm, whether or not a professional firm, has to undergo.
However, as we indicated in Committee, it does not follow that the FSA will or must necessarily apply additional burdens in respect of the non-mainstream business of authorised professional firms. The FSA will, on the contrary, be expected to act in accordance with its statutory duties, including the need to have regard to considerations of proportionality and competition. For example, any restrictions relating to the introduction by authorised firms of clients to independent financial advisers would be a matter for FSA rules—and I understand that there is no intention to make rules to that effect.
We also referred in Committee to the FSA's October 1999 consultation paper on the regulation of professional firms, in which it was made clear that with regard to the provision of non-mainstream activities, in line with the degree of risk attaching to such business, a
"differentiated and, where appropriate, less burdensome regime"
is proposed.
Amendment No. 174 relates to Clause 322(5). This subsection makes it clear that a professional firm seeking to benefit from the Part XX exemption will need to ensure that it does not carry on, or hold itself out as carrying on, a regulated activity other than one which rules made as a result of Clause 327(3) allow it to carry on. The amendment seeks to delete this provision, amending subsection (5) so that it provides that,
"The regulated activity is one which rules made as a result of section 327(3) allow him to carry on".
I am afraid that we cannot accept that amendment either.
Where a breach of the Clause 322(5) prohibition occurs, it is important that the offending firm be subject to the authorisation offences set out in Clause 21. We cannot risk professional firms giving the impression that they are free to operate outside the regime for which Part XX of the Bill makes provision. I appreciate that this means that firms who do hold themselves out as carrying on regulated activities which they are not permitted to carry on by the rules
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of the professional body of which they are members will be subject to criminal penalties. But in this regard they are no different from other firms which conduct regulated activities but are not authorised by the SPA.
I understand that the general policy behind Clause 322(5)—namely, that professional firms should keep within their designated professional body's rules subject to criminal sanctions—is broadly supported by the professional bodies currently recognised under the Financial Services Act 1986. The main objection, as I understand it, is that a breach under this subsection would render inoperable a firm's entire exemption from the general prohibition, and therefore mean that all exempt regulated activities undertaken would he illegal, and not just the particular transaction which had breached Clause 322(5).
I understand that the Treasury has recently talked this issue over with various professional bodies and has made it clear that the Government are prepared to look at the issue again. But whatever the outcome of that consideration, it will remain the case that a firm which carries on or holds itself out as carrying on activities which it is not permitted to carry on will commit an offence.
Turning to Amendment No. 218A, to which the noble Lord, Lord Kingsland, has spoken, the only effect of this amendment is to include professional firms benefiting from the Part XX exemption within the "exempt persons" definition in Clause 407 so putting them on the same footing as, for example, recognised investment exchanges and their recognised nominees. However, professional firms benefiting from the Part XX regime are more closely analogous to those members of Lloyd's who currently do not require authorisation by virtue of the provisions of Part XIX of the Bill than they are to the persons which the Bill describes as "exempt persons". In both cases, the FSA has the power to direct that the authorisation requirement should apply. In both cases, it would be misleading to describe the persons who benefit from the regime as "exempt" from the authorisation requirement in any true sense of that word since the Bill expressly contemplates the possibility that the authorisation requirement may be applied to them. Amendment No. 218A is therefore inappropriate and would have a confusing impact.
Amendments Nos. 47A and 47B are drafting amendments. They restructure Clause 17 in it way that makes the clause less clear than it currently is. We do not see the reason for those amendments and we are therefore unable to support them. In any case, Clause 17 is drafted in almost exactly the same terms as Section 3 of the Financial Services Act 1986. The meaning has remained clear for 14 years and there does not appear to be any reason for changing it.
Lord Kingsland: My Lords, I thank the Minister for his reply but I am surprised that he has not been prepared to accept my amendments. Es it not clear—perhaps this will prove to be a rhetorical question; your Lordships will wait and see—that something

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cannot be exempt from something which never applied to it in the first place? That is the effect of Clauses 17 and 36 if they are read together.
Lord McIntosh of Haringey: My Lords, with the leave of the House, if that were the effect, it would still apply even if Amendments Nos. 47A and 47B were added to the Bill. Clause 17 deals with regulated activities and specifically refers in the same terms to "an authorised person" and "an exempt person". If the noble Lord's argument were the case, Amendment No. 47B would restore exempt persons to Clause 17 and would not make anything other than a drafting difference.
Lord Kingsland: My Lords, that is an argument for improving my amendments, not for rejecting them. I shall leave the noble Lord to reflect on what he said. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 47B not moved.]
Clause 19 [Restrictions on financial promotion]:
Lord Kingslandmoved Amendment No. 48:
Page 8, line 22, leave out ("or inducement to engage in investment activity") and insert ("to engage in investment activity or information which is intended or might reasonably be presumed to be intended to induce any person to do so").
The noble Lord said: My Lords, Clause 19 of the Bill sets out the fundamental financial promotion prohibition. As your Lordships are well aware, it applies to invitations or inducements to engage in investment activity. That expression is defined in subsection (8) in two different ways. Subsection (8)(a) provides that entering or offering to enter into agreements will be,
"Engaging in investment activity",
if the making or performance of the agreement,
"constitutes a controlled activity".
Subsection (8)(b) provides that exercising rights conferred by an investment is,
"Engaging in investment activity",
if the rights are to,
"acquire, dispose of, underwrite or convert an investment".
Subsection (9) provides that an activity is a "controlled activity" for the purposes of subsection (8)(a), and so is subject to the financial promotion regime, if it is an activity specified by the Treasury and relates to an investment specified by the Treasury. However, subsection (8)(b), which is supposed to cover the same ground, does not limit investments to those specified by the Treasury. Accordingly, the fundamental financial promotion prohibition in subsection (1) is currently much wider than intended.
Although subsection (8)(a), which spells out the main meaning of engaging in investment activity, is limited to investments specified by the Treasury—because subsection (9) applies to it—there is no such limitation on the second meaning of engaging in investment activity; namely,
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"exercising any rights conferred by an investment to acquire, dispose of, underwrite or convert an investment".
These amendments are intended to limit the regime in relation to the exercise of investment rights. The new subsection (9A) requires the Treasury to specify again the same investments or classes of investment it has specified under subsection (9). Surely it is much simpler just to say that an investment is a controlled investment if it falls within subsection (9)(b). It will be far too complicated for the Treasury to specify different investments for the purposes of subsection (9) and for the purposes of new subsection (9A).
The amendment to "investment" in line 10 is probably misdirected. I refer to Amendment No. 51. Surely the financial promotion regime ought to extend to cover rights to acquire, dispose of, and so on, any investment and not just an investment which is itself subject to the financial promotion regime. Restricting the regime to where the investment which can be acquired, disposed of, and so on, is a controlled investment is therefore too limiting.
The other amendments seem to me to be wholly admirable. As the effect of specifying controlled investments is to limit the financial promotion regime, I think—dare I say it?—like the Government, that there is no need for the special parliamentary control provisions in paragraph 26 to apply. I beg to move.
Lord Elton: My Lords, I do not want in any way to cut across discussion of my noble friend's amendment but to leave a thought with the Minister to consider and perhaps discuss before the final stage. I do so because this is the last opportunity to suggest improvements for the final stage of the Bill. We have here a series of definitions and we have a series of definitions scattered throughout the Bill. In view of the great facilitation it would be to users of the Bill when it becomes an Act and is published, would it be possible to have an index in the Bill—there is precedent for this—of terms which are defined in the Bill? That would mean that where there is a different definition of the same term in different parts of the Bill, people using the Bill will not be led into confusion by thinking that the interpretation is the same in both parts.
I do not wish to promote a discussion of the merits of that idea, which I think are self-evident, but merely to leave it with the Minister so that perhaps we can return to it at Third Reading.
3.30 p.m.
Lord McIntosh of Haringey: My Lords, perhaps I may respond first to the helpful point made by the noble Lord, Lord Elton. There is indeed such an index in the Explanatory Notes which takes up several pages and indicates where in the Bill these definitions are to be found. However, that is not much help to the noble Lord as the clause numbers have changed considerably. It may be helpful, and it would not be difficult for us, if between now and Third Reading we

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were to circulate an updated list of definitions with reference to their location in the Bill, as amended on Report.
Lord Elton: My Lords, lapsing into the style of a Committee stage, publication in a separate explanatory document would not be the remedy for which I had hoped. What is needed is an index which will travel with the Act itself and should therefore be incorporated in it. Otherwise, the noble Lord got my middle stump!
Lord McIntosh of Haringey: My Lords, the definitions are in the Act. Where it is possible for a definition to apply to the whole Act, that definition is to be found in whichever clause it is that has changed. I do not have the number offhand, but it is there. The only reason why there are sometimes definitions in other places is that they only apply to parts of the Bill. That is the situation in regard to Clause 19. So it cannot be done by means of the index that the noble Lord wants on the face of the Bill. However, I undertake to see to it that when we return to these matters at Third Reading the noble Lord and other noble Lords who have taken part in the debates can have in front of them not merely the definitions as they appear in the Bill but also an index of where to find them. I appreciate the difficulty.
I am grateful to the noble Lord, Lord Kingsland, for his exposition of the government amendments. I was slightly taken aback that the noble Lord did not speak to his Amendment No. 48, as I had intended to be rather sympathetic to it—and probably still shall be. The difference between us on this amendment is narrowing.
Amendment No. 48 to Clause 19 seeks to delete "inducement" from the financial promotion restrictions and replace it with,
"invitations to engage in investment activity or information which is intended or might reasonably be presumed to be intended to induce any person to do so".
I understand the concern that the Opposition have. It has been expressed at various stages throughout the Bill. I undertook in Committee to look at whether Clause 19( 1) needs further clarification. As we have always said, it is implicit in the phrase "invitation or inducement" that only promotional communications will be targeted by Clause 19, and I believe that that is the intention of Amendment No. 48.
As things stand, in my view Clause 19 as drafted is the best way of tackling these issues. The word "inducement" should catch only communications of a promotional nature. However, we should appreciate the opportunity to confirm that that LS so, and that that is the Opposition's intention. I issued half an invitation to talk to the noble Lord, Lord Kingsland, before Report stage. I should now like to issue a firmer invitation to meet the noble Lord to discuss the matter before Third Reading. My office will make arrangements for such a meeting if the noble Lord wishes. On that basis, I urge him to withdraw the amendment.
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Amendment No. 49 seeks to amend subsection (3) of Clause 19 so that subsection (1), which sets out the basic prohibition,
"does not apply unless the communication is intended or might reasonably be presumed to be intended to be aced on by a person".
in the United Kingdom. That was also proposed in Committee. The Opposition were concerned that the clause is not sufficiently clear and that communication will be caught only if it is targeted or "directed at" a person ill the United Kingdom. We believe that this issue is best dealt with in subordinate legislation and we have proposed something designed to achieve that in the draft order set out in the second consultation document on the subject of financial promotion; namely, cutting back on the "capable of having an effect" test in subsection (3). The reason why we believe it should be in secondary legislation is that we are presently in an intermediate stage between the home state regime and the host state regime and it is difficult to estimate the speed or in which direction it will go. It is not clear what "acted on" means. For example, if a communication is sent From abroad for onward transmission by an agent in the UK, is that a communication which is intended to be "acted on" by a person in the UK? If so, is onward transmission acted on in a sense that should be covered by the Bill?
Another intention behind the amendment may be the need to address the UK's Community obligations. In any event, I should like to say a few words about this for the record. Let me say quite categorically that the United Kingdom takes its obligations seriously. That is in respect both of our treaty obligations in general and any specific legislation such as the proposed e-commerce directive, in particular with regard to territorial jurisdiction and other requirements it might place on the UK's financial promotion regime. The UK is committed to ensuring that the financial promotion regime complies with all Community requirements.
Clause 19 was amended in Committee in order to clarify that the Treasury can adjust the scope of the Bill's financial promotion regime in order to take full account of international and technological developments. Under subsection (6) of Clause 19 as it now stands, an order made under subsection (5) may in particular provide that subsection (1) does not apply in relation to communications originating in specific countries or groups of countries such as EU member states. These provisions will enable us to comply with our obligations to give effect to requirements such as a home state regime for e-commerce transactions. In the meantime, the provisions will enable us to give effect to obligations which arise by virtue of general EU law under the treaty. In applying controls of the kind which will be imposed once the necessary subordinate legislation is in place, which will be before Clause 19 and the Bill as a whole are brought into force, we must ensure that any requirements we impose are not discriminatory, are objectively justifiable, are not disproportionate to the ends to be achieved and do not duplicate controls to which a person is subject in his

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home state. Given our intention to modify the scope of the prohibition using secondary legislation, I hope that the noble Lord will not press the amendment.
The amendment to Clause 23, also proposed in Committee, still puzzles us. We are still unclear as to why oral communications not amounting to an invitation to engage in investment activity should be given a special exemption from criminal liability when presumably oral communications which amount to both an invitation and an inducement would remain subject to Clause 23(1).
The Government remain concerned that the impact of this amendment would be to create a two-tier regime with regard to penalties for breach of Clause 19 whereby some communications which breach the prohibition are subject to criminal sanctions while others are exempt. The Government do not favour that. We see no reason to apply a softer touch to all oral communications, which can after all be just as misleading as other forms of communication.
The Government have already proposed that solicited real-time communications (including oral communications) which are not part of a co-ordinated promotional strategy should benefit from an exemption. However, we remain convinced that unsolicited real-time communications should be subject to restrictions.
In any event, it is in the interests of consumers that a uniform approach be taken on the face of the Bill. Debate on the draft Financial Promotions Exemptions Order is the appropriate place to discuss which real-time communications should be classified as exempt from the prohibition.
Perhaps I may say a word about the government amendments in this group. Amendments Nos. 50 to 53 and 54 to 56 are technical, tidying-up amendments to Clause 19. Under Clause 19(8), one meaning that is ascribed to "engaging in investment activity" is,
"exercising any rights conferred by an investment to acquire, dispose of, underwrite or convert an investment".
Under Clause 19(13) "investment" is defined to include any "asset, right or interest". That represents the only limitation placed on what constitutes an investment. The amendments will serve to narrow the definition. The thrust of many of our amendments which we shall debate today are to limit the scope of the Bill and define it more closely; they are certainly not to extend its scope.
Amendments Nos. 50 and 51 seek to amend subsection (8)(b) so that engaging in investment activity is defined to mean,
"exercising any rights conferred by a controlled investment to acquire, dispose of, underwrite or convert a controlled investment".
Amendment No. 52 seeks to introduce a new subsection (9A) to define a "controlled investment" as one that is specified in an order made by the Treasury or,
"one which falls within a specified class of investment".
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One appreciates that that is not much of a definition unless one knows what the specification is to be, but this is another aspect of the flexibility which is required as financial markets change. Amendments Nos. 54 to 56 are consequential on those amendments.
Amendments Nos. 224 and 225 make consequential changes to Clause 41 which is concerned with the parliamentary control of statutory instruments. The amendments add to the list of statutory instruments which require an affirmative resolution procedure for the first orders to be made, or contain provisions made under Clause 19(9A), as well orders that add one or more investments to those which are controlled investments for the purposes of Clause 19. Amendment No. 223 also adds to this list orders which vary a previous order made under Clause 19(5) so as to make Clause 19(1) apply in circumstances where it did not apply as a result of a previous order. All these changes to Clause 418 have been approved by the Delegated Powers and Deregulation Committee.
Clause 19(9) provides that an activity is controlled for the purposes of financial promotion if it relates to an activity or investment that is specified in an order by the Treasury. Schedule 2 sets out the boundaries of what may be specified. Clause 19(10) provides that Schedule 2 applies for the purposes of subsection (9) and that references in Schedule 2 to Clause 20 should be read as references to Clause 19(9).
Parliamentary control of the secondary legislation is set out in Clause 418. Paragraph 26 of Schedule 2 also sets out parliamentary control of orders made under Clause 20. Therefore, by virtue of the provisions of Clause 19(10), paragraph 26 of Schedule 2 applies to Clause 19(9). The form of parliamentary control differs. Schedule 2 specifies that an order must be laid before Parliament after being made and that it comes into effect immediately but ceases to have effect if it is not approved by both Houses within 28 days. Clause 418 provides that a draft order is to be laid before Parliament which requires the approval of both Houses before it can come into effect. The reason for the difference is that orders under Clause 20 may need to be made urgently. Amendment No. 53 has the effect of bringing parliamentary control of Clause 19(9) unambiguously into Clause 418 by making it clear that paragraph 26 of Schedule 2 does not apply to Clause 19(9).
I hope that I have set out the reasons for the government amendments in this group. Although we are sympathetic to Amendment No. 48 and should like to discuss it further, we cannot accept the other amendments in the group.
Lord Kingsland: My Lords, I thank the Minister for his reply. The noble Lord will be relieved to hear that I do not intend to speak again to amendments that have been retabled following Committee stage. I would rather leave them where they are to ferment, perhaps steadily improving with age, so that at Report stage the Minister may find them more palatable. I am most grateful to the noble Lord for his response to

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Amendment No. 48 and look forward to receiving his kind invitation, in appropriate copperplate. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 49 not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 50 to 56:
Page 9, line 9, leave out ("an") and insert ("a controlled").
Page 9, line 10, leave out ("an") and insert ("a controlled").
Page 9, line 15, at end insert—
("(9A) An investment is a controlled investment if it is an investment of a specified kind or one which falls within a specified class of investment.").
Page 9, line 16, after ("2") insert ("(except paragraph 26)").
Page 9, line 16, leave out ("subsection (9)") and insert ("subsections (9) and (9A)").
Page 9, line 17, leave out ("that subsection") and insert ("each of those subsections").
Page 9, line 19, at end insert ("or (9A)").
On Question, amendments agreed to.
3.45 p.m.
Clause 20 [The classes of activity and categories of investment]:
Lord Kingslandmoved Amendment No. 57:
Page 9, line 31, at end insert—
("( ) The activity carried on by way of business of giving or offering or agreeing to give advice (other than legal advice) to persons in their capacity as borrowers or potential borrowers on the terms of a loan or a proposed loan secured or to be secured on land or any other property shall be a regulated activity.").
The noble Lord said: My Lords, as noble Lords are well aware, this amendment is intended to ensure that the giving of advice in relation to mortgages is a regulated activity. Such an activity could be a regulated one if the Treasury included advice on mortgages in the regulated activities order. However, it seems that, at least at present, the Government do not intend that the provision of advice on mortgages should be regulated. This is not satisfactory given that the provision of mortgages is to be a regulated activity. It is not sufficient to rely on mortgage providers, who are to be regulated, to ensure that independent mortgage advisers adopt appropriate standards.
The argument for regulation can be illustrated by asking why someone who advises on an ISA, which may involve a modest investment of only a few hundred pounds, is required to be regulated, while someone who advises on a mortgage, which may well involve a loan of many thousands of pounds, is not. Why should the former be required to carry out a detailed fact-finding of his customer while the latter is not? It is not enough to say that in the case of an ISA it is the customer's money which is being invested whereas in the case of a mortgage the customer is a recipient of someone else's money. The fact is that in the case of a mortgage the customer enters into a very substantial long-term commitment which may have a major impact on his financial position. Nowadays, the marketplace is full of different types of mortgage
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product and the average borrower is in greater, not less, need of help in determining the advantages and disadvantages of particular products.
The impression gained is that the standards of advice are very variable, with many borrowers still entering into quite unsuitable mortgages. The introduction of new standards for mortgages will help but will not provide the complete answer. In our view, it would be a major anomaly if the provision of mortgage advice was not part of the new regulatory regime from the outset. The amendment is intended to remove that anomaly. I beg to move.
Lord Newby: My Lords, in Committee we moved three amendments relating to mortgages which covered two issues: first, what was meant by "a mortgage"; and, secondly, what a mortgage could cover. My noble friend Lord Sharman described in graphic detail mortgages on boats, caravans and various other categories of property which are as important to the person who holds the mortgage as the person's home. We believe that the question of the inclusion of those mortgages in the remit of the Bill may be dealt with in regulation and that the Government accept that they are just as important as mortgages on houses. On that understanding, we have not retabled the amendment.
As to advice, we tabled an amendment which in many ways mirrored the amendment which has been moved by the noble Lord, Lord Kingsland. In Committee, the noble Lord, Lord Burns, explained why the Joint Committee believed that mortgage advice should be included in the scope of the Bill. We still believe that at some stage the FSA may wish to look at the regulation of mortgage advice, but it has been borne in upon us that the other category of advisers not covered by the Bill is insurance brokers. We believe that there is an illogicality in formally including one and not the other. Therefore, in relation to advice, at this stage we do not table an amendment similar to that tabled in Committee.
Lord Elton: My Lords, I am sorry that the noble Baroness, Lady Turner, is not present. She is at least with us in the spirit of the terms of Amendment No. 59.
It seems extraordinary that regulation of advice for the most important financial decision that many people will take in their lives should be left to subordinate regulation or made the responsibility of a body other than the FSA. The commitment to a mortgage often outlasts the commitment even to a life insurance policy. It determines the manner of life of many people. We have seen recently how people who have been wrongly advised have overcommitted themselves to a mortgage and have been caught in the negative equity trap. If there is any purpose in having the Bill so far as concerns the private citizen, this is an area of the most important sensitivity. Therefore, I support my noble friend. I hope that he does not let the matter drop.
Lord Jenkin of Roding: My Lords, I add my voice in support of the amendment. For a long time there was

573
a great sense of injustice that life insurance companies were subject to the full rigours of the then regulatory system whereas building societies—in many cases they were involved in far larger financial transactions than those for life or pension policies—were not. That situation has changed; and I welcome it. It was an unfair form of competition. The full rigours of the regulatory system applied to selling life insurance but not to selling mortgages.
However, the Bill has only gone half way. Many of the products are promoted by advisers even though the mortgage product is provided by the building society, bank—or whoever it may be. It is upon the person with whom the public has the face-to-face contact that the regulation should bite. The broker may be able to offer a range of products from different providers. But in the end it is probably on his or her advice that the punter finally decides to move forward; and it may be bad advice. There are many reasons why that may be so. I do not need to go into them now.
As my noble friend from the Front Bench said, it is extraordinary that the Bill moves only part of the way. Many people believed that if we were to have a system of regulation, it should surely cover, as my noble friend Lord Elton said, the largest single transaction that most people are likely ever to take on in their lives. With respect, it is unfair that the providers of mortgages should have to second-guess the advice of the brokers because the brokers are not regulated or subject to the regime established by the FSA; and that in order to protect themselves the building societies will need to go much further into the circumstances of the individual borrower than they might if the process were properly regulated from beginning to end.
If my noble friend receives what I suspect will be a somewhat unsatisfactory answer from the Minister, I, too, hope that he will take the matter further. It is a curious lacuna in the Bill. I am at a loss to understand why the Government are so reluctant to move this last stage.
Baroness Oppenheim-Barnes: My Lords, I support my noble friend's amendment and all who have spoken in favour of it. No doubt the noble Lord, Lord Borrie, waits to intervene in support. He knows as well as I do that this area is something of a jungle for consumers.
There is a good deal of wise advice available, but it varies, as my noble friend said. Brokers are, after all, brokers; they have a job to do which they see in one light. I do not blame the providers of the mortgages, but the variations are great. Consumers are entering a jungle; they are not confident; they are confused. The amendment seeks to ensure that the advice they receive is bona fide: that there is no unacceptable variation.
I hope, therefore, that my noble friend will not let the matter drop. The issue is important for consumers.
Lord Boardman: My Lords, I strongly support the amendment for the reasons outlined by noble Lords on this side of the House.
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There is no numerically larger group in the community than mortgagors. No group needs wise advice more than they do. Often a mortgage may be the only investment they have made and they want the best advice they can get in order to invest wisely. I urge the Minister to accept the amendment moved by my noble friend and to allow mortgages to be covered by the safeguards provided in the Bill.
Lord Borrie: My Lords, the noble Baroness, Lady Oppenheim-Barnes, will be glad to know that I wish to repeat something I said at Second Reading; namely, that the provisions for regulation should apply to those who give advice. At that time I disclosed that I was a non-executive director of the Woolwich plc, which is a provider of financial services. At the annual general meeting I ceased to be a non-executive director. However, I have the same view today as at Second Reading. The remarks of the noble Lord, Lord Jenkin, chimed with my point of view. Providers of mortgages are keen, as is the Woolwich plc, that brokers should be subject to regulation in the way that providers of financial services are.
Brokers may be or can be—it varies from case to case—exceedingly important in the choice of and decisions on investment made by the customer. As others have said, a mortgage is often the most important investment that a consumer may make in the course of his or her lifetime. I should like the Government to convince me that somehow or other such advisers should not be subject to regulation.
Lord Lipsey: My Lords, I should not like it to be thought that the controversy is between those in favour of and those against the regulation of mortgages. In answer to the point raised by the noble Lord, Lord Boardman, the Bill allows full regulation of mortgage products to be brought in by order.
The question is a practical one. Can the FSA so early in its life, with such a huge workload to digest, take on the task of regulating the vast number of mortgage brokers? I think that I have seen the figure of 20,000. Is that a sensible priority at stage one? Whatever position noble Lords take, they should not think that it is the end of the matter. It would be better to make provision at the right time—it may be later—and to get it right.
Lord McIntosh of Haringey: My Lords, we debated these matters in Committee. As I said in Committee, the Treasury consulted last year on whether mortgage advice should be regulated. The Treasury consultation document on mortgages, Regulation of Mortgages—a discussion document by HM Treasury, was published on 20th July, 1999; and the feedback document, Evidence of consumer damage reported during Treasury Mortgage Consultation, was published in January of this year. Both documents are published on the Treasury website.
The Treasury received little evidence of consumers receiving bad or biased advice and when that was mentioned it was in the context of selling commission-based products such as endowment policies, which are already regulated under the Bill. Indeed, they have

575
been regulated as "investment activity" since the Financial Services Act 1986. The Bill provides that that will continue. Therefore, the problem that has arisen is already covered by the regulatory system and as matters stand it will continue to be so. Making advice on mortgages which does not also involve advice on products such as endowment policies a regulated activity will not add to the protections which are already available.
The Government have recently taken steps to remedy one other area in which problems arise. The area was highlighted in consultation as causing particular consumer detriment; namely, the provision of poor quality or misleading information which has resulted in consumers buying an inappropriate mortgage product or being subject to hidden charges.
One interesting feature of the consultation exercise was that about half the replies the Treasury received came from borrowers who had simply not appreciated what their mortgage loans really entailed. There was clear evidence that people were willing to look after their own interests in taking out and servicing their loans if they could be empowered to do so by the available information about the loan itself.
As a result of the consultation, the Economic Secretary to the Treasury announced on 10th April important new standards which relate to standard variable and fixed rate or capped mortgages, including some discounted and cashback loans. As noble Lords who have been following the legislation in ISAs will remember, the CAT standards refer to charges, access and terms. They will help to make mortgages more straightforward, clear, fair and easy to understand. CAT standards set minimum standards, most importantly in relation to the advertising of mortgage products. That is a crucial improvement in terms of product transparency, ensuring that the consumer has access to all the information required to make an informed decision as to which mortgage product to apply for.
These measures add to those already announced to benefit borrowers, such as the proposal in the Bill that the Financial Services Authority should have a regulatory objective aimed at improving public awareness and understanding of financial products. I understand that in line with this proposed objective the FSA is currently developing information tables to assist consumers in their comparison of the different products on the market. Once again, where the issues have emerged action has been taken.
The objective of the Bill is to provide a sensible regulatory framework which focuses on areas where regulation is required. Blanket regulation of mortgage advice may look attractive, but is it sensible or proportionate? As I said, action has already been taken in those areas where problems are thought to arise. In addition—and I note that my noble friend Lady Turner is not here—if the amendment is successful, the implementation of the new regime could be substantially delayed, which I do not believe is the intention.
Lord Jenkin of Roding: My Lords, I am afraid that I missed the Economic Secretary's announcement, which is probably my fault. The Minister said that endowment mortgages were covered by regulation because they involved life insurance. Often, the biggest single issue facing a mortgagor is whether there should be an interest-only mortgage or an endowment mortgage. Perhaps the Minister could clarify whether the announcement made on 10th April ensures that those who are advising on that critical question will be subject to the regulation of the authority.
4 p.m.
Lord McIntosh of Haringey: My Lords, the announcement which the Economic Secretary made related to the introduction of the charges, access and terms regime (CAT) to mortgage products where they had not previously existed. Noble Lords who have been familiar with individual savings accounts since they were announced some two years ago will recall that the CAT standards have ensured that there is available a range of ISAs which have a kite mark in terms of the charges made on the amount paid in, ensuring adequate access and comprehensible and fair terms. That will be introduced in relation to mortgages.
If that is put alongside the now acknowledged fact that any endowment policy is investment and is regulated as such, it is clear that the two difficulties which have been identified in consultation are dealt with by the Government's proposals.
I turn to the effect of the amendment. Our previous amendments and those that we are to introduce limit the scope of the Financial Services and Markets Bill. This amendment would extend the scope of the Bill and enormously extend the responsibilities of the Financial Services Authority. It would mean—and my noble friend Lord Lipsey gave an underestimate—that the FSA would have to authorise 20,000 broker firms and 40,000 individual brokers. The FSA estimates that if the amendment were passed and the proposal carried through, it would require an additional 200 staff.
We have seen much in the press about the huge power that is being given to the FSA and the huge risks which go with that power. I do not accept what has been said in the press, but in the amendment the Conservative Party proposes an enormous extension to the power and responsibilities of the FSA.
Lord Elton: My Lords, I had brief experience as a regulator when the Financial Services Act 1986 was brought into force and I was called upon to deal with the regulation of independent financial advisers. The numbers the Minister gives do not surprise me, but they strengthen my view that on the penumbra of the large number of reputable advisers there is an enormous penumbra of highly unreputable ones. That is what we found in independent financial advisers, whose employment is similar to that which we are now discussing. The bigger the numbers become, the more the matter should be brought into regulation.
Lord McIntosh of Haringey: My Lords, the noble Lord is forgetting two things. First, we have already

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agreed that mortgage products will be regulated by the Financial Services Authority. Mortgage products must be introduced by large-scale institutions.
Lord Elton: My Lords—
Lord McIntosh or Haringey: My Lords, we are at the Report stage.
Lord Elton: My Lords, the Minister is under a misapprehension. The financial advisers to whom I am referring did not produce a product. They took a commission on advising other people to get it. That is exactly where we are here.
Lord McIntosh of Haringey: My Lords, that is exactly my point. The mortgage brokers and the individual brokers to whom I am referring have no option but to sell products which are themselves regulated under the Bill. That is the difference and the extent of their powers.
Lord Boardman: My Lords, the noble Lord gave the number of additional staff who would be required if the amendment were accepted. Could he estimate the annual number of mortgagors who would be unprotected if the amendment were rejected?
Lord McIntosh of Haringey: My Lords, no mortgagors would go unprotected because the Bill proposes, and we propose in regulation, that mortgage products will be covered. But the situation is worse than that. The amendment would bring far more than mortgage advice within the scope of the Bill. Anyone who advises on any loan would require authorisation provided that the loan was secured on some form of property. That is an extension of the power of what is being described as an "overweening authority" beyond anything I would have thought possible for noble Lords opposite to propose.
The noble Lord, Lord Newby, in a balanced speech, said that he could understand that in future it might be— he believed that it probably would be—necessary to bring such advice into the scope of the Bill. Of course, as has already been made clear, it is always possible, by regulation, to bring mortgage advice within the scope of the Bill. However, I can give him an assurance that the Treasury will examine how the new measures play out in the market place. If, in a few years' time after implementation, borrowers experience significant and widespread problems that lie at the door of bad advice, rather than relying on opaque product terms, Ministers will have no hesitation in using their powers to extend the scope of statutory mortgage regulation.
Everything that we have seen and heard so far has persuaded the Government that the measures that they have put, and will be putting, in place with regard to mortgages are a proportionate and measured response to the need to protect borrowers from unfair or restrictive practices. At the same time, they do not
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saddle the industry with costs and delays which, in the long term, simply rebound on the consumer. I ask the noble Lord to withdraw the amendment.
Lord Kingsland: My Lords, I hope that the Minister will agree that any attempt by me to disguise the strength of feeling on this side of the House about this matter will be futile. I was surprised to hear the noble Lord the Minister say that it would lead to a large extension of the power and the responsibilities of the authority. I agree that it would lead to an extension of the responsibilities of the authority, but I do not see how that would lead also to an extension of power. It means simply that the authority would apply the same powers in a wider field.
As I understand it, the main reason for establishing the authority is to protect the consumer. The consumer needs protection in this, more than any other, area of financial activity. If the noble Lord the Minister had given me some encouragement to believe that, in a reasonable time under delegated legislation, those activities would be covered, I would be inclined to withdraw my amendment. He gave me no such encouragement. Therefore, in the circumstances, I feel obliged to press the amendment.
I am disappointed that the noble Lord, Lord Newby, is not with me. However, at least I am comforted by the thought that the fewer the men, the greater the share of honour. I wish to test the opinion of the House.
4.12 p.m.
On Question, Whether the said amendment (No. 57) shall be agreed to?
*Their Lordships divided: Contents, 93; Not-Contents, 145.

Division No. 1

CONTENTS

Anelay of St. Johns, B.

Eccles of Moulton, B.

Astor of Hever, L.

Eden of Winton, L.

Attlee, E.

Elliott of Morpeth, L.

Bagri, L.

Elton, L.

Barber, L.

Ferrers, E.

Beaumont of Whitley, L.

Flather, B.

Blaker, L.

Fraser of Carmyllie, L.

Boardman, L.

Gardner of Parkes, B.

Bowness, L.

Garel-Jones, L.

Brabazon of Tara, L.

Geddes, L.

Bridgeman, V.

Goschen, V.

Brougham and Vaux, L.

Gray of Contin, L.

Burnham, L. [Teller]

Hayhoe, L.

Buscombe, B.

Henley, L. [Teller]

Byford, B.

Higgins, L.

Campbell of Alloway, L.

Hogg, B.

Campbell of Croy, L.

Holderness, L.

Carlisle of Bucklow, L.

Howe, E.

Carnegy of Lour, B.

Howell of Guildford, L.

Chilver, L.

Hunt of Wirral, L.

Clark of Kempston, L.

Hylton-Foster, B.

Cope of Berkeley, L.

Jenkin of Roding, L.

Courtown, E.

Kingsland, L.

Cranborne, V.

Kirkham, L.

Dean of Harptree, L.

Knight of Collingtree, B

Dundee, E.

Liverpool, E.

579

Luke, L.

Platt of Writtle, B.

Lyell, L.

Prior, L.

McCarthy, L.

Rawlings, B.

McConnell, L.

Reay, L.

MacFarlane of Bearsden, L.

Renton, L.

Mackay of Ardbrecknish, L.

Roberts of Conwy, L.

Marlesford, L.

Rotherwick, L.

Masham of Ilton, B.

Ryder of Wensum, L.

Mayhew of Twysden, L.

Seccombe, B.

Miller of Hendon, B.

Sharpies, B.

Monro of Langholm, L.

Shaw of Northstead, L.

Mowbray and Stourton, L.

Shrewsbury, E.

Moynihan, L.

Skelmersdale, L.

Strathclyde, L.

Northbrook, L.

Thomas of Gwydir, L.

Norton of Louth, L.

Trumpington, B.

Onslow, E.

Vivian, L.

Oppenheim-Barnes, B.

Waddington, L.

Park of Monmouth, B.

Wedderburn of Charlton, L

Pearson of Rannoch, L.

Willoughby de Broke, L.

Pilkington of Oxenford, L.

Windlesham, L.

[The votes of L. Mc Carthy and L. Wedderburn of Charlton in the Content Lobby were given in error.]
[*The Tellers for the Not-Contents reported 145 votes; the Clerks recorded 144 names.]
4.22 p.m.
Lord Lipseymoved Amendment No. 58:
Page 9, line 33, at end insert—
("( ) The Treasury shall within 28 days of the passing of this Act make provision under subsection (1) in respect of buying, selling, subscribing for, carrying out or underwriting contracts of insurance against the provision of long-term care or offering to do so, either as a principal or as an agent.").
The noble Lord said: My Lords, it has been said previously on this subject, at Second Reading and in Committee, that a boom in sales of the products covered by my amendment is to be expected when the Government respond to the Royal Commission on long-term care when it reports in July and it becomes clear that the Government cannot pay and w ill not pay for everything people require in their extreme old age.
These products are strong candidates for regulation: they are expensive; they are complicated, and once you are in you cannot get out; once you have bought it, you are stuck. They are sold in particular to vulnerable people or to people who may be at a particularly vulnerable stage in their lives, when they are going into care. There is therefore a wide consensus that they should be subject to regulation, which includes in its bounds the Personal Investment Authority, the FSA, the ABI, Age Concern, the Continuing Care Conference, the Burns committee which scrutinised this Bill before its introduction, Uncle Tom Cooley and all.
When this matter was raised by a number of noble Lords in Committee the Minister made encouraging noises in response. It might therefore be for the

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convenience of the House if we asked him to give us the result of his further deliberations right at the start of the debate. I beg to move.
Lord McIntosh of Haringey: My Lords, I believe that there is precedent for the Government to respond to a request of that kind at Report stage, and I am happy to do so.
As I said in Committee, the market for long-term care financial products is new and relatively small, though it is developing. The products are sometimes complex. There is as yet not enough claims history to provide a track record to discover whether the cover that is ultimately provided matches people's expectations of what they thought they were buying.
I referred in Committee to the work of the Treasury committee, which was established to explore with the financial services industry how long-term care insurance products and other financial products could best be designed, to see whether they could be made more attractive to a wider audience. The committee comprises representatives from the industry and consumers, as well as some academics who specialise in this area. The committee has been reviewing how the best features of existing products, coupled with good practice and an appropriate degree of regulation, can be combined to make long-term care insurance products a safe and attractive proposition for as many people as possible.
We expect the committee to report by early stages of the summer. I am assured that the committee has made a great deal of progress in a complex area. Among other things, it has discussed existing products; how they are sold; the desirable characteristics of each product; as well as topics such as the claims criteria, claims procedure, people's understanding of what they were buying, and what good practice might entail.
In developing product design criteria, the committee is considering cost and reliability as well as ease of understanding and competition. The committee is also considering how providers can be encouraged to market acceptably designed products, for example, through disclosure, benchmarks, minimum standards, codes of conduct and invitations to tender.
Once the committee has delivered its report we will be in a better position to judge what measures should be taken to ensure that consumers in this area are fully protected.
As will be clear from what I have said, the Government need to go through various processes before finally resolving this matter. These include completion of the process of regulatory impact analysis and the necessary consultations with interested parties.
However, provided that that work confirms, as my noble friend Lord Lipsey clearly expects it will confirm, that regulation will be proportionate and effective, we shall aim to include long-term care products in the regulated activities order, often referred to as the scope order, which will follow the
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passage of this Bill. I should add that the order is subject to the affirmative resolution procedure; it will therefore be debated in both Houses.
I undertake that we will give the House a full report of our conclusions, with a clear timetable for future action, at the time when the order is debated. The Government intend to lay that order before Parliament as soon as is reasonably practicable. We are determined—to pick up a phrase used by my noble friend Lord Lipsey at an earlier stage—that the stable door will not be left open so long that there is a serious risk that the horse will bolt.
The Government are grateful to those who have expressed concern over this matter. They have given us a welcome opportunity to set out our views more fully and, I hope, to alleviate the real concerns which have been expressed.
Lord Lipsey: My Lords, I am extremely grateful to the Minister for what he has said. His words are so moving as to reduce the House to silence. I could not have put his concluding words better had I drafted them myself.
I would like to thank noble Lords on all sides of the House who have supported me in our discussions of the regulation of long-term care. I would also thank the Minister, the Economic Secretary and the Treasury team for the time that they have devoted to the matter, for their consideration and for their sympathy. In truth, I do not think that there was ever much between us, and now there is nothing.
At one point a newspaper reported that the Treasury had caved in on this matter. The Treasury never caves in, and it certainly did not on this occasion. Matters have been crystallised and clarified, and I believe that the Minister's statement will delight those outside Whitehall who have supported regulation. I hope that it will also delight the House, from which I will, with your Lordships' permission, withdraw my amendment.
Amendment, by leave, withdrawn.
Schedule 2 [Regulated Activities]:
[Amendment No. 59 not moved.]
Clause 23 [Contravention of section 19]:
[Amendment No. 60 not moved.]
4.30 p.m.
Lord Kingslandmoved Amendment No. 61:
Page 10, line 43, leave out ("purchaser")") and insert ("other party")").
The noble Lord said: My Lords, Amendments Nos. 61 to 64 and 70 are variations on similar amendments tabled in Committee and are intended to avoid the word "purchaser".
As pointed out in Committee, in some circumstances, the purchaser may be a seller. That may be confusing and our original proposal was to substitute the word "purchaser" with the word "counterparty". In Committee, the Minister acknowledged the point and said that he was unsure

583
whether "counterparty" was quite the right word. However, no alternative has been forthcoming from the Government and, therefore, we suggest the rather straightforward alternative of "other party" to "purchaser". I shall be interested to hear the Minister's response to that suggestion.
Meanwhile, the other government amendments are welcome. As we have said on previous occasions, both in another place and in Committee in your Lordships' House, with respect to Clause 26, the only test for enforcement of an agreement should be whether it is just and equitable. I am delighted to say that the Government have now made it clear that what are now the issues, formerly conditions, are not fatal, even if they are answered in the negative, although the court may have regard to them.
The amendment to Clause 27 is to the same effect as that to Clause 26. It makes enforcement depend only on whether it is just and equitable, albeit that it requires the court to have regard to the question as to whether the deposit-taker really did believe that he was not contravening the authorisation requirement.
The series of amendments to Clause 28 makes the same changes in relation to the enforcement of agreements entered into pursuant to unlawful financial promotion communications, as do the amendments on the question of enforceability in Clauses 26 and 27 in relation to carrying on business without authorisation. Those amendments are also welcome.
However, I make one small point. I have noticed that in the new subsection (5A), line 3, after the words "under the agreement", there should be inserted the words "or obligation". That was missing in earlier versions and it appears to me that the omission has been carried forward. I beg to move.
Lord McIntosh of Haringey: My Lords, I have a complicated but friendly message on Amendments Nos. 61 to 64 and 70. I ask the noble Lord, Lord Kingsland, to withdraw Amendment No. 61, which changes the tag or label in Clause 24 from "purchaser" to "other party" so that we can consider in what form to bring it back on Third Reading.
The simplest thing may be to leave "other party" as it is in Clause 24 and not to have any tag or label at all rather than to put a new tag "other party" so that the phrase is not repeated, as the Bill would read were the amendment to be accepted. If the noble Lord, Lord Kingsland, will withdraw Amendment No. 61, the Government can then agree to opposition Amendments Nos. 62, 63, 64 and 70 which all take out the word "purchaser" and replace it by the words "other party". If that is done, we shall make speedy progress.
Government Amendment No. 72 deals with deposit-taking and third party breaches. That would introduce a new clause dealing with deposit agreements entered into as a result of illegal regulated activity by a third party. The need for the third party provisions in Clauses 25 and 26 arises from the fact that advising on and arranging deals in investments
584
are currently regulated activities and will remain so under the regulated activities order that we are proposing.
But in the case of deposits, a similar situation does not arise. It is only the activity of accepting deposits that is intended to be a regulated activity. As now, there will be no third party activities—for example, advising or arranging—which could be carried on by a third party in contravention of the general prohibition in relation to deposits and which could lead to deposit-taking by an authorised person. So making equivalent third party provision for deposit-taking would be an unnecessary complication.
I turn now to government amendments to Clauses 26 and 28. I wrote to those noble Lords who took part in the debate in Committee or, indeed, at any stage, with what I believe is called a "Keeling schedule"; in other words, a text of how those complicated amendments will read when inserted into Clauses 26 and 28. I am already grateful to the noble Lord, Lord Kingsland, for his support for them because they establish the just and equitable test as the sole test on which a court must be satisfied in order to enforce an agreement where that agreement is the result of some breach of either the general prohibition—that is, the prohibition under Clause 17 on carrying on regulated business without the necessary authorisation or exemption—or the financial promotion prohibition under Clause 19.
The other tests do not disappear. They are there as particular issues to which the court is directed to have regard in deciding what is just and equitable in any particular case.
Where the provider—that is, the person carrying on the regulated activity—is doing so in contravention of the general prohibition or where the agreement results from an illegal promotion that the provider himself has communicated, the court is directed to consider whether the provider reasonably considered that he was not acting in breach.
Where the provider has not committed any breach but the agreement results from a breach, of either prohibition, by another person, the court is directed to consider whether the provider knew that the agreement resulted from a breach. As has been acknowledged, the amendments respond to the point made by the Opposition in another place that the court should have flexibility to judge what is just and equitable in difficult cases, and not be hound absolutely by the "reasonably believed" and knowledge tests.
The amendments enhance the discretion of the court in those matters but we believe that that compromise establishes sufficient certainty.
I am advised that I should retract in a very modest way from the offer I made to the noble Lord, Lord Kingsland. I ask him to withdraw Amendments

585
Nos. 61 and 63 and we can agree the other amendments. I am sure that we can find a solution in relation to Amendments Nos. 61 and 63 in due course.
Lord Jenkin of Roding: My Lords—
Lord McIntosh of Haringey: My Lords, no.
Lord Jenkin of Roding: My Lords, but I was just going to comment on what the Minister said.
Lord McIntosh of Haringey: My Lords, this is Report stage. The order of business is that the mover speaks; any other noble Lord who wishes to speak speaks; the Minister replies; and no other speeches are taken other than that of the mover of the amendment. That is the rule and has been for many years.
Lord Kingsland: My Lords, I am extremely grateful to hear that the Minister is prepared to entertain my amendment. I look forward to seeing the fruits of that undertaking on Third Reading. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingslandmoved Amendment No. 62:
Page 11, line 1, leave out ("purchaser") and insert ("other party").
On Question, amendment agreed to.
Clause 25 [Agreements made through unauthorised persons]:
[Amendment No. 63 not moved.]
Lord Kingslandmoved Amendment No. 64:
Page 11, line 18, leave out ("purchaser") and insert ("other party").
On Question, amendment agreed to.
Clause 26 [Agreements made unenforceable by section 24 or 25]:
Lord McIntosh of Haringeymoved Amendments Nos. 65 to 69:
Page 11, line 35, leave out ("the enforcement conditions are met.") and insert ("it is just and equitable in the circumstances of the case,").
Page 11, line 40, leave out from beginning to second ("the") and insert ("In considering whether to allow").
Page 11, line 41, leave out ("for").
Page 11, line 42, leave out from ("retained") to first ("the") in line 43 and insert ("the court must—

(a) if the case arises as a result of section 24, have regard to the issue mentioned in subsection (4A); or

(b) if the case arises as a result of section 25, have regard to the issue mentioned in subsection (4B).

(4A) The issue is whether").
Page 11, line 45, leave out from ("agreement") to second ("that") in line 1 on page 12, and insert—
("(4B) The issue is whether the provider knew").
586
The noble Lord said: My Lords, I beg to move.
Lord Jenkin of Roding: My Lords, perhaps I may make my point at this stage. It is only brief but it is rather important. I am sure that the House will have in mind the extremely unfortunate circumstances which took place some years ago when a local authority, engaging in interest-swap transactions involving very large sums of money with a number of banks, both foreign and British, was held to have acted ultra vires.
The effect of that was to void all the transactions. I must say that it did not redound to the advantage of this country as a centre for financial services. The solution that has been found, incorporating the government amendments, seems to go a long way to avoid any repetition of what was, in terms of the financial reputation of this country, an extremely unhappy chapter.
On Question, amendments agreed to.
Lord Kingslandmoved Amendment No. 70:
Page 12, line 4, leave out ("purchaser") and insert ("other party").
On Question, amendment agreed to.
Clause 27 [Deposit-taking in breach of general prohibition]:
Lord McIntosh of Haringeymoved Amendment No. 71:
Page 12, line 25, leave out ("and
(b)") and insert (", having regard to the issue mentioned in subsection (3A).
(3A) The issue is whether").
On Question, amendment agreed to.
[Amendment No. 72 not moved.]
Clause 28 [Enforceability of agreements resulting from unlawful communications]:
Lord McIntosh of Haringeymoved Amendments Nos. 73 to 79:
Page 13, line 15, leave out from ("that") to ("it") in line 16.
Page 13, line 16, leave out ("for") and insert ("in the circumstances of the case.
(5A) In considering whether to allow").
Page 13, line 17, leave out ("for").
Page 13, line 18, leave out ("and—
(a)") and insert ("the court must have regard to the issues mentioned in subsections (5B) and (5C).
(5B)").
Page 13, line 19, leave out ("that") and insert ("the issue is whether").
Page 13, line 21, leave out ("or
(b)") and insert ("(5C)").
Page 13, line 22, leave out ("that he did not know") and insert ("the issue is whether he knew").
On Question, amendments agreed to.
Schedule 3 [EEA Passport Rights]:
Lord McIntosh of Haringeymoved Amendment No. 80:
Page 241, leave out lines 19 to 23 and insert—
("12.—(1) Once an EEA firm which is seeking to establish a branch in the United Kingdom in exercise of an EEA right satisfies the establishment conditions, it qualifies for authorisation.
(2) Once an EEA firm which is seeking to provide services in the United Kingdom in exercise of an EEA right satisfies the service conditions, it").
The noble Lord said: My Lords, I shall speak first to Amendments Nos. 80 and 86, which make it clear that the key question as to whether an European Economic Area firm qualifies for authorisation is whether it has met the establishment or service conditions. As the Bill stands, it appears that an EEA firm qualifies for authorisation only when it is seeking to establish a branch or to provide services and not when it is already doing so by virtue of the schedule.
Amendments Nos. 81 to 85 are the first of a number of groups which include amendments to complete the Government's rationalisation of the decision-making procedures in the Bill announced at Second Reading. The House will recall that we introduced a number of amendments in Committee and circulated further draft amendments to the early parts of the Bill to ensure that your Lordships would not only have the opportunity to discuss those changes in Committee and on Report, but also to ensure that the whole picture could be seen and understood. Amendments Nos. 81 to 85 are part of that group. They were all circulated to interested noble Lords when we tabled our amendments for Committee stage. They deal with the procedures under Part III of Schedule 3 for the FSA giving or withholding consent for UK firms to establish new places of business in, or to provide cross-border services into other EEA member states.
As with the Government's other amendments, they provide for a simple written notice procedure for granting requests and applications. That ensures a minimum of bureaucracy and hold-up where a firm is being granted consent for what it wishes to do. Even where the consent is not as broad as that sought, there is no reason for there to be any delay in the firm's ability to benefit from it. To the extent that the application is granted in part, that will have immediate effect. Thus, Amendments Nos. 81 to 84 are drafting amendments which require formal written notice to be given to a UK firm by the FSA, rather than the FSA simply informing the firm, when granting consent for that firm to establish a branch in another EEA state, or to provide cross-border services into another EEA state. On the other hand, the warning and decision notice procedure will apply for refusals and part-refusals.
Amendment No. 85 makes it clear that the decision by the FSA to refuse consent for a UK firm to change the details of its activities or establishments in other member states and, therefore, to issue a decision notice, is not the final determination of the matter. Heading 20(3)(b), which Amendment No. 85 amends, gives the firm a right to refer the matter to the tribunal. The refusal does not become effective until the period
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for referring the matter to the tribunal has expired without a reference, or if a reference is made, until the tribunal and, where appropriate, the higher courts have determined the matter. At that point a final notice under Clause 385 will be issued.
Paragraph 5(1) of Schedule 4 makes it an offence for a treaty firm to carry on a regulated activity in the United Kingdom before the expiry of the period of seven days beginning with the day on which it gave the FSA notice of its intention to do so. Amendments Nos. 87, 88 and 90 to 92 correct an unintended effect of that by making it clear that a treaty' firm that is already authorised by virtue of holding a Part IV permission, or having notified under Schedule 3 or 4, is not required to cease the regulated activity it may be carrying on already in the UK by virtue of its existing permission.
Thus, Amendments Nos. 87 and 88 ensure that a treaty firm which is already authorised by virtue of Schedule 4 should not have to cease for seven days its existing regulated activity when it wishes to expand the range of regulated activities it carries on in the UK. Equally, Amendment No. 87 makes it clear that, although paragraph 4(3) of the schedule deals with the case in which a treaty firm already has a Part IV permission, the firm will not commit an offence if it carries on the activity for which it has the Part IV permission during the seven-day period. Amendments Nos. 90 to 92 are consequential amendments.
Amendment No. 89 is also a technical change The existing sub-paragraph (2) of paragraph 5 applies various parts of Clause 49, which applies to applications under Part IV of the Bill, to a notice given to the FSA under that paragraph. Sub-paragraph (2) requires the notice to state the regulated activities to be carried on and to give an official UK address for the service of notices, and allows the FSA otherwise to direct the manner and content of the application, and to require verification of information contained in it. Amendment No. 89 removes the incorrect reference to subsection (4) of Clause 49, which would enable the FSA to require additional information. Given that the person's right is exercisable at the end of the seven-day period without FSA approval, that reference is redundant. Such further information as is required by the FSA to fulfil its ongoing supervisory functions as host state regulator can be obtained through rules and the exercise of powers under Part XI. I beg to move.
4.45 p.m.
Lord Stewartby: My Lords, perhaps I may ask the Minister to explain a point relating to the consequences of Amendment No. 80, which replaces paragraph 12 of Part II of the schedule. Subparagraph (1) refers to establishment conditions. In that case, the overseas regulator will have given the firm consent to establish a branch in the UK and so it will then satisfy the establishment conditions. That is perfectly straightforward. The service conditions are listed under subparagraphs (a), (b) and (c) of paragraph 14, but it is not clear to me that, if the firm

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concerned wishes to provide different services in the UK from the ones that it provides in its home state, it would really be properly authorised.
Amendment No. 80 sets out that once a firm satisfies the service conditions, it automatically qualifies for authorisation, but the service conditions as set out appear to relate to any services in the firm's home state for which it may have authorisation, whereas it may want to do something else in the United Kingdom. It may be that I have misunderstood that point, but I read it through once or twice and I still do not find it easy to see what protection there is against a firm which might want to do something different. Technically, it might qualify automatically, even if the home state regulator said that it did not authorise it in respect of those particular services and that it would not indeed do so.
Lord McIntosh of Haringey: My Lords, that is an interesting point. I believe that the answer is that Amendment No. 80 provides equality for establishment and the provision of services, whereas paragraph 12, which Amendment No. 80 replaces, does not make that distinction. My understanding is that the directives only provide the right to cross-border services which are carried on in its own home state. Paragraph 14 reflects the narrower scope of the European Union directives. If I have got that wrong or not made it clear, I shall certainly be pleased to write to the noble Lord.
On Question, amendment agreed to.
Lord Kingsland: My Lords, I wish to speak to this group of amendments.
The Deputy Speaker (Lord Brougham and Vaux): My Lords, if the Minister moves Amendment No. 81, the noble Lord, Lord Kingsland, can speak.
Lord McIntosh of Haringeymoved Amendment No. 81:
Page 244, line 19, leave out ("inform the firm concerned") and insert ("give written notice").
The noble Lord said: My Lords, I had already spoken to this amendment with Amendment No. 80. I beg to move.
Lord Kingsland: My Lords, as I understand the procedure, the Minister opens; and if no other noble Lord wishes to speak, the Opposition reply. I am simply exercising that right. Perhaps I may put it another way: I am performing that duty.
Lord McIntosh of Haringey: My Lords, I am sure it is my fault. The noble Lord, Lord Stewartby, spoke to Amendment No. 80 and I replied immediately without giving the noble Lord, Lord Kingsland, the opportunity to contribute. I apologise to him. It is entirely legitimate for him to make his points on Amendment No. 81 instead.
Lord Kingsland: My Lords, I thank the noble Lord very much indeed for his apology. I was not suggesting
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that he had done anything wrong. I am simply saying that the procedure had unfolded in such a way that I had not had the opportunity to speak. It now transpires that I can.
As regards the amendments to Schedule 3, they are mostly drafting amendments and do not change the substance of the existing provisions. The one point of note is that, as the Government have indicated, the amendment to line 39, on page 245 of the Bill, makes it clear that, in the normal way, the authority merely decides to refuse consent rather than actually refusing it. At the decision stage, although it does not issue a decision notice, the authority notifies the firm that it has decided to refuse consent and the firm may then appeal to the tribunal.
In the Government's Explanatory Notes they say that they are making it clear that the decision to issue a decision notice is not the final determination of the matter because the firm has the right to refer the matter to the tribunal and the normal provisions suspending the effect of the decision notice come into play.
However, in our view, that is not expressly stated in the amendment. Amendment No. 85 relates to paragraph 20. It provides that the authority's consent is required for specified changes to the firm or to an activity that it carries on. Neither Amendment No. 85 nor paragraph 20, as amended, provide that the authority must issue a decision notice when the firm applies for consent. All that is said is that, if the authority decides to refuse consent, the firm concerned can refer the matter to the tribunal. Presumably, the authority must notify the firm of its decision to refuse consent, but as it is not by way of a decision notice, the protective provisions in Clause 130, as amended, which refer to the procedures originating with the decision notice, never come into play.
Accordingly, in our view, Amendment No. 85 should be amended so that it requires the authority, when it decides to refuse consent, to issue a decision notice and then go on to say that the firm concerned may refer the matter.
I believe that this is just a problem of clarification. I do not believe that there is a difference of substance between us. However, it is an important matter and I hope that the Government can suggest another solution to this if our suggestion is not palatable.
As regards Schedule 4, in principle, the amendments are only drafting amendments. The Minister has explained that the reason for the reorganisation is that the present provisions of paragraph 5 require a treaty firm to issue a new notice to the authority each time it wants to begin a new regulated activity. As I understand these amendments, therefore, they provide that only one notice is needed.
I say this with great respect. Perhaps the Government will make it clear that the permission to which Amendment No. 87 refers is a permission granted under paragraph 4 of Schedule 4—in other words, a passported permission. I believe that that is what is intended; but because the amendment refers

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merely to a permission, and does not limit it to a Schedule 4 permission, it also covers Part IV permissions.
The fact that it could be read that way is made clear by the terms of paragraph 4(3). The notice that the authority requires is a notice that the treaty firm intends to use its Treaty of Rome passport under Schedule 4. The present wording of Amendment No. 87 does not achieve that.
Perhaps a solution would be to refer in Amendment No. 87, heading (11), to "permitted" instead of "regulated" in both places. Another potential solution would be that after the word "permission" in heading (b) we could insert "under paragraph 4(1)".
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for explaining his concerns. I deal first with Amendment No. 85. The noble Lord is quite correct. The point is that it is a decision to issue a decision notice—in this case, a decision notice refusing an application—which is the trigger for the right to refer the matter to a tribunal. Therefore, instead of saying that a person refused consent may refer the matter to the tribunal, if the authority decides to refuse consent without necessarily implementing that decision, there is reference to the tribunal and there is no interruption of the business involved. That should be an improvement.
However, in case we have misunderstood each other we shall look at the points the noble Lord has raised and write to him about it and, if necessary, make an amendment. It seemed clear enough to me that we were doing what the noble Lord wanted. As regards the amendments to Schedule 4, I am less clear about the very abstruse point which the noble Lord has made. Again, I shall have to write to him on that subject.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 82 to 85:
Page 244, line 20, at end insert ("to the firm concerned").
Page 245, line 14, leave out ("inform the firm concerned") and insert ("give written notice").
Page 245, line 15, at end insert ("to the firm concerned").
Page 245, line 39, leave out ("a person refused consent") and insert ("if the Authority decides to refuse consent, the firm concerned").
On Question, amendments agreed to.
Schedule 4 [Treaty Rights]:
Lord McIntosh of Haringeymoved Amendments Nos. 86 to 92:
Page 246. line 30, leave out paragraph 2 and insert—
("2. Once a Treaty firm which is seeking to carry on a regulated activity satisfies the conditions set out in paragraph 3(1), it qualifies for authorisation.").
Page 247, line 20, leave out from beginning to second ("the") in line 22 and insert ("Sub-paragraph (1A) applies to a Treaty firm which—
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(a) qualifies for authorisation under this Schedule, but

(b) is not carrying on in the United Kingdom the regulated activity, or any of the regulated activities, which it has permission to carry on there.

(1A) At least seven days before it begins to carry on such a regulated activity, the firm must give").
Page 247, line 23, at end insert—
("( ) If a Treaty firm to which sub-paragraph (1A) applies has given notice under that sub-paragraph, it need not give such a notice if it again becomes a firm to which that sub-paragraph applies.").
Page 247, line 24, leave out(",(4)").
Page 247, line 25, leave out ("(1)") and insert ("(1A)").
Page 247, line 27, leave out ("the prohibition imposed by paragraph 5(1)") and insert ("paragraph 5(1A)").
Page 247, line 33, leave out ("5(1)") and insert ("5(1A)").
On Question, amendments agreed to.
Clause 31 [Withdrawal of authorisation by the Authority]:
Lord Kingslandmoved Amendment No. 93:
Page 14, line 33, leave out ("This section applies") and insert ("A person ceases to be an authorised person").
The noble Lord said: My Lords, in moving this amendment I shall speak also to the other amendments in this group. Amendments Nos. 93 to 95 relate to Clause 31. The Minister will recall that these amendments were tabled in Committee. They remove what we believe is the unnecessary requirement for the authority to give a direction formally withdrawing a person's status as an authorised person. The Minister declined to accept the amendments on the basis that, in certain circumstances, they would make a person's status unclear. If my memory serves me correctly, he gave examples of EEA or treaty firms qualifying under Schedule 3 or Schedule 4.
Having reflected on the matter, we continue to believe that the amendments are justified. The formal withdrawal of a person's status as an authorised person is both unnecessary and confusing. In the case of an EEA or treaty firm, such a firm either qualifies for authorisation under Schedule 3 or Schedule 4 or it does not. If a firm qualifies, it is authorised for the purpose of the Bill under Clause 29(1). If it does not qualify, or ceases to qualify, it should not be, or should cease to be, an authorised person automatically. Therefore, the authority is not required to give a direction to that effect.
Take the case of an EEA firm that qualifies for authorisation under Schedule 3 and also has a Part IV permission. Assume that the Part IV permission is withdrawn and in the mean time the firm has ceased to qualify under Schedule 3. Under Clause 31 the authority has to give a direction withdrawing the person's status as an authorised person. Suppose the authority fails to do so for some reason. It seems that the firm continues to be authorised, when clearly it has ceased to qualify for authorisation.
That does not seem to be right. It would be both preferable and clearer to avoid the bureaucratic requirements of the direction and rely on the provisions of the Bill to determine whether or not the firm is authorised.

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I do not have sight of the correct paper. Perhaps I may ask the Minister whether Clause 42 is dealt with in this group.
Lord McIntosh of Haringey: My Lords, yes.
Lord Kingsland: My Lords, I am much obliged. The purpose of the amendments to Clause 42 is to allow the authority to refuse an application to vary or cancel a permission in "the interests of consumers" or "potential consumers" rather than,
"consumers, or of a group of consumers".
Presumably, that provision was originally required because it was thought that the interests of consumers can be affected even in relation to some consumers only. Meanwhile, potential consumers have been omitted altogether. I beg to move.
5 p.m.
Lord McIntosh of Haringey: My Lords, when proposing similar amendments in Committee the noble Lord, Lord Kingsland, explained that he was concerned about the possibility that the FSA may try to continue to authorise someone inappropriately. I hope I can offer him some assurance on that point so that he may feel able to withdraw the amendments.
The purpose of Clause 31 is to provide certainty as to whether or not a person continues to have the status of an authorised person following the cancellation of a Part IV permission. That is necessary because, as Clause 29 indicates, a person may have permission to carry on regulated activities other than under Part IV. When the FSA cancels a Part IV permission it will have to decide whether other permissions carry on. If it concludes that they do not, it will be obliged to give a direction under Clause 31(2). That will put the status of the person concerned beyond doubt.
I want to emphasise that the clause does not offer the FSA an alternative means of prolonging authorisation. Subsection (2) clearly states that where the cancellation of a Part IV permission means that an authorised person no longer has a permission for any regulated activity, the FSA,
"must give a direction withdrawing that person's status as an authorised person".
Clause 31 simply provides certainty as to the effect of the cancellation of a Part IV permission on the status of the person involved. Although subsection (1)(b) makes it clear that the clause applies only when the cancellation of a Part IV permission means that the person has no permission by virtue of any other provisions of the Bill, we believe that it is helpful to have a distinct administrative act that confirms that the result of the cancellation is that the person's authorisation has been withdrawn.
I now turn to Amendments Nos. 98 and 100 which concern Clause 42. These amendments are concerned with cases where the FSA has varied a person's Part IV permission with the result that there are no longer any regulated activities which that person is permitted to carry on. Once the FSA is satisfied that it is no longer
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necessary to keep the permission in force, it must cancel it. We believe that is an appropriate test which ensures that the FSA cannot keep a permission in force unnecessarily.
We also believe, and the FSA believes, that it places a more stringent test on the FSA than the one proposed in these amendments. There are, of course, various reasons why it may be necessary for the FSA to keep a permission in force. A firm may, for example, have contravened a requirement and so be subject to some form of investigation or to enforcement or to disciplinary proceedings. Alternatively, the FSA may be concerned that a firm may have contravened a requirement and, therefore, needs to satisfy itself that the firm is not trying to hide something. Clearly, the FSA's ability to protect consumers would be seriously undermined if it were unable to deal with issues such as these merely because a person had ceased to be authorised.
It is important that we should bear in mind that almost throughout the Bill we have succeeded in including provisions to deal with former authorised persons. If we had to deal with former authorised persons in every regulatory provision of the Bill, we could easily extend the length of it by 50 per cent. There are all sorts of additional complications that arise when seeking to regulate somebody who is no longer a regulated person. In this part of the Bill we keep them in membership so that they can be regulated and disciplined, rather than let them out and have to bring them back again for disciplinary purposes.
The effect of Amendments Nos. 98 and 100 would be to undermine the rigour of the test that is applied. If the amendments were accepted, the FSA would be able to keep a permission in force by relying on the fact that it was unable to satisfy itself that there was "no good reason" why the person should not continue to be subject to its control. That is a difficult test for any regulator. How can it ever be sure that there is no good reason for continuing to be able to exercise control over a person? The test in the Bill as it stands, on the other hand, would require the FSA to cancel permission if it is satisfied that it is no longer necessary for permission to be continued.
In turn, that requires the FSA to address the situation that had led it to conclude that permission should be continued and ask itself the question whether the situation is still such that it is necessary that permission should be continued. If it has no reasonable grounds for concluding that it is necessary, the effect of the Bill is that permission should be cancelled. I believe that is where we started and that that is the intention of the noble Lord. We do not believe that the test is sufficiently stringent. It would not give firms certainty that they will not be the subject of unnecessary regulation. I hope that these amendments will not be pressed.
Lord Kingsland: My Lords, I thank the Minister for the tone, if not the content, of his response. From the fact that these amendments have been retabled after much debate in Committee, he will have concluded that we regard them as, although superficially

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technical, of considerable importance. I should like to reflect on what the Minister said. We can come back to the amendments at Third Reading. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 94 and 95 not moved.]
Clause 40 [Giving permission]:
Lord Fraser of Carmylliemoved Amendment No. 95A:
Page 17, line 44, leave out from beginning to ("as") in line 45.
The noble and learned Lord said: My Lords, at an earlier stage I tabled a number of amendments which were prompted by the Law Society of Scotland. In this group are two of my amendments, to which I can speak briefly.
Amendment No. 95A relates to Clause 40. The proposal is that the wording given as an example of the limitation that the authority might incorporate into the description of a regulated activity should be deleted. The point is a short one. If those words remain in, the concern is that, applying one of the principal canons of construction, there may be a limit on the limitations that the authority could impose. It may be dangerous to do that and, accordingly, the words ought to be deleted. It does not seem to me that that can do any damage to the statute and it will certainly have the effect of simplifying it in an appropriate fashion.
Amendment No. 95B relates to Clause 41. As your Lordships will have observed, this is a short but possibly rather startling provision that the authority can include a requirement which extends to,
"activities which are not regulated activities".
We have already spent some considerable time this afternoon discussing what might be included in "regulated activities". It is clear from some of the earlier clauses that we debated that the Treasury has wide powers to specify what may and may not be regulated. It is surprising therefore that this requirement can go beyond regulated activities.
It may be that the Minister has already explained why the provision is necessary. But it seems to the Law Society and to me that it goes further than necessary. Accordingly, we should simply delete subsection (3). But I shall listen with interest to discover whether or not there is a sound basis for its inclusion. I beg to move.
Lord Brightman: My Lords, Amendments Nos. 96 and 97, which relate to Clause 42, are grouped with Amendments Nos. 95A and 95B. It is therefore my duty to speak now rather than later.
As we are looking at Clause 42 for a second time, perhaps I may mention a point of drafting of some importance which occurred to me rather late in the day. I do not expect the Minister to deal with this point in any substance because I did not give him notice in advance that I was going to raise it.
So far as I can discover, there is no definition of "consumer" in Part IV of the Bill. I may be wrong; I may have overlooked it somewhere, in which case
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I hope I shall be stopped. If there is no definition, then there seem to be four choices. Choice number one: there is a definition of "consumer" in Clause 135. That definition is adopted in Schedule 4. Choice number two: Clauses 5 and 12 use the Clause 135 definition, but add a few more persons as consumers. Choice number three: in Clause 9 we have the same definition as in Clauses 5 and 12, but excluding "authorised person" who is defined in Clause 407. Choice number four: we could have no special definition so that the dictionary definition applies. That, I believe, was the course advocated by the noble Lord, Lord Peston, on the second day of Committee when he said,
"I have lectured on consumer theory for about 40 years and believed that I understood what a consumer was".—[Official Report, 20/3/00; col. 45.]
As I said, I do not expect the Minister to deal with this point in substance now, but perhaps it could be considered before Third Reading.
Perhaps I may mention an allied point. There are some 280 pages to this Bill. Is it necessary to read every single line in order to see whether or not the word "consumer" is used again and to check that it has been defined; or is there some electronic equipment available in the House to those who wish to study the Bill, which will indicate where the word "consumer" is used? There are more than 7,000 lines in the Bill. I have reason to believe, which I shall not go into now, that the word "consumer" is used in other places in the Bill without definition. It would be too big a job for me to go through the Bill line by line. But perhaps I can be informed whether or not there is some equipment which will do it for me.
5.15 p.m.
Lord Kingsland: My Lords, as I understand it, Amendments Nos. 96 to 101 are intended to tidy up Clause 43 and refer to the power the authority uses, on "its own initiative", to vary the Part IV permission to carry on specific regulated activities. Part IV is the normal permission for which firms apply.
We had thought, in another place, to make it clear that Clauses 43 and 44 were indeed the exercise of the authority's own initiative power. The revised subsection (1) covers exactly the same ground as cases (a) to (c) except that, as mentioned in the Explanatory Notes, it is not linked to specific activities.
Lord Jenkin of Roding: My Lords, I wish to say a few words in support of Amendment No. 95B in the name of my noble and learned friend. Perhaps one should have paid more attention to this. But, on reflection, it is a surprising provision to find in a Bill that requirements that may be imposed, may extend to activities which are not subject to regulation under the Bill. It would be helpful if the Minister could give some indication of what the provision is aiming at.
Reverting to the earlier amendment on which the House divided, let us suppose that we have a regulated firm of insurance brokers or financial advisers and the authority decides, as a condition of the authorisation, that it is going to impose requirements in relation to that firm's giving of advice on mortgage products. Is

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there anything in the clause which would prevent that being done? It seems to me it is entirely open to the authority to do it. Yet the Government say that they do not intend the Bill to extend to that activity in the early stages. My noble and learned friend raises a good point and we need an explanation.
Lord McIntosh of Haringey: My Lords, I cannot resist the temptation to respond to the noble and learned Lord, Lord Brightman, first. I love that kind of point and he raised it in his characteristically lucid way. The answer to his question is case four; in other words, it is the dictionary definition. My noble friend Lord Peston was right in saying that, in general terms, if one has lectured on something for 40 years without anybody ever questioning what was meant by "consumer", it is probably better to leave it that way unless we intend the word to be used in a different way in legislation.
However, as I explained when responding to the noble Lord, Lord Elton, earlier this afternoon, there are many instances where words are used in a special case in this Bill. Indeed, as I said, we set out a glossary in the Explanatory Notes, which is now out of date as regards its references as to where to find the definitions. There are plenty of definitions; in fact, the Bill is overflowing with definitions of words that are used other than in their normal dictionary sense. But this is not one of them.
The noble and learned Lord, Lord Brightman, also asked me whether there was any electronic equipment that would enable him to detect other cases where the word is used. I assume that this legislation, like all legislation, is in electronic form on the Treasury's website, or on an equivalent website. If that is the case, it can be subject to key word searching in the same way as any other electronic file. However, if I am wrong about that, I shall write to the noble and learned Lord. It would certainly be absurd for us to engage in 19th-century pursuits, such as concordances carried out manually by scholars or rather by the unfortunate research assistants of scholars. I believe that we are entitled to better than that in the 20th century. My noble friend reminds me that I should refer to the 21st century; that is indeed correct. Well, I have been too busy to catch up.
I turn now the amendments tabled in the name of the noble and learned Lord, Lord Fraser. Amendment No. 95A would simply remove the example of the sort of limitation that could be imposed on the carrying on of a "regulated activity". I can assure the noble and learned Lord that the inclusion of a single example, which is intended to be a helpful illustration, is not something that will give rise to the restraints of the normal canons of construction to which he referred. That is certainly not the intention; nor is it the effect of the phrase. It has been included to make it clear that the power can be exercised in this important way. There are other examples of exemplifications that do not invoke the Latin clause from which he spared us; namely, inclusio unus exclusio alterius—I hope that I said that correctly.
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In granting permission to carry on an activity, it is vital that we should be clear that the FSA can specify circumstances in which it may or may not be carried on. Without the ability to make such restrictions, the FSA would be required to err on the side of caution in borderline cases and to withhold permission to carry on the regulated activity. I cannot believe that that is what the noble and learned Lord intended.
In deciding whether to impose such limitations, perhaps I may reassure the noble and learned Lord that the FSA must have regard to what is necessary to satisfy it that the threshold conditions are met and that consumers are adequately protected. If the applicant feels that the FSA has not been reasonable in imposing the limitation, he has recourse to the tribunal.
Amendment No. 95B seeks to prevent the FSA imposing requirements on the way in which how an authorised person conducts his unregulated activities. This, too, is essential if we are to have an effective and proportionate regulation. Let us take a simple example: how would banking supervision work if requirements could not be imposed on the way or the extent to which they lend? Given that the "own initiative power" is such an important tool in dealing with systemic issues—I shall deal with the genesis of that power when I describe our amendments—it is vital that it should be capable of addressing the problems that arise in the conduct of authorised persons' unregulated activities.
The noble Lord, Lord Jenkin of Roding, also referred to Amendment No. 95B. Of course, any requirements imposed by the FSA in relation to unregulated activities must be proportionate and relevant to the FSA's objectives under the Bill. That is the overall constraint with which we are working. The FSA can impose a requirement on conduct of unregulated activities only if the grounds set out in Clause 43(1) are satisfied. However, this is not a backdoor approach, as feared by the noble Lord, to the regulation of unregulated activities. It is essential that the FSA should be able to impose requirements on unregulated activities; for example, any financial resources requirements would need to extend to the whole of a firm's business. They could not be restricted to those parts of the business that are regulated because that would be like the judgment of Solomon; if we tried to make that distinction, the baby might die as a result of being cut in half. It is only possible to impose a requirement having regard to the need to meet the threshold conditions and the need to protect consumers. That, of course, takes us back to Clause 37.
I shall now deal with the Government's amendments in this group. Amendments Nos. 96, 97 and 99 clarify the grounds on which the FSA may refuse permission or exercise its own initiative power under Clause 43. The aim is to ensure that these powers can properly be exercised in order to minimise wider systemic risks. Amendments Nos. 96 and 97 clarify the ability of the FSA to take account of the interests of potential as well as actual consumers in deciding whether to refuse an application for a Part IV permission.

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The amendments also remove the possible and unintended implication of the reference to "a group of consumers" that the FSA is bound only to consider the interests of specific consumers or groups of consumers, and not those of consumers generally. The purpose of that reference was to give the FSA the necessary discretion to refuse an application on the grounds that granting it would have an adverse impact on the interests of a broad group of consumers; for example, depositors. But given the nature of systemic risk, we believe it is desirable to make it clear that this discretion would apply where the adverse impact was to the interest of consumers and potential consumers generally.
Amendment No. 99 is similar in intent. The power under Clause 43 to vary or cancel a person's Part IV permission, which is referred to as the FSA's "own initiative power", is a critical part of the authority's range of powers to deal with a wide range of regulatory concerns, including systemic threats. Therefore, it is vital that this power should be exercisable when necessary in the interests of consumers generally, and not just those who are consumers of the regulated activities for which the authorised person has permission.
Before I forget, perhaps I may interrupt myself at this point and tell the noble Lord, Lord Jenkin, that, when I referred to the reference back to Clause 37, I should have said Clause 39. I am sure that the noble Lord noticed that error and that he would have picked me up on it later.
Amendment No. 99 also removes the words,
"in relation to one or more, or all, of the regulated activities for which he has a Part IV permission",
from the end of case A. The amendment also takes the opportunity to reorganise the drafting of Clause 43(1) so that the three grounds appear as separate subsections (a), (b) and (c) rather than cases A, B and C.
Amendment No. 101 is also a drafting device. It defines the term "own initiative power" to which I referred earlier and which is already used elsewhere in this part of the Bill; for example, in Clause 45(6) and Clause 48(2). Amendments Nos. 102 and 103 incorporate the new defined term in Clause 44(1) and Clause 45(1).
Before I conclude, I should also give your Lordships notice that, following some discussion in another place of the head office requirements imposed by paragraph 2 of Schedule 6, we have been considering whether these requirements may bite a little too hard on some overseas firms, including some from elsewhere in the European economic area. We are checking to ensure that Schedule 6 is completely consistent with our Community obligations and with the need to maintain the openness of the UK financial markets. If necessary, we may table amendments at Third Reading. If we are in a position to lighten the regulatory burden in some way at that stage, I hope that noble Lords will feel able to indulge us.
Lord Fraser of Carmyllie: My Lords, the first amendment that I moved was simply a drafting one.
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There might he some argument as to whether the subsection contains just one example or perhaps two, but it was a small risk about which I thought the Government ought to be aware. It seems to me that the removal of such words would have done nothing to restrict what the authority might he able to do. However, I shall obviously not be pressing it.
As far as concerns Clause 41(3), I believe I understood what the Minister said in his response. I shall read most carefully in Hansard the examples that he gave. Nevertheless, this still seems to me to be a point to which we may wish to return. Under subsection (2), the authority can impose a requirement on a person which will require him "to take specified action" or,
"to refrain from taking specified action".
If the FSA does that and the person concerned says that it is outside the regulated activities, and the FSA then says that it has the right to require that of the person, whether or not it is regulated, that is precisely the area of controversy that I should have thought this House would wish to avoid the authority becoming involved in. The greatest criticism of the USA at the present time is that it will clumsily or unnecessarily trespass into matters that are not within those areas which we all acknowledge and recognise ought to be regulated. If the measure we are discussing is to have a narrow remit, I can understand how it might emerge as an ancillary power, as it were, but it seems to me, and, I believe, to my noble friends, to be expressed in the widest possible terms. Some restriction may be desirable. But, having said that, I have no intention of pressing Amendment No. 95B either. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 [Imposition of requirements]:
[Amendment No. 95B not moved.]
5.30 p.m.
Clause 42 [Variation etc. at request of authorised person]:
Lord McIntosh of Haringeymoved Amendments Nos. 96 and 97:
Page 18, line 34, leave out ("of a group of") and insert ("potential").
Page 18, line 36, leave out ("of that group of') and insert ("potential").
On Question, amendments agreed to.
[Amendment No. 98 not moved.]
Clause 43 [Variation etc. on the .Authority's own initiative]:
Lord McIntosh of Haringeymoved Amendment No. 99:
Page 19, line 3, leave out subsection (1) and insert—
("(1) The Authority may exercise its power under this section in relation to an authorised person if it appears to it that—

(a) he is failing, or is likely to fail, to satisfy the threshold conditions;

(b) he has failed, during a period of at least 12 months, to carry on a regulated activity for which he has a Part IV permission; or

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(c) it is desirable to exercise that power in order to protect the interests of consumers or potential consumers.

(1A) The Authority's power under this section is the power to vary a Part IV permission in any of the ways mentioned in section 42(1) or to cancel it.").
On Question, amendment agreed to.
[Amendment No. 100 not moved.]
Lord McIntosh of Haringeymoved Amendment No. 101:
Page 19, line 24, at end insert—
("( ) The Authority's power under this section is referred to in this Part as its own-initiative power.").
On Question, amendment agreed to.
Clause 44 [Variation of permission on acquisition of control]:
Lord McIntosh of Haringeymoved Amendment No. 102:
Page 19, line 28, leave out ("acting under section 43") and insert ("exercising its own-initiative power").
On Question, amendment agreed to.
Clause 45 [Exercise of powers in support of overseas regulator]:
Lord McIntosh of Haringeymoved Amendment No. 103:
Page 19, line 38, leave out from ("Authority's") to ("may") in line 40 and insert ("own-initiative power").
On Question, amendment agreed to.
Clause 46 [Prohibitions and restrictions]:
Lord Kingslandmoved Amendment No. 104:
Page 21, line 15, after ("A") insert ("or contravene any other obligation or duty the institution may owe A").
The noble Lord said: My Lords, as I said at Committee stage of the Bill, Clause 46 gives the authority power to impose requirements on authorised persons and to give notice of these requirements to any institution with whom the authorised person keeps accounts. The institution does not act in breach of any contract with the authorised person if, having been instructed by the authorised person to transfer any sum or otherwise make any payment out of the authorised person's account, the institution refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with a requirement imposed by the authority.
However, if the institution complies with the instruction from the authorised person, it is liable to pay to the authority an amount equal to the amount transferred. It does not seem reasonable that the institution must be automatically liable when complying with such an instruction when it appears that the requirement imposed by the authority is not an absolute requirement. Therefore, to balance the approach adopted in Clause 46, it would be reasonable to include the words, "without reasonable excuse". I beg to move.
Lord Stewartby: My Lords, I may be making the same point as my noble friend, but on reading Clause 46(5)(b) I wondered whether,
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"if the institution complies with such an instruction"
that institution has had to go through the process of assessing whether complying with the instruction would or would not be incompatible with the requirement. It is not clear whether there is an assumption in Clause 46(5)(b) that it will have made such an assessment because the instruction of itself may not put the institution on notice that it ought to consider whether complying with the instruction would infringe the requirement. Perhaps that matter should be spelt out in paragraph (b).
Lord McIntosh of Haringey: My Lords, subsection (5)(a) of Clause 46 provides for notification of other institutions, such as a bank, where the person subject to an assets restriction has an account. It protects those institutions from action for breach of contract if they comply with the terms of the restriction.
Amendment No. 104 seeks to extend this protection to other obligations or duties to which the institution may be subject, such as a fiduciary duty or a duty of care. As I said in Committee, we understand fully the intention of the amendment. Subsection (5)(a) already recognises the need for a bank to be able to rely on the restriction as a defence to an allegation that it has acted in breach of such a duty. The provision is drafted in the way it is in response to comments made in our public consultation on the draft Bill. A number of people thought that the form of the provision in the draft Bill was confusing. We came forward with this wording to make clear that, after an assets requirement had been imposed, the institution would continue to hold A's property on the terms that had previously applied, except that it could legitimately forbear to make transfers in accordance with A's instructions.
In response to the comments made by the noble Lords opposite in Committee, we have considered whether the drafting should be further amended. We have consulted parliamentary counsel on that issue. It is our clear view that the amendment is unnecessary. It seems implausible that a court would hold that the institution was in breach of a fiduciary duty it may owe the authorised person, A, given the existence not only of an express prohibition or restriction on,
"the disposal of, or other dealing with, any of A's assets".
but also an express provision that there is no breach of contract if a person refuses to do what his contract with A would otherwise have obliged him to do. We are satisfied that it is clear that a person who complies with a requirement imposed on him under statute cannot at the same time be liable to actions in the civil courts. This would fundamentally undermine the effect of the requirements for which Parliament itself has made provision.
In this particular case we have included express provision about breach of contract in order to make it clear that the terms on which the institution holds A's property are the same as those that applied before the assets requirement was imposed—with the very important exception that, so long as the assets requirement is in place, the institution is no longer obliged under its contract with A to comply with A's directions.

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We are doubtful of the value of trying to go further in this particular instance because we do not think that it is necessary to go beyond the specific case we have dealt with here—which is necessary for the simple mechanics of this particular requirement. We do not want to run the risk of creating doubt about the position in other areas where there may be an explicit statutory requirement but there is no express provision about civil duties and liabilities. In those cases no provision is required because those duties and liabilities are displaced by the requirements imposed under the statute. Nevertheless, as I say, we have consulted parliamentary counsel on this matter and we think that we are on safe ground here.
Amendment No. 105 concerns the liability which is imposed under subsection (5)(b) on a financial institution which acts in breach of a requirement notified to it by the authority. It would give the financial institution a defence to that liability if it could show that it had a "reasonable excuse" for having paid out or transferred any part of the account. As I said in Committee, we must remember that we are not dealing here with punishment of the institution for an offence or other misconduct, but with safeguarding assets which may be owed to consumers or to other creditors. The effect of a breach of the requirement may well be to allow the authorised person subject to the restriction to dissipate its assets in a way that puts them out of reach of the firm's customers or creditors. It is only right that an institution which has notice of the requirement should comply with it.
Clearly, there may be circumstances in which the notification has been garbled or not received, but in those circumstances no liability would attach to the institution in any event. It is difficult to imagine any other circumstances in which the institution would have a reasonable excuse for having failed to comply with a requirement. However, even if it did, we do not think that it would be right to deprive the firm's creditors and other persons to whom the assets may properly belong. And to allow, indeed encourage, institutions to look for excuses for failing to comply with requirements could seriously undermine their effectiveness. It might also expose smaller institutions to undue pressure from unscrupulous and perhaps desperate firms.
Amendment No. 106 is a drafting amendment. I do not think that the noble Lord referred to that amendment and therefore the House can be spared the pain of hearing me speak to it.
Amendment No. 106A concerns the position of a trustee appointed to hold assets pursuant to an assets requirement. Subsection (8) provides that assets will be treated as being held in accordance with such a requirement only if the authorised person has instructed the trustees to do so by written notice. The amendment, which we considered in Committee, would require that notice to come from the FSA rather than from the authorised person. Again, as we said in Committee, we can appreciate the thinking behind it, but it would cause more problems than it would solve.
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The obligation to transfer the assets to the trustee is imposed on the authorised person, although it must be approved by the FSA. The authorised person will have failed to comply with the requirement—and will therefore be exposing himself to possible disciplinary' proceedings—if he fails to notify the trustee that those assets are held in accordance with the requirements. I think these two go together.
The noble Lord, Lord Stewartby, raised a point similar to that of the noble Lord, Lord Kingsland. The institution should be on notice that there are restrictions in dealing with A's property This will mean that the authority will have given the institution a notice of the restriction in dealing with A's assets by virtue of Clause 46(4)(b). So it is not necessary to spell this out in subsection (5)(b).
On that basis, I hope that the noble Lord will not press the amendment.
Lord Kingsland: My Lords, I thank the Minister for what he has said. If I understood him correctly, he has gone some way towards giving me some comfort on these matters. I shall of course read the text of Hansard carefully before deciding whether to return to this matter at Third Reading. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 105 to 106A not moved.]
5.45 p.m.
Clause 50 [Determination of applications]:
Lord McIntosh of Haringeymoved Amendment No. 107:
Page 23, line 19, leave out subsection (4) and inset:—
("(4) If the Authority grants an application for, or For variation of, a Part IV permission, it must give the applicant written notice.
(5) The notice must state the date from which the permission, or the variation, has effect.
(6) If the Authority proposes—

(a) to give a Part IV permission but to exercise its power under section 40(7)(a) or (b) or 41(1), or

(b) to vary a Part IV permission on the application of an authorised person but to exercise its power under any of those provisions (as a result of section 42(5)),

it must give the applicant a warning notice.
(7) If the Authority proposes to refuse an application made under this Part, it must (unless subsection (8) applies) give the applicant a warning notice.
(8) This subsection applies if it appears to the Authority that—

(a) the applicant is an EEA firm; and

(b) the application is made with a view to carrying on a regulated activity in a manner in which the applicant is, or would be, entitled to carry on that activity in the exercise of an EEA right whether through a United Kingdom branch or by providing, services in the United Kingdom.

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(9) If the Authority decides—

(a) to give a Part IV permission but to exercise its power under section 40(7)(a) or (b) or 41(1),

(b) to vary a Part 1V permission on the application of an authorised person but to exercise its power under any of those provisions (as a result of section 42(5)), or

(c) to refuse an application under this Part,

it must give the applicant a decision notice.").
The noble Lord said: My Lords, in moving Amendment No. 107, I shall speak also to Amendments Nos. 108 to 110; to the amendment of the noble and learned Lord, Lord Fraser, Amendment No. 110A; to government Amendments Nos. 111 and 112; to Amendments Nos. 163 to 166; and to Amendments Nos. 168 to 170. These amendments are all part of the package of procedural amendments, of which we gave notice some time ago.
Amendment No. 107 establishes the procedures for granting or refusing applications for a new permission or variation of an existing permission under Part IV. If an application is granted, the applicant receives written notice which states the date on which the new permission takes effect. If the FSA proposes to grant or vary a permission in accordance with an application, but to impose limitations or requirements under Clauses 40, 41 or 42, it must follow the warning and decision notice procedure.
The warning and decision notice procedure also applies if the FSA proposes to refuse an application—unless the reason for refusal is that the applicant should properly notify under Schedule 3 in accordance with the directives, in which case we would expect the question of which route was correct to be sorted out in discussion with the home state regulator.
The first new clause after Clause 51 (Amendment No. 109) applies the flexible, supervisory-type decision procedure to the exercise of the FSA's own initiative power to vary an authorised person's permission under Part IV. The own initiative power is, as I have explained, one of the key tools in the FSA's regulatory toolbox; a power that needs to be exercised in different ways according to the circumstances of each case.
Where action needs to take effect immediately or at some date prior to the full process having been completed, it is important that the action can and does take effect then. That is provided for by subsection (2), as qualified by subsection (3) which requires the FSA reasonably to consider it necessary for the action to take effect immediately or while the decision is open to review, having regard to the grounds on which the action is being taken.
On the other hand, where the power is being exercised to apply relatively routine requirements—for example, adjusting the premium income limit for an insurance company or setting a new capital ratio for a bank—to reflect new aspects of that authorised person's business, there may be no need for the requirement to take effect before the person concerned has had the opportunity to refer the matter to the tribunal, in which case the requirement will not take effect while the matter is open to review.
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The second new clause after Clause 51 (Amendment No. 110) deals with the procedure for cancellation of permission. As I made clear when introducing the changes in Committee, we are applying the full warning and decision notice procedures to those decisions, in effect treating them in the same way as disciplinary-type cases. This reflects the seriousness of this kind of regulatory action. It is possible to adopt this process only on the basis that if protective action is required in the meantime, the own initiative power is there for that purpose.
These new clauses replace Clauses 51, 52 and 53, which we are omitting under Amendments Nos. 108, 111 and 112.
Amendments Nos. 163, 164 and 165 remove the requirement under Clause 253 for the direction to specify the date on which a requirement takes effect, and replaces this with a requirement for the notice under Clause 255 to specify when the requirement takes effect. This removes an element of duplication—as it stands, both the direction and the notice would appear to specify these dates—and aligns the provisions more closely with others in the Bill.
As with subsection (12) of the second new clause after Clause 51 (Amendment No. 110), Amendments Nos. 166, 168 and 170 introduce new subsections into clauses setting out the supervisory procedures for giving directions under Clause 253 to authorised collective investment schemes; for giving directions under Clause 263 to recognised overseas collective investment schemes; and for giving directions under Clause 277 to overseas collective investment schemes authorised by virtue of Clauses 266 or 268.
These new subsections define what is meant by a decision being "open to review" by reference to the new subsection (6A) to Clause 386, to which we will come in due course. This therefore determines the basic presumption about when a decision takes effect in the absence of any need for the supervisory action to take effect any earlier.
Amendment No. 169 is a consequential change which makes clear that a decision to refuse an application for variation or revocation of a direction made under Clause 263 can be referred to the tribunal.
Some of the amendments to Part XVII reflect the fact that we can now introduce a common definition of what is "open to review" for the purposes of supervisory decisions. This is the effect of Amendment No. 193, to which we shall come in due course. The others are directed at slight technical points—duplicative requirements to set dates in one case and the omission of an explicit provision about references to the tribunal in another.
The amendment of the noble and learned Lord, Lord Fraser, Amendment No. 110A, seeks to amend Clause 52, which we propose to omit. I shall respond in terms of the replacement clause rather than the clause as printed. The noble and learned Lord seeks to introduce a minimum period of 14 days before the issue of a written notice under Clause 52 before a decision can take effect. Clause 52 currently deals with

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the authority's exercise of its own initiative power in cases other than those where it is necessary for the authority's action to take immediate effect.
As we have proposed an amendment to omit Clause 52, it might be helpful if I respond in terms of its replacement. By virtue of subsection (2) of the new clause, a supervisory decision could take effect immediately it is given or on a specified date. But this can happen only if the FSA considers it necessary that it should happen. Even in such cases, we would expect that an authorised person would be given the maximum possible notice before any action were to take effect. It would be in only relatively rare cases—for example, where it is necessary to protect consumers—that anything less than 14 days' notice should be given. I hope that that will satisfy the noble and learned Lord, Lord Fraser. I beg to move.
Lord Fraser of Carmyllie: My Lords, I had observed that my amendment sought to amend a clause which the noble Lord intended to delete. If he had not been so obviously enjoying giving the answer he gave, I might have interrupted him to tell him that it was an unnecessary response.
Lord McIntosh of Haringey: My Lords, I cut it down very substantially.
Lord Fraser of Carmyllie: My Lords, I am delighted to hear that. Perhaps I may say to the Minister that I understood the point that he was making. My point about notice is not only covered in subsection (2) but, presumably, if the notice has to give notice of his right to refer a matter to the tribunal and must give an indication of the procedure, doubtless within that there would be some indication of the time limits to which that reference would be subjected. When it comes to my moment of glory, I intend not to move the amendment.
Lord Jenkin of Roding: My Lords, I am sure that the whole House is indebted to the noble Lord, Lord McIntosh, for the care with which he has explained this very large group of amendments which covers some pages of the Marshalled List. I should also like to say that those of us who have been seeking to follow the proceedings on the Bill and have had advance notice with explanations of the amendments very much appreciate that. The noble Lord is doing his best to make an extremely unpalatable mess of pottage possibly a little more palatable than it otherwise would be.
I shall not detain the House long on this point, but, here we are, nearing the end of a long legislative process. It has spread over two Sessions of Parliament. The Bill was carried over and the noble Lord, Lord Burns, who is no longer in his place, chaired the Joint Committee of both Houses on the Bill. It has proceeded through all its stages in another place and then it came to this House. It has been through several days of Committee and we are now on the second day of Report. But we still find ourselves facing page after page after page of amendments. I really must once again make a protest that this is no way to legislate.
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Those outside who have tried to follow the proceedings have been dismayed at the way in which things have been done. One of the things of which one has also become aware is that many of them are keeping their heads well below the parapet because they do not wish to get into the bad books of the Financial Services Authority. There have been several examples of that. It may be appropriate at a later stage to draw attention to the article in today's Daily Telegraph saying that there must not be an unofficial blacklist of people. The powers being given to the authority, which no doubt under this sheaf of amendments may be exercised a little more logically and with a little more regulation, as it were, than had originally been provided, are immense. That we are at this very late stage making this whole sheaf of amendments to the Bill demonstrates how unsatisfactorily this whole process has been carried on.
I have made my protest about this before and I feel that it is appropriate to do so again. When we have this group of amendments, with new clauses coming in and with existing clauses being taken out and whole parts of the Bill being effectively rewritten at this late stage, I must once again protest and say that this is a disgraceful way of proceeding.
Lord Peyton of Yeovil: My Lords, I should like briefly to apologise for the fact that it was not possible for me to get here earlier. I had no intention of rising to my feet until I heard the contribution made by my noble friend Lord Jenkin. My noble friend lost nothing by his restraint as it was a very effective protest. I should like particularly to echo what he said in tribute to the noble Lord the Minister, who has the embarrassing task of defending the really messy conduct of the Bill. I just wish I knew who really is responsible; if anyone has been the pilot—p-i-l-o-t, not spelt the other way—behind the scenes.
I shall not detain the House any longer except to say that if I were given a single wish now it would be that the noble Lord who is conducting proceedings on the Bill would so far forget himself as to forget where he is and think that he was sitting, as he was a couple of years ago, on the Opposition Front Bench. I do not believe for one moment that he would be quite so restrained in his condemnation of the Government's conduct as, on the whole, we on this side of the House have been. I want to ask one question. Is it possible to identify anyone who has been more responsible than most for the ghastly mess in which we find ourselves?
Lord McIntosh of Haringey: My Lords, I have to say to the noble Lords, Lord Jenkin and Lord Peyton, that flattery will get them nowhere. I have listened to these complaints. I thought that the thrust of the complaints at the Committee stage had some justification and I apologised; indeed, I think I used the word "grovel". But I do not think that I am in that position now. What we doing with the Bill is consistently, deliberately and carefully improving it. I do not believe that we are being helped particularly by the Opposition.
Perhaps I may just say this to noble Lords. Have they looked at the Marshalled List? Have they looked at the fact that 40 of the amendments on the

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Marshalled List being debated today are starred? In other words, they were put down only at midday on Friday, so that I had no opportunity to consider briefing on them over the weekend, which is what I would otherwise have expected. Have they looked at the fact that, in addition to those 40 starred amendments, there are 14 on a supplementary Marshalled List, tabled by the noble and learned Lord, Lord Fraser, which I saw for the first time at ten o' clock this morning? How am I expected to respond to amendments of that kind at such an interval?
If it comes to accusations of—
Lord Fraser of Carmyllie: My Lords, I thank the noble Lord for giving way. Am I correct in understanding that not so long ago the noble Lord made a proud boast in the Dining Room of your Lordships' House that the first time he read the notes for the amendments was when he got up to read them?
Lord McIntosh of Haringey: My Lords, I would be very surprised if the noble and learned Lord was right in saying that; and, if he were, it would be entirely improper for him to quote in the House anything that I said in the Dining Room. I do not know what kind of a club this is, but it certainly is not the club in which one quotes what other people say in a dining room and attribute that quote.
I was not going to say anything about these matters until I was attacked—until the Government were attacked—but now I have been attacked I shall respond to that. I shall respond to the noble Lord, Lord Jenkin, who made a most outrageous statement. He said that there were people in the City who had objections to the Bill but were not prepared to raise those objections for fear of being victimised by the Financial Services Authority. If there are such people, let the noble Lord name them. If there are not such people, let him not make such an accusation, which is damaging to the reputation both of the City and of the Financial Services Authority.
I turn to the issue of powers under the Bill. I have already made the point several times today—it applies to previous stages of the Bill—that in the Bill the Government are limiting the powers of the Financial Services Authority, to create greater certainty about those powers and to make the Bill easier to operate. The only amendment on which the Opposition have chosen to divide the House is an amendment which would increase the scope of the Financial Services Authority's activities to the extent of encompassing another 60,000 people and employing another 200 staff. I ask the world outside to judge who is complicating the Bill and who is attempting to improve it.
Finally, I was asked by the noble Lord, Lord Peyton, how I should feel if I were on the Opposition Benches, faced with government amendments, and whether I should have been as restrained as he has been. The Financial Services Act was introduced by the noble Lord's government in 1986. It was a smaller Act; it was not concerned with banking or insurance, or with the European economic area, Lloyd's or the
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treaty obligations. It was necessarily a smaller Act because it was dealing with a simpler financial community. At the Bill's Report stage in the Lords, after the Bill had completed its passage in the Commons, there were 400 government amendments and there were 70 government amendments at Third Reading.
6 p.m.
Lord Peyton of Yeovil: My Lords, I am obliged to the noble Lord for giving way. He refers to my government. It was not exactly my government. Indeed, if the noble Lord would care to do me the favour of exercising his considerable memory, he will remember that my relations with what he calls "my government" were not all that warm at the time.
Lord McIntosh of Haringey: My Lords, I do not deny that the noble Lord was in opposition to the government of the party of which he is a member and whose Whip he takes. I do not deny that he was, in many cases, an outstanding opponent when they were doing things that were particularly wrong. But there is an element of collective responsibility. We are talking about the Conservative Party, which put through defective legislation to a much greater degree than we have done, to which we responded with considerable restraint—much more restraint than was shown by the noble Lords, Lord Jenkin and Lord Peyton.
The only response that I have received to these government amendments has been a very friendly one from the noble and learned Lord, Lord Fraser. I therefore commend the amendment to the House.
The Deputy Speaker (Lord Strabolgi): My Lords, the Question is that Amendment No. 107 be agreed to. As many as are of that opinion shall say "Content"—
Lord Kingsland: My Lords, we have not spoken to the amendments.
The Deputy Speaker:—to the contrary, "Not-Content". The "Contents" have it.
On Question, amendment agreed to.
Clause 51 [Refusal of application for permission]:
Lord McIntosh of Haringeymoved Amendments Nos. 108 to 110 en bloc:
Leave out Clause 51.
After Clause 51, insert the following new clause—
EXERCISE OF OWN-INITIATIVE POWER TO VARY PART IV PERMISSION:PROCEDURE
(" .—(1) This section applies to an exercise of the Authority's own-initiative power to vary an authorised person's Part IV permission.
(2) A variation takes effect—

(a) immediately, if the notice given under subsection (4) states that that is the case;

(b) on such date as may be specified in the notice; or

(c) if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.

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(3) A variation may be expressed to take effect immediately (or on a specified date) only if the Authority, having regard to the ground on which it is exercising its own-initiative power, reasonably considers that it is necessary for the variation to take effect immediately (or on that date).
(4) If the Authority proposes to vary the Part IV permission, or varies it with immediate effect, it must give the authorised person written notice.
(5) The notice must—

(a) give details of the variation;

(b) state the Authority's reasons for the variation and for its determination as to when the variation takes effect;

(c) inform the authorised person that he may make representations to the Authority within such period as may be specified in the notice (whether or not he has referred the matter to the Tribunal);

(d) inform him of when the variation takes effect: and

(e) inform him of his right to refer the matter to the Tribunal.

(6) The Authority may extend the period allowed under the notice for making representations.
(7) If, having considered any representations made by the authorised person, the Authority decides—

(a) to vary the permission in the way proposed, or

(b) if the permission has been varied, not to rescind the variation,

it must give him written notice.
(8) If, having considered any representations made by the authorised person, the Authority decides—

(a) not to vary the permission in the way proposed,

(b) to vary the permission in a different way, or

(c) to rescind a variation which has effect,

it must give him written notice.
(9) A notice given under subsection (7) must inform the authorised person of his right to refer the matter to the Tribunal.
(10) A notice under subsection (8)(b) must comply with subsection (5).
(11) If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(12) For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 386(6A).").
After Clause 51, insert the following new clause—

CANCELLATION OF PART IV PERMISSION: PROCEDURE
(".— (1) If the Authority proposes to cancel an authorised person's Part IV permission otherwise than at his request, it must give him a warning notice.
(2) If the Authority decides to cancel art authorised person's Part IV permission otherwise than at his request, it must give him a decision notice.").
The noble Lord said: My Lords, I beg to move Amendment No. 108, and Amendments Nos. 109 to 110 en bloc.
Lord Kingsland: My Lords, once again I find myself shut out from responding to a large number of government amendments. I shall not protest, formally, but the House ought to allow the Opposition to respond to a large number of detailed amendments to
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which my noble friend Lord Jenkin has referred. I am obliged to the Minister for indicating that he will allow me to do so. The Minister smirks and sniggers.
Lord McIntosh of Haringey: My Lords, after the noble Lords, Lord Jenkin and Lord Peyton, had spoken, I paused, I looked around, and I waited to see whether anyone else wanted to intervene before I responded to the debate. Fortunately, the noble Lord is entirely within his rights to speak to the Question that is now before the House. I shall endeavour to respond as best I can, both in relation to the amendments that are before the House and to other amendments in the group.
Lord Kingsland: My Lords, I am much obliged. First, I want to deal with the amendments to Clause 50. Amendment No. 107 deletes subsection (4) which relates to the determination of an application for permission, and limits the simple written notice to where the application is granted. In other words, it is a fast-track procedure. However, new subsections (6) to (9) bring in the warning and decision notice procedures in those cases where the authority gives a Part IV permission but imposes limitations or requirements on it.
We asked for this provision in another place and we are extremely pleased to see it on the face of the Bill. There is, however, one small point that we wish to raise with respect to it. The new subsection (6)(a) applies the warning notice procedures to the exercise by the authority of its powers under Clause 40(7)(a) and (b). Clause 40(7)(b) allows the authority to specify either a narrower or a wider description of regulated activity than was asked for. Where it is a narrower description, obviously the application has not been granted in full; therefore, the warning and decision notice procedures should be gone through. However, a wider description means that the applicant will be able to do more regulated activities than he applied for, and this can only be to his benefit.
We think that the specifying of a wider description should be treated in the same way as the giving of permission for a regulated activity which was not included among those asked for in the application. Accordingly, we think that in the new subsection (6)(a), after "or (b)" there should be inserted the expression, "in relation to specifying a narrow description". If that is done, the same amendment needs to be made in subsection (9)(a).
Perhaps I may make one small point on the new subsection (4). The noble Lord and his team may have picked it up already. I think it is clear that in the first line the word "the" should be inserted after the expression "or for".
So far as concerns Clause 51 and the two new clauses after it, Clause 51 is deleted, as I understand it, because it is covered by the amended Clause 50. There is then a new clause which sets out the procedures for the exercise by the authority of its own initiative power to vary Part IV permissions.

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That is fine as far as it goes, but I humbly suggest two improvements. First, the authorised person whose Part IV permission is being varied should be allowed to see the evidence causing the authority to vary it. Otherwise, the whole situation is somewhat Kafkaesque in that, although the authorised person will know why the authority wants the variation, he will not know the evidence that has caused the authority to want it—so that he can, if he wishes, rebut it. Given that the authority is trying hard to be transparent, that evidence should be given to him. Therefore, although there is no warning or decision notice, it should be covered by Clause 389 concerning access to authority material. Clause 387, which lists the sections to which Clause 389 applies, should be amended appropriately.
Secondly, the period given to the authorised person to make representation should be reasonable. Therefore, I suggest that in the second line of the new subsection (5)(c), after "within such", the word "reasonable" should be inserted.
The second new clause, inserted after Clause 51, which applies to cancellation of permissions, is welcome, as it brings in all the normal disciplinary-type protections including access to authority evidence. The deletion of Clauses 52 and 53 is welcome. They have been replaced by the two new clauses after Clause 51.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for his observations and, indeed, for his general welcome, which I believe I can infer from his specific objections. If those are the only objections he has, we are doing quite well.
On the issue of giving a Part IV permission to exercise power under Clause 40(7)(a) or (b), the noble Lord, Lord Kingsland, is right. Clause 40(7)(b) does provide for a narrower or wider description of regulated activity. I shall look into the question he raises as to whether "wider" would be inappropriate and I shall write to him on the point. If it seems necessary, I shall make such amendments as may be required.
As to Amendment No. 109, the noble Lord asks that under subsection (5) the notice should give evidence of the reasons for the variation. Subsection (5)(a) already provides that the notice should give details of the variation. Subsection (5)(b) provides that the notice should,
"state the Authority's reasons for the variation and for its determination as to when the variation takes effect".
"Reasons for the variation" does not apply only to when the variation takes effect but the variation as a whole. I would have thought that it was rather difficult to provide detailed reasons without giving evidence. But if there is anything more in "evidence" than I believe is already provided for I shall look into the matter. My immediate judgment is that there is not.
The noble Lord also referred to subsection (5)(c) in Amendment No. 109. He suggested that the representation should be made to the authority within
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such reasonable period as might be specified. We had a debate in Committee on "reasonable". If anything, there are perhaps far too many "reasonables" in the Bill. I believe that here "reasonable" can be inferred. The noble Lord suggested that the variation of permission should be subject to Clause 389, which is concerned with access to FSA material. We have made generous provision as to access to material which goes beyond anything that exists currently. It would be inappropriate to extend this to supervisory decisions and, therefore, make supervision far too bureaucratic and litigious. With those responses to the specific points, to which I shall add if there is anything further that I can usefully say, I beg to move that Amendments Nos. 108 to 110 be agreed to.
On Question, amendments agreed to.
Clause 52 [Procedure on exercise of the Authority's own-initiative power]:
[Amendment No. 110A not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 111 and 112:
Leave out Clause 52.
Leave out Clause 53.
On Question, amendments agreed to.
Clause 55 [Prohibition orders]:
Lord Kingslandmoved Amendment No. 112A:
Page 25, line 11, at end insert—
("(4A) In proceedings for an offence under subsection (4) it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence. ").
The noble Lord said: My Lords, in moving Amendment No. 112A I should like to speak also to Amendments Nos. 112B, 114A and 115D. Clause 55 permits the authority to prohibit an individual from acting in a designated capacity in an authorised firm. Subsection (4) provides that an individual who acts in breach of a prohibition order is guilty of an offence. The purpose of the first amendment in the group is simply to provide the individual with a defence similar to that available in an action for breach of the general prohibition or the restrictions on financial promotion.
Subsection (5) provides that an authorised person must take reasonable care to ensure that none of his functions is performed by a prohibited person. The requirement to take reasonable care was inserted at Committee stage; prior to that, it was an absolute obligation. The amendment provides that where an authorised person contracts with another authorised person, who himself engages a prohibited person, the first authorised person will not be liable in stated circumstances.
I am assured that, in the securities and unit trust industries, it is quite common for an authorised firm to delegate fund management or settlement to another authorised firm. I understand that there is no practicable way in which the first firm can ensure that its authorised contractor observes the requirement.

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Therefore, it is reasonable for the first person to be able to rely on the second, who is also an authorised person, promising to perform the task.
Clause 58(1) requires an authorised person to take reasonable care to ensure that, when necessary, all of his staff are individually approved. Subsection (2) goes further and requires authorised firms to take reasonable care to ensure that all of their contractors' staff are duly authorised when required. Again, "take reasonable care" was inserted in Committee.
This is still a particularly onerous requirement. Firms would find it most helpful to receive some guidance on what is meant by "reasonable care"—hence the amendment. The amendment provides that, where the contracting firm is itself authorised, the duty is discharged where it undertakes in the out-sourcing contract to ensure that those of its staff who require individual approval are indeed approved.
Clause 65 empowers the authority to take disciplinary action against an individual who fails to comply with a statement of principle, or is knowingly concerned in a breach of rules by his employer or similar person. As mentioned already in relation to Clause 60, it would be easy for an individual to breach a principle and thus be guilty of misconduct. The purpose of this amendment is to provide the approved person with a defence that he took all reasonable precautions and exercised due diligence. This is the same defence as is available in relation to a breach of the general prohibition or a breach of the restrictions on financial promotion. I beg to move.
6.15 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Kingsland, for speaking to this group of amendments. I say immediately that some of the amendments cause us problems for one reason or another. However, this debate gives me an opportunity to explain what is required by the relevant provisions of Clauses 55, 58 and 65 which I hope noble Lords will find helpful. I said that some of the amendments 'were problematic. The noble Lord will be pleased to know that the first one is not one of them. That amendment would give an individual a statutory defence if he performed functions for an authorised or exempt person in contravention of a prohibition order. The wording of the amendment mirrors that in use in certain other statutory defences under the Bill, for example in Clause 21(3). It is important that a person should not be convicted of an offence where he has done what he can to avoid committing it. This amendment has that effect, and its drafting is without fault. I am pleased to accept it.
I turn to Amendments Nos. 112B and 114A which set out certain circumstances in which an authorised person is to be deemed to have taken reasonable care to ensure that persons subject to a prohibition order under Clause 55 do not perform functions on his behalf. I am not attracted to including such express provisions on the face of the Bill. What amounts to "reasonable care" will depend on all the circumstances
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of the case. The test, which is well established and understood, is simple enough and there is no need to define "reasonable care". I believe that it is fair enough to ask authorised persons to exercise such care to ensure that persons who are subject to a prohibition order are not employed by them. In any event, it is not clear to me that the cases set out in the amendments would always amount to the required standard; they might or might not. It would depend on the facts of the case. The extended definitions which would be imported by Amendments Nos. 112B and 114A might well fall short of what constituted reasonable care in any particular case. I do not think that it is right to provide that authorised persons should be able always to delegate their responsibilities in those particular cases in the way that the amendments allow.
Turning to Amendment No. 115D in Clause 65, this deals with breaches of the legislative provisions made by the authority under this part of the Bill. For convenience, I shall refer generally just to rules, but what I say here applies to other legislative instruments made by the FSA, including statements of principle under Clause 63(1). The same logic does not apply to the breach of a rule as it does to the commission of an offence. To be guilty of an offence carries a certain stigma. I do not for one moment condone breaches of the rules, but the reality is that they will occur more frequently and will not necessarily give grounds for criticism or discipline.
One of the underlying purposes of this Bill is to secure that consumers are protected, and that is what the disciplinary provisions under the Bill are designed to achieve. Any disciplining of authorised or approved persons is simply a means of securing that that end is achieved. For example, an authorised person may breach regulatory requirements that apply to him through no fault of his own. An approved person under this part may have been involved in the breach. In certain circumstances, the FSA's response may well be not to take disciplinary action against anyone, but instead it may decide to use its powers to help to rectify the problem. In our view, in a rule breach of that kind, it is immaterial whether the person took steps to avoid committing the rule breach; it happened and remedial action is required.
On the other hand, there will be times when the nature of the breach would suggest some kind of misconduct. I do not believe that it is particularly helpful or meaningful to say that in certain circumstances the breach did not happen, even in cases where the actions of the transgressor were perfectly well-meaning. The important issue in such cases is what would be the consequences of the breach.
The other possible consequence of a rule breach would be disciplinary action. In response to the recommendation of the Joint Committee, the Government have made changes to the Bill to offer protection to persons who have breached FSA requirements, and those amendments are relevant here. The relevant provisions are in Clause 69(2) referring to approved persons; Clause 91(2), referring to the official listing; Clause 120(2), referring to market abuse; and Clause 206(2), on discipline of

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authorised firms. Those provisions require the authority, when issuing a statement about its policy for imposing financial penalties, to take into account a number of relevant factors. In the case of Clause 69(2), the relevant factors are the seriousness of the breach, the extent to which the misconduct was deliberate or—dare I say it?—reckless, and whether the person was an individual.
In our view, there is a presumption that where a person had taken reasonable steps to avoid breaching a requirement, it would often be difficult for the FSA to justify taking disciplinary action. Clearly that would depend on the circumstances of the case. Moreover, even if the FSA proposed to take action, it would find it very difficult to impose a substantial penalty if the rule breach were quite clearly not deliberate and the person's behaviour had not been reckless. That would be all the more true if the person concerned had followed the guidance given by the authority, or indeed if he could show that he had taken legal or other professional advice to ensure that he would stay on the right side of the line.
On that basis, while I see what Amendments Nos. 112B, 114A and 115D are trying to achieve, I think that they could confuse a situation which at the moment is reasonably clear, and which certainly has the kind of effect I believe that the noble Lord seeks to achieve by his amendments.
There is another important point here. If we were to accept Amendments Nos. 112B, 114A and 115D, without doing so in every other relevant instance in the Bill, we would cast doubt over whether the effect of the other equivalent provisions would continue to be as I have just described—and which in our view deliver precisely the policy outcome that the noble Lord, Lord Kingsland, seeks to achieve. In the light of what I have said, I hope that he will appreciate the subtle distinction I have explained between the different cases. I hope that my acceptance of Amendment No. 112A will reassure the noble Lord that we have thought carefully about the effect of the relevant provisions of the Bill.
Lord Kingsland: My Lords, my initial elation at the news that the Government accept Amendment No. 112A has somewhat subsided. However, I shall read carefully in Hansard what the Minister said and reflect on whether it will be appropriate to return to Amendments Nos. 112B, 114A and 115D at Third Reading.
I am particularly sad that the Minister felt unable to move in my direction on Amendment No. 112B which reflects an everyday situation. I believe that the terms of the Bill will impinge harshly on innocent parties. Perhaps some comfort may be gleaned from some of the Minister's remarks. I am grateful for the noble Lord's full response. I commend the amendment.
On Question, amendment agreed to.
[Amendment No. 112B not moved.]
Clause 57 [Applications relating to prohibitions: procedure and right to refer to Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 113:
Page 26, line 1, leave out ("refuses") and insert ("decides to refuse").
The noble Lord said: My Lords, in moving the amendment, I speak also to Amendment Nos. 114, 115, 118, 171 and 172. They are all drafting amendments. In each case they replace a reference to the FSA "refusing" with a reference to the FSA "deciding to refuse". It is a matter we discussed earlier today.
The point is to make it clear that the decision to refuse various types of application—an application for variation or revocation of a prohibition order; an application for approval under Part V; or an application for variation or revocation of a requirement imposed under Clause 316—is not the final determination of the matter. That does not occur until the period for referring the matter to the tribunal has expired without a reference, or if a reference is made, until the tribunal (and, where appropriate, the higher courts) have determined the matter. At that point, a final notice under Clause 385 will be issued. I beg to move.
Lord Kingsland: My Lords, as the Government have explained, the three amendments to Clauses 57 and 61 make it clear that the decision notice is only a decision to refuse an application to vary or revoke an order prohibiting someone from working in the financial services industry or to approve an individual to work in it. The actual refusal is dealt with by the final notice.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 114:
Page 26, line 3, leave out ("application is refused, the applicant") and insert ("Authority gives the applicant a decision notice, he").
On Question, amendment agreed to.
Clause 58 [Approval for particular arrangements]:
[Amendment No. 114A not moved.]
Clause 60 [Determination of applications]:
Lord Kingslandmoved Amendment No. 114B:
Page 27, line 34, leave out ("three months") and insert ("one month").
The noble Lord said: My Lords, under Clause 60(3), the authority is allowed three months to determine applications for individual authorisation. As the Minister will be well aware, the financial services industry believes that that period is unreasonably long; and we share that view. Firms need to fill vacancies much more quickly. They are frequently criticised by the authority for being under-resourced. It is not practicable for a firm to make a job offer, in particular to an overseas applicant, and then to have to wait up

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to three months for the authority's agreement. A period of one month should be long enough for the authority's purposes. I beg to move.
Lord Stewartby: My Lords, I support my noble friend's amendment. Clause 59(2) makes clear that discussion can take place before the application is made because the application has to,
"be made in such manner as the Authority may direct".
The authority will have had the opportunity to ask for the application to be accompanied by the information that it needs. Before the clock starts ticking, under Clause 59 there will have been an opportunity for such discussion.
However, even if there had not been such discussion, under Clause 60(4), the clock stops running on the day that the authority asks for more information and starts again only when the information is received by the authority. If one limits to one month the period during which the application shall be determined, if there is any doubt on the part of the authority and it needs more information to check that out, in practice the period can be a good deal longer.
Given the pace at which matters move in these Financial markets, and the need for firms to have the right people in place as soon as possible, a period of three months seems very relaxed. I hope that the Minister can look favourably on the amendment.
6.30 p.m.
Lord McIntosh of Haringey: My Lords, the amendment would reduce the amount of time the FSA has to consider applications for approval under Part V. I certainly do not disagree with what the noble Lords, Lord Kingsland and Lord Stewartby, said about the importance of avoiding unnecessary delay. It is important that applications are turned around quickly and this is something that the FSA recognises. It has said that it intends to publish service standards, setting out how long it expects the application process to take, and has undertaken to publish its performance against those standards. It has already indicated that routine cases should be processed well within the one month deadline suggested by these amendments—somewhere between a few days and a couple of weeks. Therefore, in practice, the reduction in the time proposed in the amendments would not make any difference to most candidates.
However, there are bound to be a minority of more difficult cases. We believe that Clause 60 gives the FSA an appropriate amount of time to consider the detail of those difficult or complex applications and to weigh the relevant information, without allowing for unnecessary or damaging delays.
It is worth bearing in mind that the FSA is required to satisfy itself that a candidate is a "fit and proper" person to carry out the functions to which the application relates before it can grant the application. If it is unable to do so, it must reject the application. Against this background, a one-month deadline could
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be unworkable, particularly where a candidate is the subject of an investigation or where the FSA needs to obtain information from an overseas regulator.
These processes take time. It is unlikely that they could be completed within a month. This would mean that the FSA would be unable to satisfy itself that such candidates were "fit and proper" and would therefore have to reject their applications. That would be in no one's interests, least of all those of the individual or firm in question.
The important point is that at least part of the time period available to the FSA is not within its power. It is only within the power of those of whom it makes inquiries. I do not believe that the amendment would help. The three month period of consideration has to apply to all applications. If it is reduced, that will do nothing for most candidates who can expect a decision within that time. However, it could hamper the delivery of an effective and thorough approvals process, the purpose of which is to ensure that only those people who meet high standards are able to perform these functions.
Lord Kingsland: My Lords, the Minister said that most applications would be processed quickly, in a matter of a couple of weeks. Would he consider a variation on the amendment which in principle stated that one month was the right period, but subject to circumstances in which the authority had reasonable cause to believe that a longer time was required?
Lord McIntosh of Haringey: My Lords, with the leave of the House, we are always open to suggestions and we always consider them.
Lord Kingsland: My Lords, I asked whether the noble Lord would be prepared to give particular consideration to such a request with a view to coming back at Third Reading with his own amendment.
Lord McIntosh of Haringey: My Lords, I would rather first see the whites of the amendment's eyes. I would be prepared to consider such an amendment.
Lord Kingsland: My Lords, in those circumstances, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 61 [Applications for approval: procedure and right to refer to Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 115:
Page 28, line 14, leave out ("refuses") and insert ("decides to refuse").
On Question, amendment agreed to.
Clause 63 [conduct: statements and codes]:
Lord Fraser of Carmylliemoved Amendment No. 115YA:
Page 28, line 41, leave out ("may") and insert ("shall").
The noble and learned Lord said: My Lords, as wit h previous and future amendments, I had intended to he as succinct as possible. However, after that

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intemperate attack by the noble Lord, Lord McIntosh, on my noble friends Lord Peyton and Lord Jenkin, I see no reason why I should be succinct.
If the noble Lord would care to reflect on matters more carefully than he did in the course of his attack, he would realise that this is not a club. This is a Parliament and there is a duty to ensure that whatever legislation comes before this revising Chamber is dealt with as carefully as possible. I make no apology for tabling my amendments yesterday. If the noble Lord were not so London-centric in all his attitudes, he would have appreciated that we last considered the Bill on a Thursday evening. If it has not yet dawned on him, let me indicate to him now that those of us who come from other parts of the United Kingdom tend to regard it as not a bad idea to return to those parts, particularly at the weekend.
Furthermore, if the noble Lord had looked in any way at a number of my amendments, it would have been obvious to him that their intention was to take up problems which seemed to me to emerge from the answers he gave on Thursday. He was all over the place on whether the offence of market abuse was civil, criminal, partly civil, partly criminal, none of those or some new hybrid creature. If he looks at those amendments, he will see that a number of my amendments deal with what might be an appropriate burden of proof.
If the noble Lord wants to indicate that at no time did he ever say to anyone that the first time he considered amendments was when he was reading them at the Dispatch Box, I shall unreservedly withdraw that comment. However, what troubled me was that the noble Lord launched out on an approach which indicated that such was his approach to the Bill that he would have been considering all the amendments over the weekend and would not have been considering them any later.
I hope that the noble Lord understands that what he has said has caused a real sense of outrage on this side of the House. If the noble Lord's Chief Whip has any arrangement through the usual channels, he had better be disabused about that. And, after what the noble Lord said, if he and his luckless officials are under any apprehension that they might be ready for an early bath tonight, they should be disabused of that idea. It seems to me that he has done no one any favours by adopting such an attitude. He has shown so swiftly such an unacceptable display of temper.
The amendment seeks to remove "may" and insert "shall". The provision relates to the clause which imposes or allows for the authority to issue statements of principle with respect to the conduct expected of approved persons. I should have thought that that was a highly desirable activity for the authority to carry out.
The amendment suggests that rather than leaving the matter to the discretion of the authority, it is something that it should do. If the Minister indicates that the authority will issue such a statement of principle, I suppose that in large measure I should be
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satisfied. I just want to make it clear beyond any doubt that that is something in which we believe the FSA should engage. I beg to move.
Lord Boardman: My Lords, I support my noble and learned friend's amendment. The clause is important because it relates to the conduct of the authority. Surely, a Bill which provides so many regulations about what everyone does should require that, as regards the conduct of the authority, the principles which it intends to follow in the process of its monitoring should be under "shall". It is not a question that the authority "may" want to do so, but that it "shall" do so. I strongly support my noble and learned friend and hope that the Minister will accept his amendment.
Lord Peyton of Yeovil: My Lords, I support my noble and learned friend. In doing so, perhaps I may express my gratitude to him for his support and friendly sympathy. Although, naturally, I am bruised by the savage attack which he thought the Minister directed at me, I have reasonable confidence that I shall in due course recover.
I entirely agree with my noble friend Lord Boardman. I always dislike giving authorities discretions. I believe that their duty should be clear. I do not like the idea that they should be free to decide whether or not something suits them, depending on which officials are handling the matter, and so on. I would much rather see something definite in the Bill. I hope that the noble Lord will go along with that and see fit to accept the amendment.
Lord Kingsland: My Lords, I wish to speak to Amendment No. 115A to Clause 63 and to Amendment No. 115B to Clause 64. As your Lordships are well aware, Clause 63 enables the authority to issue statements of principle on the conduct of approved persons. Subsection (2) requires the authority to issue a code of practice to help to determine whether a person's conduct complies with a statement of principle.
That is a particularly important power because subsection (7) provides that a code of practice can be relied upon as tending to establish whether the individual's conduct complies with a statement of principle. As presently drafted, subsection (3) enables the authority's code of practice to specify compliant conduct or non-compliant conduct or factors to be taken into account in determining compliance.
As I understand it, there is no requirement on the authority to issue all three categories of guidance. In consequence, the current draft, which is contained in consultation paper No. 26, contains only examples of non-compliant conduct. Moreover, the examples refer mainly to situations which people would automatically recognise as being non-compliant. As the Minister is well aware, the principles themselves are very broadly drafted. An authorised individual who breaches a rule will necessarily breach principle 2, while a manager who fails to run his section properly will probably be in breach of principles 5 to 7.

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Therefore, because of their breadth, it is important that the code sets out what the authority considers would be compliant behaviour in a number of real situations likely to be encountered in practice. At present, it does not do so. The current draft of the code is of limited or no assistance.
Clause 64 requires the authority to consult before it issues a statement or code with regard to the conduct of approved persons. Subsection (7) disapplies the consultation procedure if the authority considers that the delay would be prejudicial to the interests of consumers. However, that is no reason why the authority should not consult at the same time as the urgent statement or code is issued, and then proceed to make amendments if the representations are persuasive. Indeed, one could well argue that where material is issued urgently, and perhaps without full consideration of the consequences, there is a greater rather than a lesser need to consult and review the action that must be taken.
6.45 p.m.
Lord McIntosh of Haringey: My Lords, in response to the accusations of an intemperate attack, I would say only, "Cet animal est méchant; quand on attaque, il se défend", and I do not make any distinction between myself and the Government in this matter.
So far as concerns the specific amendments of the noble and learned Lord, Lord Fraser, I am grateful to him for setting out with some clarity what he intended because it was not entirely clear to us when we read them this morning. In our view, Amendment No. 1 15YA would not have any effect. He asks whether under Clause 63(1) the FSA can issue no statement of principle. At the minimum, the Bill provides that an approved person is guilty of misconduct if knowingly concerned in a breach of rules by the firm. Whether or not further statements of principle are required is properly a matter for the authority. We know that it intends to make such statements.
I believe that in this matter we are returning to the old issue of "may" and "shall". No doubt the noble and learned Lord and I have debated that on many occasions. Since the noble Lord, Lord Peyton, reminded me of my time in opposition, he will recall that on many occasions I used to use "shall" instead of "may". I was always told by the government that lawyers say that "may" means "shall". That always sounded quite implausible to me. However, that is what the Conservative government used to say to the Labour opposition, and I shall rest my case with that. If I can add to it, I shall of course write to the noble and learned Lord, Lord Fraser.
Amendment No. 115ZA addresses the question of the fee that may be charged when the authority issues statements and codes under this section. The provision, as drafted, is permissive. Within limits, it enables the authority to charge for a copy of the statement and code. That is provided because the authority will issue copies of the code to persons other than those to whom its fee-raising powers under
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Schedule 1 will apply. However, where the authority is able to distribute copies and absorb the costs, we see no reason to oblige it to charge people.
I turn now to the amendments moved by the noble Lord, Lord Kingsland. Amendment No. 115A raises a technical drafting point—again, in relation to "may" and "shall". However, in our view, the Bill is correct as it stands. Clause 63(1) confers power on the FSA to issue statements of principle with respect to the conduct expected of approved persons. Clause 63(2) then provides that if the authority issues a statement of principle, it must also issue a code of practice for the purpose of helping to determine whether or not a person's conduct complies with the statement of principle. Therefore, the authority cannot issue a statement of principle unless it also issues a code of practice which supplements that statement of principle.
Clause 63(3) sets out certain matters which the authority may include in a code. Its purpose is to make it clear that a code may make provision in those matters. The amendment would oblige the authority to include the matters mentioned in Clause 63(3) in every code of practice that it issues. However, that cannot be right. The contents must depend on the nature of the statement of principle which it supplements. The sole purpose of a code is to help a person to determine what he must do in order to comply with a particular principle. Although in many cases factors such as those set out in Clause 63(3) will be relevant, it is not possible to say with certainty that they will be relevant in all cases. Therefore, in a case in which those factors are not relevant, the effect of the amendment would be to require the authority to engage in some kind of work of fiction. I do not believe that that can be right.
Amendment No. 115B questions the Bill's arrangements for consultation on the FSA's proposals to exercise its delegated legislative powers under the Bill. I must remind the House that the Government brought forward a significant number of amendments to the Bill's consultation procedures at Report stage in another place. Those amendments sought to reinforce the procedures in the light of concerns expressed by the Opposition in Committee. The amendments also sought as far as possible to introduce consistency between the procedures for exercising the different delegated legislative powers under the Bill.
As currently drafted, when the authority proposes to make rules or issue statements and codes, including statements and codes under Clause 64, the Bill requires it to publish a consultation draft of the proposed rule, statement or code; to accompany the draft with a cost-benefit analysis; to provide a period for representations to be made; and to produce a feedback statement on the consultation. However, in each case, we have made provision which removes the need for the authority to follow those procedures where the need to make the rules, statements or codes is urgent. I am not sure that Amendment No. 115B, as drafted, would work because, if an issue had to be addressed so urgently, I would not expect the authority to be able to

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produce a meaningful cost-benefit analysis in the time available without there being an undue risk to consumers or the markets.
However, perhaps I can offer some reassurance to the noble Lord, Lord Kingsland, that will enable him to agree that the amendment is not necessary. The Bill allows the authority not to follow the usual procedures where the circumstances require the authority to act urgently. We do not believe that the authority would be able to avoid the procedures frequently. The noble Lord, Lord Kingsland, may have noticed that the period for consultation in Clause 64(2)(b) is expressed in a way that would give the authority flexibility to carry out a short consultation if that were practicable. I am sure that if it were, the FSA would do so. The point the amendment seeks to address will be something that arises only very rarely in relation to any kind of delegated legislative provision, and quite exceptionally in the case of a statement or code under Clause 63.
On these rare occasions where a change has to be made urgently it may be somewhat academic as to whether or not a provision to the effect of the amendment is introduced. The amended rule, statement or code will be in the public domain and those affected by it will be free to express their concerns and make representations, whether or not it is in the Bill. The practitioner and consumer panels will, of course, be able to make representations at any time.
Last Thursday I said that the Government would consider further the amendments tabled by the Opposition on the role of the panels and bring forward amendments to improve the feedback arrangements. I am sure that they would help in this case.
When the Authority makes rules of any kind, whether under the routine or the urgent procedure, it will be bound by the objectives and principles under Clause 2 and the Director-General of Fair Trading will have responsibility for ensuring that the requirements do not have an unduly adverse effect on competition.
There are plenty of safeguards in the Bill as it stands. I believe that imposing another requirement for consultation, cost-benefit analysis and feedback statements after the event, in cases where the FSA has had to act urgently in response to some unexpected circumstance, would be excessive.
Lord Fraser of Carmyllie: My Lords, I express some disappointment that the noble Lord did not take the opportunity to offer any sort of apology, but I will leave that for the time being.
I am also very much aware of the circumstances in which the courts have construed "may" as "shall" and other circumstances where they have construed "shall" as "may". My conclusion, however, is that this is a circumstance where the courts would construe "may" as "may".
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The noble Lord has indicated that it is the intention of the Financial Services Authority to issue just such a code. I would regard that as very desirable and, for the present purposes, sufficient. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 115ZA and 115A not moved.]
Clause 64 [Statements and codes: procedure]:
[Amendment No. 115B not moved.]
Clause 65 [Disciplinary Powers]:
Lord Fraser of Carmylliemoved Amendment No. 115BA:
Page 30, line 45, leave out ("it appears to the Authority") and insert ("the Authority is satisfied beyond reasonable doubt").
The noble Lord said: My Lords, I understand that this amendment is coupled with Amendments Nos. 115CA and 133CA. Two of them relate to the issue of standard of proof and one relates to the issue of publication of findings in a national newspaper. They also tie in with other amendments that I shall wish to speak to later this evening.
They are all related to the issue which has been of some concern to me: that of market abuse and what exactly the Financial Services Authority is doing if it decides to pursue the matter of market abuse, impose penalties or make findings of misconduct.
When I was on the Joint Committee chaired by the noble Lord, Lord Burns—barring the clear expression of view given to us by the noble and learned Lord, Lord Hobhouse, that everything we were looking at was effectively criminal—I thought that I had a fairly clear understanding of what was contained within market abuse. In summary, it was this: that at one end of a continuum it was clearly civil in nature and, at the other end, it was almost undoubtedly criminal.
It would not be difficult to envisage circumstances when the criminal end of it would apply, where there had been conduct which might otherwise have been prosecuted as insider training but for the reluctance of prosecuting authorities to take that course because of the history of failure experienced in recent years.
What has always struck me as a difficulty, however—and no one has yet answered it for me—is whether at the point when one looks at behaviour that might be regarded as market abuse, before setting out to prosecute it, one can determine that it is civil or indeed criminal in character. In some circumstances it might appear to some to be a quarrel of an academic nature but, given the presence in our law—certainly north of the Border and shortly to be incorporated into English law—of the human rights legislation, it seems to me that we should be absolutely clear on what is the character of market abuse. We should certainly not attach to it any procedure or other characteristics that would allow any finding of market abuse or any conviction to be subjected to challenge in the courts thereafter.
One way of ensuring that that happened to the least possible degree would be to indicate that the appropriate test to be applied in those cases—whether civil or criminal—is that the burden of proof to be applied is that of beyond reasonable doubt.

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If, looking at it in retrospect, the conclusion were that it was essentially criminal in character, that finding would be less likely to be challenged if the test applied throughout had been that of beyond reasonable doubt, In any event, it seems to me that in disciplinary proceedings of this sort such a test is appropriate.
My purpose in putting down these amendments is to explore further whether there is an appreciation of the concerns that I and others have, and whether the Government regard the approach that I have suggested as being at least part of a technique which could be applied to ensure that the risk of challenge was reduced as much as possible.
My second amendment, Amendment No. 115BA, relates to the publication of statements of misconduct in a national newspaper. In a way, it is of secondary importance. I would envisage in such circumstances, if there were findings of misconduct, provision would be made for publication in one form or another. Whether a national newspaper remains the most appropriate way in which to do that nowadays, I do not know.
I would wish for some reassurance, however, that, where there were such proceedings and where penalties were imposed, this was not done behind closed doors but in accord with principles of openness and transparency, which I understand the FSA, and those who support the broad new regulatory regime to be introduced, would regard as being important. I beg to move.
Lord Boardman: My Lords, I support this amendment. It is right that the authority, in reaching a decision, should do so beyond reasonable doubt. Beyond reasonable doubt is a judgment which is applied to so many cases, from murder downwards. It should be clearly on the statute in this case and those words should be inserted. It does nothing to detract from the Government's approach to this Bill.
With regard to the second amendment, I think that it would he helpful to say "publish in a national newspaper". The present wording leaves the matter open. One can publish in all sorts of forms, even by putting leaflets through everyone's letterbox. This amendment removes any doubt.
Lord Kingsland: My Lords, I wish to speak briefly to Amendments Nos. 115C and 122A. Amendment No. 1150 is intended to seek clarification that to be knowingly concerned in a contravention under Clause 65(2)(b) means that the person knows that the relevant authorised person is contravening a requirement imposed on the authorised person by or under the Act.
The same point applies to Amendment No. 122A, which relates to similar wording in Clause 89.
7 p.m.
Lord McIntosh of Haringey: My Lords, I speak first to Amendments Nos. 1 15BA and 115CA, if that order is convenient to the House.
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Amendments Nos. 115BA and 133CA would both have the effect of requiring the FSA to prove disciplinary matters under Clause 65, or market abuse under Clause 119, to the criminal standard of proof of "beyond all reasonable doubt". I shall not enter into the wider issues (to which the noble and learned Lord, Lord Fraser, referred) of the extent to which these matters are criminal or civil. The noble Lord, Lord Boardman, referred to a body reaching a decision. But that is not the case here. In this case, the FSA is exercising a statutory discretion rather than reaching a decision. It is not so appropriate to be talking of standards of proof when a body is exercising a statutory discretion. The real point is that it should exercise its powers rationally.
I agree entirely that the FSA should be required to be satisfied of the facts before taking the action, but the present clauses achieve that. As the Bill stands, the FSA must reach a view as to whether it believes that a person has committed a disciplinary infraction or engaged in market abuse. It will therefore impose a penalty. It must issue a warning notice allowing that person to make representations and then, if it decides to proceed, it must issue a decision notice which will trigger the relevant person's right to take the matter to the independent tribunal.
The tribunal provides not only a safeguard but a strong incentive for the FSA to take the right decision at the start. If the case is referred to the tribunal, it will be subject to the appropriate civil standard of proof. As the former Economic Secretary to the Treasury, Patricia Hewitt, made clear to the Joint Committee—she was supported by learned witnesses; for example, Sir Sydney Kentridge—that is a sliding scale which takes account of the seriousness of the behaviour or failing alleged by the FSA. The more serious the behaviour, the higher the standard which will be applied. I believe that the noble and learned Lord, Lord Fraser, as a member of the Joint Committee, will well recall that debate and will recognise that that was the nature of the evidence given to the committee and which the committee acknowledged.
We are dealing with important provisions and it is right that they should be properly analysed and debated. But as it stands, the Bill delivers a balanced and appropriate package of measures with sufficient checks and balances. I hope that that will persuade the noble and learned Lord, Lord Fraser, not to press his amendments.
I deal now with the amendments which are concerned with Clauses 65 and 89, which give the FSA certain disciplinary powers in the event that rules or requirements are breached, and those concerned with Clause 119, which gives the FSA the power to impose penalties in cases of market abuse.
I deal with Amendments Nos. 115C and 122A in the name of the noble Lord, Lord Kingsland. Clauses 65 and 89 both refer to people—approved persons or directors respectively—being knowingly concerned in breaches by the firm of the relevant rules or requirements. Those amendments seek to define the concept of someone being "knowingly concerned" but

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we do not believe that any definition is necessary. The definition in these amendments might tighten the test in a way which is inappropriate.
It would, of course, be wrong to seek to impose penalties or to use other disciplinary powers against individuals where the person concerned had no knowledge of the action leading to the breach of rule or requirement. That would be draconian. It would also be a pointless sanction since such a case could not act as a deterrent because the person upon whom it was imposed would not have known anything about the action leading to the breach and so would hardly have been in a position to avoid it. That is why the Bill requires the individual to be "knowingly concerned" in the contravention before any action can be taken.
There is existing jurisprudence on the "knowingly concerned" test. The test requires the individual to be aware of the facts which give rise to the breach of the rule in question by the firm and aware too of his own involvement in that factual situation. But it does not have to be shown that the individual was aware of the legal rules which were contravened because ignorance of the law is rightly no defence.
The effect of the amendments would appear to be to require that the person involved not only knew about the action in question but must also have known that it involved a breach of a requirement or rule. If we adopted that approach, it could mean that we ended up in a position where people could avoid sanctions for breaches of rules or requirements simply by making sure that they kept themselves in the dark about what those rules or requirements are.
It is important to remember that we are talking about approved persons or directors—people holding responsible and important positions within the financial services industry who should make it their business to know the rules relevant to their sphere of activity and to ensure that systems are in place to avoid breaches. To give such people an incentive to remain ignorant of the rules does not seem to be either sensible or desirable.
I do not believe that it is the intention, but it seems to us also that the amendments would make it less clear than it currently is that the individual must also be shown to have been aware of his own involvement in the particular factual situation. The amendments might risk making individuals liable whenever they knew that something was being done wrongly by the firm, even when they were not aware that they were themselves involved in that wrongdoing. That might place too high a burden on individuals.
I assure the House that the concept of someone being "knowingly concerned" is not new. It is contained in the Financial Services Act 1986. It has been used by the FSA in proceedings that have been brought in the past. There is existing jurisprudence on
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what it means and it would be most undesirable to cast doubt on that. I believe that I have dealt with all the amendments.
Lord Boardman: My Lords, the Minister has not dealt with Amendment No. 115CA.
Lord McIntosh of Haringey: My Lords, the noble Lord must be right. Clause 65 is designed to provide for a proportionate approach towards the exercise of disciplinary powers under the approved persons regime. That approach would be somewhat undermined by Amendment No. 115CA, tabled by the noble and learned Lord, Lord Fraser of Carmyllie.
Where the FSA decides to take action in response to the misconduct of an approved person, it may either impose an appropriate penalty or, alternatively, publish a statement of his misconduct. Those disciplinary powers supplement the power to withdraw an approval.
They allow the FSA to make a measured response to instances where a person's behaviour did not meet expected standards but was not such as to justify withdrawing altogether the person's approval. I think that that is the response which the noble Lord, Lord Boardman, was seeking.
Lord Boardman: My Lords, as I understood the amendment, it was about publication in a national newspaper. It sought to clarify whether the information should be simply stuck up on a notice board or published in a national newspaper.
Lord McIntosh of Haringey: My Lords, the key to that is that the disciplinary powers must be used in an appropriate and measured way. Clearly, it may be right, on occasion, to publish in a national newspaper; but on other occasions, it would be disproportionate. Nothing would be gained by restricting the discretion of the FSA along the lines proposed in Amendment No. 115CA as to the nature of the action that it may take under Clause 65(3)(b). It may be wrong to arm it with a sledgehammer when perhaps a nutcracker would be more appropriate.
Lord Fraser of Carmyllie: My Lords, the noble Lord cited what the Minister said in evidence before the Joint Committee. He accurately recorded what her evidence was. But if he goes through the whole of the evidence, I should be surprised if he can discern from all that evidence one clear, unequivocal line of opinion given to the Joint Committee. Indeed, some were really quite troubled that it should have anything of a civil character and thought that it really was, from the word go, entirely criminal in nature.
However, that is not the point which really concerns me; it is the issue on which I have still not had an answer. I do not really blame the Minister. I am not trying to flatter or to criticise him; I am just making the point that I have not had an answer to that point. If it is a sliding scale—a continuum—at some point it changes from being civil in character to being criminal. No one has been able to identify for me—nor, I

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believe, before the Joint Committee—the point at which that change occurs. Once it occurs, particularly in the context of human rights legislation, one must ensure that, if they are criminal, there are attendant upon the proceedings a number of important safeguards set out in the convention and, more generally, in our criminal law. It seems that the best opinion that can be expressed is simply that after the event, it may be possible to look at the charge within the proceedings and then to say, "As we now look at it, it is clear that it was civil or criminal".
What troubles me about that approach, although I do not disagree with it, is that if we have a case on the borderline, there may be some risk of subsequent challenge to those proceedings. My sole purpose is to do what can be done to avoid the risk of such a challenge. I have no doubt that the harder and more rigorously we consider that matter, the better it will be. I have heard what the Minister has said and I shall certainly not be pressing the amendment at this stage.
In relation to my second amendment, he raised the provision of subsection (3) of Clause 65:
"If the Authority is entitled to take action … against a person, it may—
(a) impose a penalty on him of such amount as it considers appropriate;
or
(b) publish a statement of his misconduct"
I can well envisage circumstances where the authority comes to the view that there has been a degree of misconduct and that that misconduct should be brought to wider attention. What is not entirely clear to me is how disjunctive that "or" is in the middle of the subsection. It seems that it is not difficult to envisage circumstances where a person has been reprehensibly guilty of misconduct and the authority, with good cause, might wish to impose a significant penalty on him, in which circumstances it would seem appropriate that that should also be published.
Lord McIntosh of Haringey: My Lords, with the leave of the House, I wonder whether the noble and learned Lord would allow me to intervene. I was not as full as I might have been in response to him. The current practice of the FSA is to make those statements in press notices which are widely reported in the trade press and can feature also in the national press in serious and high profile cases. Of course, we cannot force the national press to support such statements. The protection is that all FSA press notices are posted on its website. They are therefore available to members of the public.
Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for that intervention. It is not quite the answer to my point. He is absolutely right about that: if anyone has an adverse press notice about him posted or given any degree of publicity, I am aware that such individuals are often far more concerned about that than about any level of penalty that might be imposed upon them because of the reputational damage it might do to them. I am not saying that that is a bad
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thing, but I am indicating that I understand. What I am not clear about is whether those are alternatives or whether one may impose a major penalty and publish.
Lord McIntosh of Haringey: My Lords, the answer to that is "yes". If the FSA imposes a penalty, it may also make a statement of the fact that it has done so.
Lord Fraser of Carmyllie: My Lords, it has taken us a little time to get there, but I am grateful that we have done so. That is what I wanted to ascertain. As I indicated, publication in a national newspaper does not seem to be at the core of matters. As time Minister has indicated, publication on a website, where perhaps the whole world may pick it up, may be far more damaging than anything else. As I indicated, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 115C to 115D not moved.]
7.15 p.m.
Clause 67 [Notice for payment]:
Lord McIntosh of Haringeymoved Amendment No. 116:
Leave out Clause 67.
The noble Lord said: My Lords, in moving the amendment, I shall speak also to Amendments Nos. 127, 138, 184, 189, 190 and 191. That group of amendments completes the changes begun in Committee to replace the separate provisions dealing with notices for payment with a single over-arching clause dealing with final notices. Clause 385 deals with final notices, and subsection (5) requires a final notice imposing a financial penalty to state the amount of the penalty and the manner and period in which the penalty is to be paid and to give details of the way in which the penalty will otherwise be recovered.
That removes the need for a number of existing clauses which provide for separate notices for payments setting out those details. Of course, I understand that the Opposition had some worries about that. They felt that there was some ambiguity as to whether payment notices could be issued before the relevant decision was intended to take effect; that is, not until after any relevant tribunal and other judicial procedures, or the period for making references or appeals had passed. To address that concern we introduced Clause 385 in Committee. During discussion, noble Lords opposite sought my assurance that the remaining provisions dealing with notices for payment and, in particular, Clause 124, would be omitted on Report.
We offered that assurance and the amendments fulfil it. Thus the government amendments would omit all the remaining clauses which separately provide for notices for payment—Clauses 67, 93 and 124 under Parts V, VI and VIII and Clause 381, which provides for payment notices for restitution orders under Clause 378. Amendment No. 189 is a consequential amendment resulting from the omission of Clause 381.

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It requires final notices issued in connection with the restitution power to set out the persons to whom, the manner in which and the period within which payments or distributions should be made.
Amendment No. 190 specifies that, as for other final notices requiring payments to be made, that period may not be fewer than 14 days. Amendment No. 191 makes provision for those payments or distributions to be enforceable through the courts. Removing the separate provision for notices for payment and dealing with the issue in Clause 385 makes it clear that payment cannot be required until the decision has come into effect, either because the period for reference to the tribunal has passed without a reference being made, or because a reference has been made and is being determined by the tribunal or by the higher courts. I hope that that meets in full the points made by the Opposition in Committee. I beg to move.
Lord Kingsland: My Lords, Clause 67 relates to notices for payment and is deleted in line with the new procedures, which leave payment notices to the final notice. That seems sensible. Clause 93 deals with notices for payment and therefore, again in accordance with the new procedures, needs to be deleted because payment notices are again now dealt with by the final notice. We are also pleased about that. Am I right in thinking that there is a new clause after Clause 93 relating to competition?
Lord McIntosh of Haringey: Yes, my Lords. It is not in this grouping.
Lord Kingsland: My Lords, I am extremely pleased to hear that, because I was about to speak to it. I am much obliged.
On Question, amendment agreed to.
Clause 68 [Publication]:
Lord McIntosh of Haringeymoved Amendment No. 117:
Page 32, line 13, leave out subsection (2).
The noble Lord said: My Lords, in moving this amendment, I should like also to speak to Amendments Nos. 192 to 194. They are concerned with the publication of information concerning supervisory actions. It further underlines the basic presumption in favour of openness where that is consistent with fairness and the protection of consumers. On reflection, it occurs to me that perhaps we should have grouped these amendments with earlier amendments from the noble and learned Lord, Lord Fraser of Carmyllie, because they are on a similar subject. Perhaps that is one of the victims of oversight because of the speed with which we were doing things this morning.
However, one of the amendments also links into amendments we have already discussed and which address the question of when non-urgent supervisory decisions take effect. That is a point which has caused some concern to the Opposition.
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Amendment No. 193 defines what is meant by "open to review" for these purposes. A matter is still open to review if the period for referring the matter to a tribunal is still running; there is a reference before the tribunal currently; the period for making an appeal against a tribunal ruling is still running; or an appeal is pending.
That feeds back into the relevant procedural clauses, such as the first new clause after Clause 51, which was introduced by Amendment No. 109 which we have already debated, and Clauses 255, 264 and 278, with the effect that a non-urgent supervisory decision does not take effect while the matter is open to review.
Turning to the issue of publicity, Clause 386(2) requires that when the FSA decides not to proceed with a proposed action and issues a notice of discontinuance, that notice must state that the FSA may publish appropriate information about the matter if the person consents. Similarly, subsection (3) of that clause requires that any copy of a notice of discontinuance given to a third party in accordance with Clause 388(14) must be accompanied by a statement that the FSA may publish appropriate information about the matter if that person consents. The FSA may not publish any information about the matter without the appropriate consents. That supersedes Clause 68(2) which Amendment No. 117 deletes.
Amendment No. 192 makes it clear that, like a final notice, information about a supervisory notice may be published if appropriate, once the notice takes effect. However, the Bill provides that it may not be published if this would be unfair to the person concerned or prejudicial to the interests of consumers. So, if publicising a supervisory action might give rise to a general loss of confidence and therefore may result in damage to consumers, the FSA should not publicise it. Amendment No. 194 imports the definition of "supervisory notice" from Clause 390 for that purpose.
Before I move from this amendment perhaps I may return to the point raised by the noble and learned Lord, Lord Fraser of Carmyllie, when we considered the words "knowingly concerned" in Clause 65. I believe it was the noble and learned Lord, but it may have been someone else. I thought that he was asking about the effect of the word "or" in Clause 65. I said that the authority was entitled, when imposing a financial penalty, also to make a public statement. To be more accurate, what will happen is that the final notice imposing the penalty will itself be published under Clause 386(4), subject to the exceptions in subsection (5) of that clause. So the publication will not be under Clause 65(3)(b). The word "or" does indeed mean "or". If it is of any consolation to the noble and learned Lord, he was right in that respect. I beg to move.
On Question, amendment agreed to.
Clause 71 [Actions for damages]:
Lord Fraser of Carmylliemoved Amendment No. 117A:
Page 33, line 24, at end insert ("but shall in any event include natural persons and Scottish partnerships under section 4 of the Partnership Act 1890").
The noble and learned Lord said: My Lords, this is a very "tartanising" short point. As I understand Clause 71(2), the opportunity is provided that a "private person" will be defined and shall have,
"such meaning as may he prescribed".
I seek to ensure that there is due acknowledgement of the fact that in Scotland a partnership enjoys the status of a separate legal persona. I should like to see some provision made to ensure that where a meaning is given to the words "private person" in such prescription, the separate legal persona of a Scottish partnership will be recognized. I beg to move.
Lord McIntosh of Haringey: My Lords, this amendment would limit the Treasury's discretion when defining a "private person" for the purposes of Clause 71 which is concerned with rights of action. Our intention is to reproduce the regulations under the Financial Services Act 1986. The regulations do not include in the definition people acting in a professional capacity.
Lord Fraser of Carmyllie: My Lords, I am grateful to the noble Lord for that answer. I shall reflect on it. I am sure that there are also professionals who will reflect on it with even greater care than I. Although the amendment concerned partnerships rather than the status of professional persons, that of itself is revealing. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 76 [Decision on application]:
Lord McIntosh of Haringeymoved Amendment No. 118:
Page 35, line 19, leave out ("refused") and insert ("decided to refuse").
On Question, amendment agreed to.
Lord Bachmoved Amendment No. 119:
Page 35, line 19, at end insert—
("( ) If the competent authority decides to grant an application for listing, it must give the applicant written notice.
( ) If the competent authority proposes to refuse an application for listing, it must give the applicant a warning notice.
( ) If the competent authority decides to refuse an application for listing, it must give the applicant a decision notice.
( ) If the competent authority decides to refuse an application for listing, the applicant may refer the matter to the Tribunal.").
The noble Lord said: My Lords, on behalf of my noble friend, in moving this amendment I speak also to Amendments Nos. 120, 123 and 124. We introduced a number of changes to Part VI of the Bill in Committee as a result of the transfer of the competent authority function from the London Stock Exchange to the FSA. My noble friend said then that the missing elements of the package concerned the procedures that the competent authority has to follow when coming to
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a decision, and the right to refer competent authority decisions to the tribunal to be established under the Bill. This set of amendments deals with these matters.
Amendment No. 119 to Clause 76 provides that the competent authority must give an applicant for listing a written notice if the application is accepted. If the competent authority proposes, however, to refuse an application, the amendment sets out the warning notice and decision notice procedures that it must go through. Additional provision on warning notices and decision notices is contained in Part XXVI of the Bill. The amendment also provides that if the competent authority decides to refuse an application for listing, the applicant may refer the matter to the tribunal.
Amendment No. 120 introduces a new clause after Clause 77 which sets out the procedures to be followed if the competent authority proposes to suspend or discontinue the listing of listed securities. These decisions are supervisory in nature rather than disciplinary, and the procedures are broadly in line with those which the FSA must follow when exercising its own-initiative powers under Part IV of the Bill.
The new clause provides that if the competent authority proposes to discontinue or suspend listing, or does so with immediate effect, it must give the issuer of the securities written notice, setting out its reasons, and informing him of the right to make representations and to refer the matter to the tribunal.
Having considered any representations, the competent authority then has to decide whether to continue with its proposal, or if it has suspended or discontinued listing with immediate effect, whether to continue with the suspension or discontinuance. Whatever it decides, it must give the issuer written notice, again informing him of his right to refer the matter to the tribunal.
The clause also deals with applications by issuers for the cancellation of suspensions which are in place. The procedures are the same as for refusal of an application for listing. The clause also provides for a right to refer a competent authority decision to refuse to lift a suspension to the tribunal.
The amendments to Clause 90 set out the steps that the competent authority must go through when it proposes to impose a penalty on someone or publish a statement censuring him under Clause 89. These are, of course, disciplinary sanctions. The first amendment, Amendment No. 123, simply replaces the reference to "imposing a penalty" with one to "taking action against". That is consequential on the introduction in Committee of the intermediate power of issuing a public censure against directors and ex-directors as well as against issuers.
The second amendment to Clause 90—Amendrnent No. 124—aligns the procedures for warning notices and decision notices with those that we are applying to the Financial Services Authority more generally when it proposes to impose a penalty or make a statement.

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We have debated those already. Subsection (7) of the amendment provides the right to refer a decision of the competent authority to the tribunal. I beg to move.
Lord Kingsland: My Lords, Clause 76 deals with applications for listing and makes it clear that the warning and decision notice procedures apply to proposed refusals and that the applicant can refer the matter to the tribunal. That is why the proposed amendment to page 35, line 19, changes "refused" to "decided to refuse". All this is most helpful.
As the Minister has already explained, the new clause after Clause 77 illuminates in great detail the procedures that will apply in the case of a discontinuance or suspension of listing and assists issuers, especially as it gives a right to refer the matter to the tribunal. However, three points trouble us.
First, in subsection (3)(c) the period for representations, in our view, should be a reasonable period. Secondly, subsection (9) provides that when a discontinuance is cancelled securities,
"are to be readmitted, without more, to the official list".
Perhaps the Government can explain what that means. Presumably there does not need to be a new application for listing, but what sort of statement does the competent authority make to the public, saying that securities are readmitted?
Thirdly, there are some quite detailed provisions in subsections (10) to (12) allowing the issuer to apply for a suspension of listing to be cancelled. However, there does not seem to be any similar provision allowing the issuer to apply for a discontinuance of listing to be cancelled.
With regard to the amendments to Clause 90, I suppose that the first amendment to line four is required because the competent authority can either impose a penalty or publish a statement of censure. Therefore, it is inappropriate to refer to imposing a penalty only. The new provisions replacing subsections (2) and (3) simply spell out in a little more detail what happens with warning and decision notices and give a right to appeal to the tribunal, rather than, as the Government until now have wanted, a separate tribunal. That makes perfectly good sense.
Lord Bach: My Lords, I am grateful to the noble Lord for his general support for these government amendments. I shall attempt to deal with the questions that he asked about Amendment No. 120, the new clause after Clause 77. He takes issue with subsection (3)(c), saying that there should be a reasonable period for representations. The fact that the subsection makes no comment as to the period, in my view, means that the time given would have to be reasonable. If it were not reasonable, a court would intervene. The precise period would depend on how soon the discontinuance or the suspension took place.
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On another question posed by the noble Lord, the effect of cancelling a discontinuance under subsection (9),
"is that the securities concerned are to be readmitted, without more",
and the words "without more" imply that there would not have to be a fresh application. As to whether there was any further procedure that was necessary, I shall have to write to the noble Lord, as I fear I shall have to on his detailed question about subsections (10) and (11).
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 120:
After Clause 77, insert the following new clause—
DISCONTINUANCE OR SUSPENSION: PROCEDURE
(" .—(1) A discontinuance or suspension takes effect—

(a) immediately, if the notice under subsection (2) states that that is the case;

(b) in any other case, on such date as may be specified in that notice.

(2) If the competent authority—

(a) proposes to discontinue or suspend the listing of securities, or

(b) discontinues or suspends the listing of securities with immediate effect,

it must give the issuer of the securities written notice.
(3) The notice must—

(a) give details of the discontinuance or suspension

(b) state the competent authority's reasons for the discontinuance or suspension and for choosing the date on which it took effect or takes effect;

(c) inform the issuer of the securities that he may make representations to the competent authority within such period as may be specified in the notice (whether or not he has referred the matter to the Tribunal);

(d) inform him of the date on which the discontinuance or suspension took effect or will take effect: and

(e) inform him of his right to refer the matter to the Tribunal.

(4) The competent authority may extend the period within which representations may be made to it.
(5) If, having considered any representations made by the issuer of the securities, the competent authority decides—

(a) to discontinue or suspend the listing of the securities, or

(b) if the discontinuance or suspension has taken effect, not to cancel it,

the competent authority must give the issuer of the securities written notice.
(6) A notice given under subsection (5) must inform the issuer of the securities of his right to refer the matter to the Tribunal.
(7) If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(8) If the competent authority decides—

(a) not to discontinue or suspend the listing of the securities, or

(b) if the discontinuance or suspension has taken effect, to cancel it,

the competent authority must give the issuer of the securities written notice.
(9) The effect of cancelling a discontinuance is that the securities concerned are to be readmitted, without more, to the official list.

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(10) If the competent authority has suspended the listing of securities and proposes to refuse an application by the issuer of the securities for the cancellation of the suspension, it must give him a warning notice.
(11) The competent authority must, having considered any representations made in response to the warning notice—

(a) if it decides to refuse the application, give the issuer of the securities a decision notice;

(b) if it grants the application, give him written notice of its decision.

(12) If the competent authority decides to refuse an application for the cancellation of the suspension of listed securities, the applicant may refer the matter to the Tribunal.
(13) "Discontinuance" means a discontinuance of listing under section 77(1).
(14) "Suspension" means a suspension of listing under section 77(2).").
On Question, amendment agreed to.
Lord McIntosh of Haringey: My Lords, I beg to move that further consideration on Report be adjourned. In moving the Motion I suggest that the Report stage begin again not before 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Special Constabulary
7.35 p.m.
Lord Bradshawrose to ask Her Majesty's Government whether they will consider paying members of the Special Constabulary.
The noble Lord said: My Lords, before beginning this debate about the Special Constabulary I want to declare two interests. I am a member of Oxfordshire County Council and of the Thames Valley Police Authority. However, I do not speak on behalf of the police authority or the Thames Valley Police, but I shall draw on my six years' association with police authorities and some of the issues that have come to my attention during that time.
I do not want to enter into any arguments about the numbers of police officers, or where the political responsibility may lie for that, although it is interesting to note that since 1992 police numbers in England and Wales have remained reasonably constant at between 126,000 and 128,000. However, there is now great difficulty in recruitment and retention of officers, particularly in those parts of the country where housing costs are high. That problem appears to have been made a great deal worse by the loss of the housing allowance following the implementation of the Sheehy report, which was implemented at a time of industrial recession and lower housing costs. The plain fact is that there are not enough police officers and I believe that present and planned recruitment, taking into account wastage, will not bridge that gap.
Wastage of full-time police officers and the reasons for it are not part of this short debate, but they need to be dealt with. I argue that when the Government agree new pay and allowances for the police, as I am sure
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they will have to do in the not too distant future, they should also seek to revitalise the Special Constabulary in any deal that is made.
The number of special constables is falling. Between March 1997 and March 1999 there was a net loss of 3,380 which is 17 per cent of the total strength. Interestingly, the number of retained fire fighters is not falling, although the police and the fire service have been the subject of much more stringent training requirements and health and safety requirements in the past few years. Retained fire fighters receive some payment in return for their commitment to weekly training sessions and to answering fire calls. That amounts to around £3,000 a year, and includes a compulsory two-hour training session each week, a call-out fee of £11.42p and £5.80p an hour after they have been on duty for an hour and a quarter.
The police service is subject to great "peakiness" in demand. There is a big demand on Friday evenings and Saturdays, but there are also special events such as football matches, race meetings and pop concerts. It is my experience of many other industries that large peaks in demand are best met by part-time labour, rather than the present practice which takes place in many police services of denuding whole areas of policemen in order to provide men to cover special events, such as Royal Ascot. It would seem to me to be desirable in many cases to have more specials to draft in to cover some of those events.
A paper presented by Ian Blair, then Chief Constable of Surrey, to the ACPO conference in 1998, addressed the future of police patrol. He suggested that the staff of other agencies, suitably accredited and trained, might be used more in a policing role, particularly in extending the scope of patrolling. My colleague, Susan Kramer, at present campaigning to be elected as mayor of London, has proposals in her manifesto for a community safety constabulary to work in partnership with the police. I believe the Government have ideas about neighbourhood wardens.
A community safety constabulary, or whatever we call it, would go beyond what I am advocating in terms of a revived Special Constabulary. But we should be aiming, as part of the community safety strategies which local authorities are developing, to bring together the efforts of many people like traffic wardens, park rangers, estate wardens and street inspectors. They could have a much greater impact on vandalism, graffiti, broken street lights, blocked bus lanes, anti-social behaviour and abandoned cars. A common uniform and radio contact with the police, which is in prospect with the new radio systems becoming available, would enhance the effectiveness of such people. I believe that the police should remain in the lead in law enforcement and my proposals seek to reinforce their efforts.
There is a traditional argument that Specials value their volunteer status. Many existing Specials do and we should be grateful for their voluntary, public-spirited service, and I do not in any way wish to devalue that. However, we need to go out to a much

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wider catchment of potential recruits and some payment may be an effective incentive. The sums offered to retain fire fighters are not large, but they are sufficient in the town where I live to have 10 people ready to staff the local fire engine when called and in many of the towns in Oxfordshire there are 20 people who are willing to turn out when required. I believe that sort of payment might encourage people to volunteer to be special constables. I know that in the past a small bounty was offered, I believe in Dorset, without any great effect. But I am calling for a much more widely-publicised and radical initiative.
The retained fire service is also a valuable way of recruiting to the full-time service. A revived and relaunched Special Constabulary might help full-time police recruitment. It may also help in the vital area of attracting ethnic minority recruits who would be able to sample police life before entering into a career commitment.
In some businesses, such as the railways, London Underground, and so forth, employers might encourage and even be prepared to pay staff to join up as Specials. In fact the British Transport Police, with its heavy commitment on football days, would seem to be the ideal place to step up recruitment of Specials familiar with the technicalities of the railway system. Accredited football stewards and other properly trained security staff may also be potential recruits.
I realise that such proposals are not likely to be welcomed by the Police Federation. It will argue for an overhaul of wages and conditions. I accept that that is necessary and I am not, in raising the subject of the Special Constabulary, seeking to distract attention from the legitimate views of the federation in relation to pay and conditions. But we cannot wait for that.
It seems unlikely, with wastage running at current rates, particularly in London and surrounding areas, that the much-heralded increase in police numbers will be achieved. I will go so far as to say that the increases will not be achieved and that in 18 months time we will have fewer officers in many areas than we have at present. In Thames Valley, transfers out—officers going away to forces in other areas—have grown from 10 officers a year two years ago to an anticipated 30 officers this year and the figure is rising sharply. However, a radical approach to revitalising the Special Constabulary, including payment, could see 10,000 more people in uniform within 18 months at times and in places where an additional police presence is vitally necessary. I hope that the Minister tonight will be able to tell us that the Government will give this matter serious consideration.
7.45 p.m.
Lord Luke: My Lords, your Lordships may wonder why I decided to put my name down to speak in this debate, for which we are all indebted to the noble Lord, Lord Bradshaw. I congratulate him on his most interesting speech, though I do not necessarily agree with some of his conclusions.
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The reason for my speaking in this debate is that for some 12 years I was a member of the City of London Special Constabulary. I served mainly as a mobile special, using my own car with another special and, most importantly, with a regular constable on board. Among other things, I remember acting as a guinea pig for the new hand-held radio, which did not work very well at the start. I helped to line the streets when President De Gaulle came to lunch at the Guildhall. I helped to get Princess Margaret's car through the crowds to Tower Pier on the occasion of her marriage to Lord Snowdon. I even participated in the arrest of some men in a stolen car (it was broken down at the time).
So my knowledge is a bit rusty; in fact, some 40 years old. But at that time, as is the case now, special constables were never used as substitutes for full-time and, most importantly, fully-trained members of the police. The Special Constabulary is, was, and should remain, a means for public-spirited people to offer their services to help police forces to carry out their duties in whatever way may be appropriate to each force while at the same time contributing to the welfare of their own communities.
The number of special constables appears, as the noble Lord, Lord Bradshaw, said, from the statistics that I have been given, to be falling at an alarming rate. That is particularly marked in the metropolitan area. What is the reason for that? Several probable reasons have been advanced. One is difficulty in getting time off work. I find that odd. Surely most duties for specials are likely to commence after six o'clock at night.
Another reason is the length of time spent training. That is interesting because 22 weekends, either Saturday or Sunday, are spent by the new special in training. In my day, I spent about five evenings of two hours each. No doubt I was poorly trained by current standards, but at least some of that time was spent in learning first aid and becoming qualified. Incidentally, that no longer seems to be a requirement. If my briefing on this matter is wrong, which I hope it is, I apologise. But if not, then can the Minister say why that is? I am sure that a basic knowledge of first aid is essential for a special constable.
Another reason advanced for the alarming drop is the inadequate level of expenses. However true that may be—I believe it is the case—that is not a reason for poor recruiting or retention. However, a poor level of morale in all police forces, due to poor funding, a lack of respect for the police generally, due, not least, to the Macpherson report and the way it was received by the Government, colours the general public's view of the police. There is also the almost universal portrayal of police on television as often brutal, often bent and sometimes both. In my view, that is not the main reason for such a fall in the recruitment and numbers of special constables.
There is also the seemingly inexorable rise in the national crime rate, which has been particularly noticeable this past year. However, I believe that the

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report of the working group on the Special Constabulary of April 1996 had it about right when it said that,
"the voluntary nature of the Specials' contribution is important, not because it saves taxpayers' money, but because the Special is a prime example of the partnership between the public and the police which underlies policing by consent"—
and that is so important. This is the only way forward. Whereas I believe that more could be done to improve the level of expenses paid to Specials, to my mind their voluntary nature is priceless and should be preserved at all costs; that means, I am afraid, no pay.
7.50 p.m.
Baroness Harris of Richmond: My Lords, before I begin, I should make your Lordships aware of my interest in policing matters. I chair a police authority and am a member of the Association of Police Authorities, as well as being a member of the National Crime Squad Service Authority, the Police Advisory Board and the Police Negotiating Board.
When we look at the question of whether special constables should be paid, we need to look at some of the conclusions and recommendations found in two reports to which I should now like to refer. The first is the Home Office Working Group on the Special Constabulary in England and Wales, which reported in 1995–96. This document defined the role of the special constable, and I should like to quote briefly from it:
"The Special Constabulary is a voluntary body designed to assist the regular Police, drawn mainly from the communities served by each local Force. Special Constables perform constabulary duties and exercise constabulary powers under the supervision of, and supported by, regular Police Officers. They are expected to achieve and maintain a level of proficiency which will enable them to assist regular officers in solving local policing problems, and thereby to enhance the overall contribution and effectiveness of their local Police Force. They are a manifest sign of the partnership between the Police and the public".
However, the thorny question of payment for the Special Constabulary has from time to time been addressed. The Home Office working group concluded that, having had a number of representations from the special constables on the topic of payment—the overwhelming majority valued their voluntary status highly—and did not want it to be changed. As my noble friend Lord Bradshaw said, Dorset piloted a scheme in 1993—a sort of bounty payment—with no conclusive results. The recommendation of the working group was simply that the regulation that prohibits payment should be repealed in order to allow forces the discretion to make payment, if they so wished. It was thought that a payment might aid retention of the Specials, but this did not seem to be the case. The current national "loss" is approximately 20 per cent, which is interesting if you compare that with the Territorial Army, which does receive an annual bounty, whose "loss" is approximately 80 per cent. I am not at all sure whether or not that is a fair comparison; it is simply an interesting one.
The second report to which I should like to refer is from Her Majesty's Inspector of Constabulary's thematic document, A Special Relationship, which was
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published in 1997 and complemented the Home Office report to which I previously referred. This report, looking into the payment of special constables, concluded that,
"there was no need to introduce such schemes at present",
but that,
"it would be remiss not to report that the issue still remains active in the minds of many younger special constables in particular".
When I used to swear in special constables—not too long ago—not one of them ever said to me, "I joined because I hope you'll pay me". Indeed, payment was never the motivator. It may be interesting to your Lordships to learn of the sort of person who joins as a special constable. Their ages range between 181/2 and 55 years. In North Yorkshire, we have bankers; civil servants; local government officers; teachers; nurses; shopkeepers and shopworkers; students; young—and older—mothers (and sometimes grandmothers!); all sorts of tradesmen and women; and former members of her Majesty's forces (quite a lot of those). I could go on. I simply wanted to demonstrate the great wealth of talent among members of the special constabulary. I know that North Yorkshire is not alone in having many who hold managerial positions in commerce, industry and the public sector. Nevertheless, we have a duty to ensure that we address the problem of shortage of numbers of police officers generally, as my noble friend Lord Bradshaw rightly reminded us. The plain truth is that most police forces now rely heavily on their special constables to help to deliver policing services in the fight against crime.
It is immaterial to the officer (and the public) on the street who might be faced with an incident, whether he works 40 or 4 hours per week; whether he has a pension, sickness or disability benefits, and so on. Members of the public expect that officer dealing with that incident to do so to the best of his ability. However, in reality, the special constable might think twice before doing so because he might be faced with injury, loss of earnings or litigation; and would find himself in a very different situation from that of his regular colleagues. That is totally unacceptable. The Home Office is currently addressing this complex issue. I trust that those who have the rank and "clout" within the service will actively lobby for some form of insurance scheme for our special constables sooner rather than later.
In conclusion, I should like to share with noble Lords what happened to one special constable in North Yorkshire in 1992. Glenn Goodman had hoped to join the regular police and had served with the Specials for only a few months. On the evening of 6th June, he went out on one of his first patrols with a regular officer. Glenn was a lorry driver—a husband to Fiona; a father to young Thomas. Glenn was a happy, likeable, enthusiastic 37 year-old. He put in extra hours that night and it was almost 4 o'clock in the morning of 7th June when the two officers made a routine check on a car on the A64 near Tadcaster. Shots were fired and both men were badly wounded. The regular officer spent many weeks in hospital and has since retired from the force. Glenn died later on that Sunday evening.

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I tell noble Lords this story because it helps to illustrate the selflessness and dedication that our special constables bring to their duties. No payment, no bounty, no insurance policy would have saved Glenn Goodman that night. But a recognition that we must care for and treat our special constables properly and guard their welfare thoroughly is an absolute necessity, and one that I trust your Lordships will support wholeheartedly.
7.57 p.m.
The Earl of Rosslyn: My Lords, perhaps I may begin by thanking the noble Lord, Lord Bradshaw, for tabling this Question tonight. I should also like to declare an interest as a serving police officer with Thames Valley Police.
The Police Act states that,
"a Special Constable enjoys all the powers, privileges and protections of a Constable in the police area for which he or she has been appointed".
They also face the same dangers and challenges and their families the same anxieties and pressures. We have every reason to be grateful to them.
Demands for police services are rising and, if our strategic aims and performance targets are to be met, we need to develop a culture that engages with the members of the volunteer force and the community at large. Volunteers not only reinforce the links between the service and the public but also allow communities to develop their capabilities within the framework of policy authority.
In 1962 the Royal Commission on the Police remarked that,
"the recruitment of special constables is of great value in promoting relations between the police and the public".
That is no less true today, though the context of policing is somewhat different. In recent years, the duties of special constables have become more varied and more demanding. Traditionally viewed as a reserve to augment police strength, today they undertake general patrol, police special events, work alongside neighbourhood watch schemes and act as neighbourhood special constables working in defined geographic areas.
However, as the noble Lord, Lord Bradshaw, said, in recent years their numbers have fallen from over 20,000 in 1995 to a little under 16,500 in 1999. During that period, only six out of the 43 police forces in England and Wales recorded a net increase in numbers. One force recorded a reduction of 45 per cent, while at the other end of the scale increases of 38 per cent were achieved in Dorset and North Wales.
In 1994 the Home Office research and planning unit found that the turnover of special constables was in the order of one in five per year. For those not joining the regular force or moving out of the area completely, the average length of service was about four years. The majority gave "personal commitments" as the reason for leaving, but in interview it emerged that resignations were in fact linked to some aspect of the work itself. Based on calculations made in 1995 the
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estimated costs of training, recruiting and equipping a special constable are about £1,500. Such levels of wastage are therefore damaging in more than one sense.
It seems to me that the first step in achieving a committed, motivated Special Constabulary with low wastage rates is to ensure that the right recruitment decisions are made both by the applicant and by the force. Thereafter, integrating new recruits, managing and deploying them effectively and ensuring that they feel appreciated are critical. These are, after all, volunteers who on average contribute more hours per week for a longer period of service than those undertaking other forms of voluntary activity.
However, it is also clear that the number volunteering purely as a community service is falling, with a proportionate increase in those expecting at least a mutual benefit to themselves and the force. Research on volunteering for the 1995 Make a Difference report suggested that this is a common trend in the voluntary sector. Volunteers, especially the young, who are, after all, the most significant source of new recruits, increasingly expect to benefit from their voluntary service in terms of their own personal development. The police have much to offer here both to the special constables and to their employers, although I wonder whether we have done enough to market those latter benefits and to seek reciprocal support from employers themselves.
Adequate training and resources are also necessary to an effective Special Constabulary but they are not in themselves sufficient to make it flourish. The attitudes of regular officers are fundamental. Specials value feeling part of the police team and this can best be achieved by integrating them fully into the operational effort of the service. This can often be realised by attaching them to a specific team of regular officers. There is evidence from the Metropolitan Police that where volunteers feel valued and see themselves as part of the local policing effort wastage is reduced.
Many volunteers will have times when the demands of paid employment or domestic circumstances prevent them reporting for duty. Increased flexibility over working patterns may help to retain valuable Specials who feel under pressure from the demands of their other lives.
A report by Her Majesty's Inspector of Constabulary in 1997, to which the noble Baroness referred, found that successful performance was directly and consistently related to the involvement of regular officers in leading these volunteers and to the participation of Special Constabulary staff in decisions about deployment and tasking. The 1996 Home Office working group on the Special Constabulary, which has also been referred to, remarked on the need for new regular constables to be taught adequately about the Special Constabulary and to begin working alongside it with an understanding of its voluntary nature and role.
In all of this it has been found that volunteers respond to effective leadership and good management which, with sensitivity, exploits what they have to

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offer. But would payment also help? The overwhelming majority of Specials who responded to the 1996 working group valued their voluntary status highly and did not want that to be changed. This has already been mentioned. The voluntary nature of the Specials' contribution is important because it exemplifies the partnership between police and public that underlines the principle of policing by consent. That point was mentioned by the noble Lord, Lord Luke. I believe that volunteering should be acknowledged as having its own intrinsic value. It seems to me important that a special constable joins with that as his or her primary motivation, not personal financial gain.
In conclusion, the oft repeated accusation that the Special Constabulary provides policing on the cheap is" I believe, ill conceived. It fails to take account of the positive links created between police service and public as a result. We should be open-minded about all recruitment strategies but perhaps as much can be achieved by valuing and supporting our special constable colleagues as by paying them.
8.4 p.m.
Lord Mackenzie of Framwellgate: My Lords, I declare an interest as a former president of the Police Superintendents' Association. I thank the noble Lord, Lord Bradshaw, for tabling this timely Unstarred Question this evening. The police service is going through a difficult period. That is a cyclical process. In my 35 years in the police force I have experienced difficult and good times.
It may surprise noble Lords to hear that I acquired my first knowledge of the Special Constabulary after I joined the police service when I was working in Jarrow on Tyneside. I had completed about six months' service at that time. I had not really concerned myself with the Specials as I was too busy getting to know the regulars. One night I was assaulted in the bus station at Jarrow. I lay in the gutter and I was in some difficulty until a bus driver jumped out of his cab and came to my assistance. He was like the cavalry as far as I was concerned in that he rescued me. I always remember that incident as it was the first major assault to which I was subjected. I suffered one or two subsequent assaults, but that first assault stuck in my mind. I discovered that the bus driver was a special constable.
The numbers in the Special Constabulary appear to fluctuate between about 16,000 and 20,000 officers at any one time. They constitute a tremendous fund of allies in the field. Specials have families and they are good ambassadors for the police service. I am sure that police officers are aware of the value of the Special Constabulary.
This evening we are discussing whether we should pay Specials for their service. I used to be an instructor at a police training school where Specials were trained. The quality of those Specials was extremely high, certainly in Durham where I began my service. I have a high regard for the people who provide that service. The noble Baroness, Lady Harris, has stolen my
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thunder as I had intended to speak at some length about special constable Glenn Goodman. However, she has already done so and has paid tribute to that officer. I, too, pay tribute to him. That is the serious side of the service. On Friday and Saturday nights many Specials suffer the kind of assault that I suffered and give selfless service. We should pay tribute to that.
The important point to note is that Specials give their time to the police service. I have spoken to many Specials over the years and my impression is that they do not do the job for money. The last thing they want is payment. They simply want to provide a service and to help out where they can. As has been said, many people join the Specials simply to get a flavour of policing before they join the regular force. There is nothing wrong with that, but it results in a certain amount of wastage in that the regular service benefits from the Specials' loss. However, I must emphasise the important point that Specials are allies in the community. They should quite rightly be distinguished from the regulars. Understandably, regular officers feel in some respects slightly threatened in the sense that they are fully trained while Specials are not trained to the same extent. However, I believe that the vast majority of policemen value the service that the Specials provide.
How can we retain the Specials? The big problem is not so much recruiting as trying to ensure that they do not leave once they have been recruited. I agree with the noble Earl, Lord Rosslyn, that the way to prevent that wastage and to ensure that they do not leave is to make them feel valued and part of the team. That requires the establishment of a good relationship with them, both on and off duty.
The cost of a Special is fairly minimal; it costs about £1,800 to recruit and train a Special, and thereafter the cost is about £600 or £700 per annum. They provide an extremely useful service, particularly in policing special events. As a divisional commander I would have been lost without the help and partnership of the Special Constabulary which turns out in force and does an excellent job. Unlike the duties of the fire service and the Army, policing constitutes a constant battle, a constant war. The members of the fire service and the Army can stand down while waiting for the next fire or the next war. Policing is not like that; it is different. We need people to come into the service for the right reasons.
I remember talking to someone in the street and trying to recruit him, for whatever reason. I said, "Why don't you join the Specials?" He said, "Half the police force are bare-faced liars"—I was quite taken aback—and then he said, "And the rest of them have moustaches or beards". I gave up the task of trying to recruit him.
What has been said is important: we need to value special constables and we need to encourage them to join for the right reasons. I do not thank that payment plays a part in that.
8.10 p.m.
Lord Dholakia: My Lords, I thank my noble friend Lord Bradshaw for introducing the debate. What he said made a lot of sense. How else would we have discovered the hidden qualities of the noble Lord, Lord Luke, in his role as a special constable? I envy some of the very exciting tasks he has performed. The only area where I disagree concerns the matter of payment. If I were a chief constable, I would certainly have handed him a brown envelope if he had refused any kind of payment.
I served as a member of the Sussex Police Authority for a number of years. It became clear to me that many chief constables concentrate their operations in urban areas where problems are acute. Much of the policing strategies were demand based, almost always reactive and had considerable resource implications.
Over the years, the policing of our towns and cities has changed immensely. Fewer police officers are now to be seen in our rural areas. According to Home Office figures, the shire counties have some of the lowest numbers of officers per 100,000 people. The Government have a high profile strategy in fighting crime. Unfortunately this is not reflected in the number of police officers required for the purpose. But that is not the subject of the debate.
We have a great tradition that in many areas of our public life we rely on those who are prepared to offer their services for the cause they believe in. Many of our voluntary organisations, including charities, depend on volunteers, who provide specialist knowledge and help. The police constabularies are no exception. The Special Constabulary is a voluntary body designed to assist the regular force. It reflects a cross-section of the community because its members are drawn from local areas.
My noble friend Lady Harris of Richmond has rightly pointed out the nature of our Specials, who perform police duties and exercise police powers under the guidance and supervision of regular officers.
Over the years, recruitment to our police service has seen dramatic changes. Many of the cadet schemes, which were the backbone of recruitment and training, have disappeared. However, it has remained a feature of our policing that special constables have retained their status and identity. They are a partnership between the police and the public. More importantly, they are a feature that reinforces our belief that independence and public consent is more evident when we see volunteers as special constables providing valuable service to the community.
But recent trends in recruitment and retention of police officers is a cause for concern. This is more so in relation to special constables. In a Commons Written Answer in Hansard on 28th February 2000, it was stated that the number of special constables who were recruited between September 1998 and September 1999 was 2,341. However, the number who left the constabulary totalled 3,386. The public has a legitimate concern about the falling numbers. In September 1999, there was 1,694 fewer police officers than at the last general election.
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Even more worrying is the trend in relation to the fall in the number of front-line police constables. The Audit Commission report stated that for the first time in five years there was a decrease in the overall average number of police constables available for ordinary duties. The low level of police recruitment is making it harder for the police to meet the Government's 10-year target for increasing recruitment and retention of officers from ethnic minority communities. The British Crime Survey 1998 revealed that knowledge about special constables was particularly low among these communities.
Of course I welcome the initiatives taken to increase the number of Specials. In an increasingly competitive world, where contract culture is an important element, volunteers find it difficult to take time off work. Employers need to be convinced about the value of the work done by Specials and to recognise that such staff should be released.
I was able to study the HMIC report of 1997 about police forces, the Special Constabulary and the Neighbourhood Watch. The importance of the Special Constabulary is highlighted. It states:
"Demand for police services is rising faster than the available resources. If strategic aims and performance targets are to be achieved, the service needs to develop a performance culture which will take advantage of the potential not only of regular officers and civilian support staff employees but also members of the volunteer force and the community at large. It is the view of HMI that force performance is enhanced by harnessing the support of and working with the community in partnership".
I wholly commend this statement; it goes to the core of our policing matters. I scanned the report to see whether there was any mention that payment of a kind would assist recruitment and, above all, assist retention. Unfortunately, there was no such mention.
I then turned to the report of the working group on the Special Constabulary published by the Home Office, which has been quoted in the debate by many noble Lords. It gave some attention to the basic question of remunerative payment to Specials in recognition of their services. I think that we all subscribe to the view of the working party—endorsed by the noble Lord, Lord Luke—that the voluntary nature of the Specials' contribution is profoundly important, not because it saves expenditure by the taxpayer but because the Special is a prime example of the partnership between the public and the police.
In a response to this report, the Police Federation also concluded that it is strongly opposed to the payment of a bounty. The point at issue is that police and policing issues are very much in the public eye. My noble friend Lord Bradshaw is right; the issue of paying members of the Special Constabulary will not go away. Is it not time that we revisited the whole matter relating to payments to special constables? It is also important that the matter is not left simply to the constabulary and the federation, but that the public has a say. The independence of and public consent for our police is the envy of the world. Let us ensure that by adequate rewards, the special constables continue this noble tradition. Receiving a payment is a small part of this equation.
8.17 p.m.
Viscount Bridgeman: My Lords, I am sure that we are all very grateful to the noble Lord, Lord Bradshaw, for initiating the debate. It is a tribute to the composition of this House that it can attract to this kind of debate a former special constable, a serving police officer and a former president of the Police Superintendents' Association.
There is agreement from all sides of the House on the invaluable role which special constables play, not least in the interface which they form between public and police. A superficial comment might be, "Why can't a job well done be recognised in its remuneration?" But of course the answer is not as simple as that, as has been shown today. The case put forward by the noble Lord, Lord Bradshaw, deserves a great deal of respect.
But there are some considerations as to why this should not come about. There has, for instance, historically been a rivalry between Regulars and Specials, greater in some forces than in others, as referred to by the noble Lord, Lord Mackenzie. I understand that there is a feeling among some Regulars that if Specials are paid, they will divert work which would otherwise be done by Regulars who would earn overtime.
But the overwhelming consideration—it is a gratifying one—that has come through in so many speeches is that there still exists in the community the concept of service to the community. Specials are proud of the job they do and they appreciate the dignity, if one can put it like that, of being truly volunteers and of doing the job for no reward, other than a very limited reimbursement of expenses.
It is noteworthy that the Police Federation and the Police Superintendents' Association, together with the special constables' own body, are all opposed not only to pay but to the bounty system. Special constables seek training and equipment on a par with regular forces, and recognition of this in the uniform, which is now identical to that of regular police officers. I gather that the only differentiation is in the numbering.
We are having this debate against a background of seriously falling numbers among special constables. The figure of 17.3 per cent between 1995 and 1999 has been mentioned. I am proud that my own county of Hampshire is one of the half a dozen or so referred to by the noble Earl, Lord Rosslyn. It has spectacularly bucked the trend and shows an increase in special constables from 698 to 760 over the same period—an increase of 8.5 per cent—and that, it should be noted, is after a series of forced redundancies, common to a good many forces, due to existing members failing fitness tests.
This success is attributed by the force to an intensive recruitment drive, to the provision of good information packs, to obtaining favourable coverage in local newspapers and on radio and television, and to—the most recent innovation—an imaginatively produced website. Added to that is close liaison with the employers of recruits. A full-time inspector is assigned to the special constable force. But at the end
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of the day, the special constables have the assurance that they have the same training, including training in the use of CS gas and the long baton, the same equipment, the same fitness requirements and the same uniform. They are integrated into the Regulars' duties and they have identical powers of arrest. Most significantly, they are also aware that they can perform some duties—for instance, in the case of Hampshire, in under-cover drugs enforcement—which at the end of the day simply would not be covered owing to lack of resources. So this is a force which shows what can be done with recruitment if the problem is addressed with vigour and imagination.
This is not a party political matter—the noble Lord, Lord Bach, will be particularly pleased to hear that—and we congratulate the Government on the recent recruiting initiatives which have been launched and which are being taken up by local forces. I took the opportunity to look at websites relating to special constables. There are several very good ones; Suffolk and West Yorkshire being two examples. The West Yorkshire website showed a day in the life of a special constable. If that does not turn on an adventurous recruit, I do not know what will.
If there is a point which we would make from these Benches it is about the conclusions arising from the Home Office review conducted during 1995 and 1996 under the initiative of my right honourable friend Mr David Maclean. That made a number of recommendations, including a uniform system of allowances, improved personnel administration, and attention to special constables' welfare, such as arrangements for sick pay and a system of uprating of allowances in line with that for regular officers. A number of consultation papers have been issued and we from these Benches urge that those should be given high priority.
Perhaps I may sound a note of caution. The Government have recently announced a 12 million grant for rural neighbourhood watch. We suggest that serious consideration should be given if special constables are to be incorporated into that scheme. There are hazards and dangers. The matter should be considered very carefully.
The institution of special constables, with its ethos of voluntary service to the community, is a particularly British concept. We are on these Benches are not in favour of payment to special constables. We look forward to hearing the Minister's reply.
8.23 p.m.
Lord Bach: My Lords, the whole House will be grateful to the noble Lord, Lord Bradshaw, for initiating this important debate. As the noble Viscount, Lord Bridgeman, said, seldom can there have been such a distinguished group of speakers—perhaps apart from the noble Viscount and myself—who have had such involvement with special constables. There were three members—a past member in one case—of police authorities. If I mention in particular the noble Baroness, Lady Harris of Richmond, I know that the other two will

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understand. The noble Baroness's reputation goes before her as far as concerns this matter. We heard from two senior police officers—one still serving, one not serving, but both equally distinguished. First and foremost is the former special constable himself, the noble Lord, Lord Luke, whose story about stopping the stolen car that had broken down has, I am sure, had many an outing on many an occasion. I look forward to hearing the full story at some time in the future.
The Special Constabulary is made up of more than 15,000 men and women in England and Wales who give up their spare time to help police their local communities for the benefit of the residents. They provide an excellent example of the police and the public working together to tackle crime. Special constables are fully trained to assist the work of regular officers and are able to carry out many of the police officer's duties, providing a high level of support. This requires a significant commitment from volunteers, yet they offer their services free, despite the inherent dangers associated with police work. The tragic case of special constable Glenn Goodman, referred to by two of the speakers in the debate, proves that beyond doubt.
In return I can say that the Government value that commitment and are themselves totally committed to maintaining the Special Constabulary as an important part of the police service. An example of that is the Government's Ferrers Trophy, which is awarded annually to the special constable of the year from nominations submitted by the police forces in England and Wales. I am sure that nearly all Members of the House will know why it is called the Ferrers Trophy. For those who do not, it is named after the very distinguished Member of this House, the noble Earl, Lord Ferrers, who was a Home Office Minister in 1993 when the trophy was inaugurated. Noble Lords will be pleased to know that the competition for that prestigious award is as strong as ever.
No one is prepared to put up with unlawful and anti-social behaviour. People should be able to walk down the street with their children without having to fear for their safety. Special constables play a vital role in making the whole country a safer place in which to live and work. The Government have huge admiration for the work of special constables. They demonstrate in a practical way the part citizens can play in maintaining law and order. This debate gives me the opportunity to express the Government's gratitude to those volunteers whose service is so selfless, a word that has already been used in this debate. Every special constable should be proud of his or her contribution.
The question of whether special constables should be paid has been an issue for a number of years. We have heard about the Dorset experiment. A bounty was paid from existing police funds to see whether it would improve recruitment, retention and morale. The results were inconclusive. I shall not say more about that. A working group was set up by the previous Government in 1995–96. It reviewed the Special Constabulary and, as part of its remit,
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considered the arguments for and against a bounty. The then Minister wrote an open letter to all special constables whose names were on the data base inviting comments for the group's consideration.
As we have already heard, of the special constables who made representations about payment, the overwhelming majority valued their voluntary status highly and did not want it to be changed. The working group's conclusion was that the voluntary nature of the special constable's contribution is profoundly important, not because it saves expenditure by the taxpayer, but because the special constable is a prime example of the partnership between the public and the police which underlies policing by consent. The group thought it essential that a special constable joins with that as his or her primary motivation, and not for personal financial gain. After considering the group's report, Ministers decided not to reintroduce the bounty.
That view has been supported by recent research conducted on behalf of the Home Office. Special constables who were interviewed did not consider that payment was an important issue. I am glad to be able to tell the House that the development of the Special Constabulary is kept under constant review by a standing committee. It has developed from the working group and is made up of representatives from the appropriate associations. It meets every six months to monitor developments. The payment of special constables is an issue that is reviewed from time to time. However, the Government are of the view that there is insufficient evidence to show that paying special constables for their service would have any effect on recruitment or retention, and we have no plans to do so at the present time.
I have listened carefully to the arguments put forward this evening. They have been moderate and sensible, whatever their point of view. I thank the noble Lord, Lord Bradshaw, for having had the courtesy to send me six or seven days ago a full summary of what he intended to say in opening the debate.
We remain convinced that paying special constables would not have any real effect on recruitment or retention. Comparisons have been made with the role of a retained fire-fighter who receives payment. I make two distinctions. The first is that a special constable is part of a day-to-day resource in which the volunteer generally agrees his or her times for duty, often on a Friday or Saturday night when a more visible police presence is required, while retained fire-fighters make up a reserve force with its members waiting on-call. Another distinction, perhaps, is that the Special Constabulary is an additional resource over and above the establishment of a police force, while retained fire-fighters are part of a fire brigade's establishment.
The Special Constabulary is already being used by many applicants as a taster for the regular force, and we are not convinced that payment would see increased numbers come forward. We can see the attraction of encouraging ethnic minority recruits to

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join the regulars via the Special Constabulary but there is no evidence to suggest that paying special constables would achieve this.
It is true that the number of special constables has fallen in recent years. All noble Lords have spoken about that. One of the reasons is that police forces have raised their standards of recruitment generally. To reflect that, special constables are now used on a wider range of duties, many similar to those performed by regular officers. It was true sometimes in the past that special constables would be equipped with a regular officer's cast-offs and would receive not as much training as they do now. While their contribution was significant then, the Special Constabulary was nevertheless considered by too many to be something of a second-class force. Today's Specials are much more professional, with the latest personal protective equipment and much better training.
To reflect the higher standards, the entry criteria have been strengthened, so a somewhat higher proportion of applicants fail to meet the standards than was the case a few years ago. In recent years there have also been open evenings at which the full details of being a special constable have been explained. That may have to some extent put off' some would-be applicants. As the noble Earl, Lord Rosslyn, said, it may just not have suited them or the constabulary that they sought to join.
The police forces in England and Wales have improved their management of special constables in recent years. I am glad to be able to tell the House that later this year the Government will bring in regulations for special constables which, among other things, will improve entitlement to out-of-pocket expenses and provide better sick leave pay to reimburse loss of remuneration following an injury on duty. We shall also provide a free legal advice and representation scheme for specials who are the subject of complaints, disciplinary action or civil or criminal proceedings. We believe that those measures will help to address any dissatisfaction that some special constables may have with their conditions of service rather than the payment of a bounty.
The noble Lord, Lord Luke, raised a question about first aid. I do not want to be absolutely firm about this, but my understanding is that special constables still receive a basic first aid training. I promise to find out the details and write to the noble Lord. I do not want to be too dogmatic.
The Special Constabulary has seen radical change in recent years. It provides its regular colleagues with a high level of vital support. The vast majority of special constables want to put something back into society without reward, and in return they expect the time that they give to the police to be valued and used to good effect. I hope that some of them at least will hear about this debate and will not be able to go away with any impression other than that they are highly valued by Members on all sides of this House who have spoken. The Government, in their turn, and the police service
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have the utmost respect for the volunteers and fully value their contribution. We are continually looking to improve their conditions of service.
Lord Burlison: My Lords, I beg to move that the House do now adjourn during pleasure for five minutes.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.35 to 8.40 p.m.]

Financial Services and Markets Bill
Further consideration of amendments on Report resumed.
Clause 83 [Prospectuses]:
Lord Bachmoved Amendment No. 121
Page 38, line 30, after ("the") insert ("competent").
The noble Lord said: My Lords, in moving Amendment No. 121 on behalf of my noble friend should like to speak also to Amendments Nos. 122, 125, 126, 129 and 130. All of these are government amendments which make minor but essential drafting changes. Amendments Nos. 121, 125, 126 and 129 insert the word "competent" before ''authority". This amendment is necessary to ensure that it is absolutely clear that it is the competent authority, rather than the FSA, to which reference is being made. The Bill names the FSA as the competent authority and that will be correct so long as the authority continues to exercise these functions. However, if the functions were ever transferred the FSA would no longer be the competent authority and there is a danger that the Bill would not make sense.
The other amendments in this group, Amendments Nos. 122 and 130, concern the power to define the term "approved exchange". This power is currently contained in Clause 101. However, the definition is relevant only to Part VI as it is modified by Schedule 9 to the Bill where the term "approved exchange" appears in paragraph 5. Amendment No. 130, therefore, deletes the power in Clause 101 and Amendment No. 122 inserts it in its proper place in Schedule 9. I beg to move.
On Question, amendment agreed to.
Schedule 9 [Non-listing Prospectuses]:
Lord McIntosh of Haringeymoved Amendment No. 122:
Page 253, line 7, at end insert—
("( ) After paragraph 8 of that Schedule, insert—
"Meaning of "approved exchange".
9. "Approved exchange" has such meaning as may be prescribed." ").
On Question, amendment agreed to.
Clause 89 [Penalties for breach of listing rules]:
[Amendment No. 122A not moved.]
Clause 90 [Warning notices]:
Lord McIntosh of Haringeymoved Amendments Nos. 123 and 124:
Page 42, line 4, leave out ("impose a penalty on") and insert ("take action against").
Page 42, line 6, leave out subsections (2) and (3) and insert—
("(2) A warning notice about a proposal to impose a penalty must state the amount of the proposed penalty.
(3) A warning notice about a proposal to publish a statement must set out the terms of the proposed statement.
(4) If the competent authority decides to take action against a person under section 89, it must give him a decision notice.
(5) A decision notice about the imposition of a penalty must state the amount of the penalty.
(6) A decision notice about the publication of a statement must set out the terms of the statement.
(7) If the competent authority decides to take action against a person under section 89, he may refer the matter to the Tribunal.").
On Question, amendments agreed to.
Clause 91 [Statement of policy]:
Lord McIntosh of Haringeymoved Amendments Nos. 125 and 126:
Page 42, line 19, after first ("The") insert ("competent").
Page 42, line 37, after ("The") insert ("competent").
On Question, amendments agreed to.
Clause 93 [Notice for payment]:
Lord McIntosh of Haringeymoved Amendment No. 127:
Leave out Clause 93.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendment No. 128:
After Clause 93, insert the following new clause—
("Competition

COMPETITION SCRUTINY
.—(1) The Treasury may by order provide for—

(a) regulating provisions, and

(b) the practices of the competent authority in exercising its functions under this Part ("practices"),

to be kept under review.
(2) Provision made as a result of subsection (1) must require the person responsible for keeping regulating provisions and practices under review to consider—

(a) whether any regulating provision or practice has a significant adverse effect on competition; or

(b) whether two or more regulating provisions or practices taken together have, or a particular combination of regulating provisions and practices has, such an effect.

(3) An order under this section may include provision corresponding to that made by any provision of Chapter III of Part X.
(4) Subsection (3) is not to be read as in any way restricting the power conferred by subsection (1).
(5) Subsections (6) to (8) apply for the purposes of provision made by or under this section.
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(6) Regulating provisions or practices have a significant adverse effect on competition if—

(a) they have, or are intended or likely to have, that effect: or

(b) the effect that they have, or are intended or likely to have, is to require or encourage behaviour which has, or is intended or likely to have, a significantly adverse effect on competition.

(7) If regulating provisions or practices have, or are intended or likely to have, the effect of requiring or encouraging exploitation of the strength of a market position they are to be taken to have, or be intended or be likely to have, an adverse effect on competition.
(8) In determining whether any of the regulating provisions or practices have, or are intended or likely to have, a particular effect. it may be assumed that the persons to whom the provisions concerned are addressed will act in accordance with them.
(9) "Regulating provisions" means—

(a) listing rules,

(b) general guidance given by the competent authority in connection with its functions under this Part.").

The noble Lord said: My Lords, in moving government Amendment No. 128 I should like to speak also to Amendments Nos. 128A and 157A. We made clear in Committee in another place our intention to subject the competent authority to competition scrutiny in respect of its regulating provisions and practices. Currently, there is no such scrutiny under the Financial Services Act. Like the FSA more generally, the competent authority in going about its functions under the Bill can do things which have an impact on competition. Almost all regulation by definition involves restrictions which can affect competition in one way or another. We believe it right, therefore, that the special competition scrutiny regime should apply to the competent authority as well as the FSA and recognised bodies. The new clause, therefore, gives us the power to apply such a regime to the competent authority by order.
The reason for doing this by order is to allow flexibility to adapt the competition scrutiny regime should the power in Schedule 8 to the Bill ever be exercised to transfer the function to another body. For example, if we ever split the function between two bodies we might need to make changes to these provisions. We cannot foresee now whether we shall ever transfer the function and, if so, to what kind of body. However, given that we have such a power in the Bill, which was debated and agreed in Committee, we believe that it makes sense to introduce a provision for competition scrutiny arrangements. The Delegated Powers and Deregulation Committee has not raised any questions about our taking this power.
The new clause allows the Treasury to provide for the competition scrutiny of the competent authority's regulating provisions and practices. Subsection (3) provides that the order may include provision corresponding to that made by any provision of Chapter III of Part X. We intend to exercise this power to bring in the same arrangements for the competition scrutiny of the competent authority as the Bill has put in place for the Financial Services Authority.
The Director-General of Fair Trading will be placed under a duty to report on regulating provisions or practices of the competent authority which have a significantly adverse effect on competition. The

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Competition Commission will then, as in Part X, reach a conclusion on whether there is a significant adverse effect and, if so, whether it is justified. If the commission reports that any such effect is justified, in ordinary circumstances that will be the end of the matter. If, however, the commission reports that an adverse effect is not justified the Treasury will, in ordinary circumstances, have to direct the competent authority to make any necessary changes.
The only exceptions to what I have just said arise where the competent authority makes any necessary changes itself which obviate the need for Treasury action, or where the Treasury considers that the exceptional circumstances of the case lead it to a different conclusion from the commission. An example of this, which was outlined by my noble friend when we debated Chapter III of Part X, is where it is necessary to meet our international obligations. If the Treasury considers that there are exceptional circumstances which lead it to a different conclusion we intend to provide, as in Part X, that it must publish a statement of its reasons and lay a copy before Parliament. As has been indicated in previous debates, Treasury Ministers expect that this House or another place may wish to question them on their reasons for coming to a different conclusion.
I turn next to Amendments Nos. 128A and 157A tabled by noble Lords opposite. These amendments have the same effect, although the former in relation to the competition scrutiny regime for the competent authority and the latter in relation to the regime which covers the FSA more generally. The amendments would include within the scope of those items covered by the competition scrutiny regime matters which have a significantly adverse effect on competition between authorised persons and particular classes of authorised persons and the competitive position of the United Kingdom.
I am happy to reassure noble Lords that the first two elements of this definition—competition between authorised persons and between classes of authorised persons—are already included in the wide class of matters which have a significantly adverse effect on competition, but only in the case of the competition regime under Chapter III of Part X. Why? As noble Lords will appreciate, in the case of the new clause we are concerned with issuers, not authorised persons. The competitive position of the United Kingdom is also covered in so far as we are talking about things which the FSA does that damage competition. I fear that there may be some confusion as to how the Bill works, so perhaps I may take a brief step back. All regulation has an impact on competition. Regulation involves placing restrictions on those who can perform a regulated activity and the way that they perform it.
No one doubts that it is necessary, nor that too much can be counter-productive.
The Bill sets the FSA objectives and principles of good regulation, and subjects it to transparency and accountability arrangements which should lead it to strike the right balance between regulation and competition. However, if it does not, and it over-regulates so as to produce a significantly adverse effect
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on competition, then the competition authorities can step in and investigate and, ultimately, the FSA can be directed to change what it is doing.
However, if the FSA is regulating in accordance with its objectives and principles in a way that does not have a significantly adverse effect on competition, then what is there for the competition authorities to examine? There is, we certainly acknowledge, a separate issue concerning the competitive position of the UK, which noble Lords are attempting to introduce into the competition scrutiny regime. This separate issue is whether the regulatory framework set up by the Bill, including the objectives and principles, remains the right one in the light of developments in the UK and world financial markets. That is a legitimate question. But it is not one that is appropriate for the competition scrutiny regime.
As was made clear in our debate last week on Report, Ministers will keep the legislation under continual review. As part of that, of course, they will consider its impact on the UK's competitive position. Ministers will be responsible for their policies to Parliament in the usual way. If appropriate, Ministers could decide at some point to commission a review of the impact of the regulatory regime on competition and the competitive position of the UK. Whether the competition authorities would be the right bodies to carry out that particular task would of course be considered carefully if the issue arose.
In conclusion, let me try to reassure noble Lords that there is nothing missing in the competition scrutiny regime. It covers the right things, which are the effects of the FSA's regulatory provisions and practices on competition. Its job is not to review whether the FSA's objectives and principles are the right ones; and indeed the Bill does not give the Treasury powers to change those objectives and principles. These are things for Parliament to decide in the first instance, and for Ministers to keep under review thereafter.
In the light of this somewhat lengthy explanation, I hope that noble Lords will not move those amendments. I beg to move.
Lord Fraser of Carmyllie: My Lords, perhaps I may resort to the rather tired device of addressing the Minister before he sits down. We would want to reflect on his extremely helpful statement. Having pursued at earlier stages of the Bill interest in ensuring that the international competitiveness of the United Kingdom should be maintained, what the noble Lord said was encouraging.
The noble Lord may be encouraged to know that, having heard what he said, I may not return to some of the earlier issues in the Bill.
Lord Bach: My Lords, by phrasing it in that way, the noble and learned Lord allows me to rise to my feet to thank him very much.
Lord Kingslandmoved, as an amendment to Amendment No. 128, Amendment No. 128A:
Line 39, at end insert—
("(10) "Competition" includes competition between authorised persons, or particular classes of authorised persons, and the competitive position of the United Kingdom").
The noble Lord said: My Lords, in moving the amendment, I thank the Minister for his remarks. I too have had the benefit of my noble and learned friend's views. Perhaps the wise course would be for me to wait until I have read Hansard, reflect on what the Minister has said, and consider whether or not it is right to reintroduce the amendment at Third Reading.
In those circumstances, I confine my comments to the new clause, after Clause 93, introduced by the Government. I have only a technical point to make. The amendment introduces the same competition scrutiny for the rules of the authority as a competent authority—in other words, in its role as a listing authority—as is imposed by Chapter III of Part X on the authority as regulator, although it does not go into the detail of who will be the person responsible for keeping the rules and practices under review.
In two places the amendment refers to "a significant adverse effect" rather than "significantly adverse effect". I am sure this is a mistake. The difference is that with the phrase "significantly adverse effect" the adversity must be significant. However, in the (if I may so say) incorrect phrase, "significant adverse effect", the effect must be significant.
It is plainly a drafting point, but one of significance. It is for that reason that I draw it to the attention of the Minister. I beg to move.
Lord Bach: My Lords, significantly, the noble Lord may have a significant point! I should like carefully to consider it as he will consider carefully what to do with his amendments.
Lord Kingsland: My Lords, I am obliged to the Minister. In those circumstances, I beg leave to withdraw the amendment.
Amendment No. 128A, as an amendment to Amendment No. 128, by leave withdrawn.
On Question, Amendment No. 128 agreed to.
Clause 94 [Obligations of issuers of listed securities]:
Lord McIntosh of Haringeymoved Amendment 129:
Page 43, line 37, after first ("the") insert ("competent").
On Question, amendment agreed to.
Clause 101 [Interpretation of this Part]:
Lord McIntosh of Haringeymoved Amendment No. 130:
Page 47, leave out lines 17 and 18.
On Question, amendment agreed to.
Clause 103 [Insurance business transfer schemes]:
Lord Kingslandmoved Amendment No. 130A:
Page 49, line 29, at end insert—
("CASE 5
Where the scheme provides expressly that the provisions of this Part shall not apply to the scheme.").
The noble Lord said: My Lords, Amendments Nos. 130A and 131A are probing amendments. Part VII deals with the control of business transfers involving transfers of insurance and deposit taking.
We welcome those provisions, which were included at the later stages of the Bill's progress in another place. However the provisions of Clause 102 state that,
"No insurance business transfer scheme or banking business transfer scheme is to have effect unless an order has been made in relation to it under section 109(1)".
Such an order is an order for the court.
However, in Clauses 103(2) and 104(2), it is clear that an insurance business transfer scheme and a banking business transfer scheme can involve the transfer of only a part of the business. Is it intended that every business transfer involving the transfer of part of a business, no matter how small, must require the approval of the court before it becomes effective? In the case of the transfer of a very small business it may be possible to get consent to a scheme from all the policyholders and deposit holders involved. Is it still necessary to obtain court approval in such cases?
The clauses are beneficial, in that in the case of transfers of substantial businesses, it will not be necessary to obtain the consent of all policyholders and deposit holders. But should the provisions be compulsory in all cases? I beg to move.
9 p.m.
Lord McIntosh of Haringey: My Lords, perhaps I may respond by speaking briefly to government Amendment No. 131 in this group. It addresses a minor technical point. In its current form, Clause 103 refers to a body incorporated "in any part of the United Kingdom". It is more usual to refer to a body incorporated "in the United Kingdom". The amendment tidies the drafting.
As regards Amendments Nos. 130A and 131A, Part VII of the Bill would enable a person carrying on deposit-taking or insurance business to transfer that business to another entity with the sanction of the court. This is broadly equivalent to the arrangements for long-term insurance companies under the Insurance Companies Act 1982. In the past, different arrangements applied in other cases. General insurance business transfers could be approved by the Secretary of State; now the Treasury. Banking transfers required a Private Bill procedure. We have therefore taken this opportunity to rationalise the arrangements so that similar procedures apply in all these cases.
To a degree, the transfers of business arrangements are facilitative. Without these provisions, it would nearly always be impossible for a bank or insurance company to transfer its business to another firm. But

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that is not the only purpose that these provision serve. Part of the reason for introducing them is to provide that a proper regulatory scrutiny may be applied to transfers of business. Perhaps I may illustrate the potential difficulty.
If a company wanted to transfer its business, it could do so in a way whereby insufficient assets were transferred to meet the liabilities of the business being transferred. That could happen, for example, where a company was taking over a failing firm and seeking to combine the businesses. That could have the effect of jeopardising the solvency of the firm to which the business is transferred and could thereby threaten the interests of the policyholders from both companies.
A transfer of business could also be used as a device for a company to restructure its group so as to place all the liabilities in one subsidiary while retaining the assets in another, from which they could be siphoned off, leaving the remainder of the group and the policyholders insolvent. The noble Lord, Lord Kingsland, seemed to believe that that was a shocking allegation. However, I can assure him that it happened on occasions at Lloyds. Those might be extreme cases, but they illustrate the kinds of risk that we need to guard against. Therefore, the provisions of this part are intended to ensure that any transfer proposals affecting insurance or deposit-taking business are subject to proper scrutiny.
They will be subject to certain conditions being met. The conditions will include proper independent analysis of the financial standing of the firms concerned to ensure that the customers of the firms are not exposed to undue risks. The provisions give the authority a proper role in scrutinising the scheme and advising the court of its likely effect, and give any person likely to be affected by the scheme the opportunity to make his views known to the court. It will then be for the court to decide whether the transfer may take place, and whether any conditions should be imposed.
The Treasury has heard arguments that certain types of transfer should be excluded. The noble Lord, Lord Kingsland, referred to minor transfers. Clearly, there will be a question where minor transfers are involved whether the transfer is of a business as opposed to a contract, asset or liability. That would need to be considered on a case-by-case basis. The position is no different from that under the Insurance Companies Act 1982. It has never caused any problems in practice during the past 18 years, although I realise that out of context my reply might seem vague.
There are difficulties even in excluding certain kinds of transfer. For example, if a life insurer were to offer a small cash incentive to its policyholders to agree to the transfer, most would probably accept without having any understanding of the significance of what they had signed up to. Another case might be where only a small part of the business was to be transferred. But that itself raises question as to the extent of the assets that need to be transferred to ensure that both parts of the business remain viable.
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If there were a case for making exemptions, in our view it would need to be made by or under the Bill and certainly not, as Amendments Nos. 130A and 131A would have it, be a matter of discretion for the transferee and transferor firms.
However, we have concluded that it would be wrong to provide for exemptions of that kind over and above those set out in Clauses 103 and 104. The risks are too great. While it has been argued that in some cases court scrutiny is not necessary and would be burdensome, the Government believe that that can easily be tested under the procedure set out in Part VII. If a transfer is simple, raises no prudential concerns and has the support of the customers and creditors or the firms involved, there is no reason why the court process should be protracted.
However, I would like to draw attention to one point which has come to light in the past few days. That involves a possible exemption for transfers which are subject to approval procedures in overseas jurisdictions; for example, where two firms are incorporated in Australia and the merger or transfer of business would be approved in accordance with Australian law. That is something we are looking at and will come back to at Third Reading if necessary.
On the basis of what I have said, I urge the noble Lord, Lord Kingsland, not to press the amendments.
Lord Kingsland: My Lords, of course I recognise that from time to time fraudulent practices take place. It is extremely important to do everything in our power to prevent that happening. On the other hand, the Bill, in the circumstances I described, could prove extremely onerous for those who want to enter into what seems to me to be a straightforward and simple transaction. It is a question of finding the right balance.
When I have the benefit of seeing the Minister's speech in print I shall look carefully at what he has said and shall reflect on whether to return to the issue on Third Reading. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringeymoved Amendment No. 131:
Page 50, line 2, leave out (", or") and insert ("the United Kingdom; or
(b) is").
On Question, amendment agreed to.
Clause 104 [Banking business transfer scheme]:
[Amendment No. 131A not moved.]
Clause 115 [Market abuse]:
Lord Kingslandmoved Amendment No. 132:
Page 56, line 1, leave out from ("which") to ("the") in line 3 and insert ("falls below").
The noble Lord said: My Lords, the Minister will recall that in Committee this and a number of related amendments formed the basis of a long debate. As I said to the Minister earlier today, it is not my intention to repeat speeches I made in Committee to identical

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amendments I have tabled on Report. I simply wish to remind the Minister of the importance that we ascribe to the definition of "market abuse". I wonder whether he has had an opportunity since our last debate to reflect further on what was said and whether, in the light of that reflection, he has decided to make any changes to this part of the Bill. I beg to move.
Lord Eatwell: My Lords, Amendment No. 113A in my name and that of my noble friend Lord Lipsey is contained within this particular group. However, I intend to speak to it in its position in the Marshalled List and not at this point.
Lord Fraser of Carmyllie: My Lords, the noble Lord takes me slightly by surprise in that approach. I want to make a relatively brief intervention on this matter. I believe that the Minister will understand that my greater interest lies not so much in what is contained within Clause 115 as in a wish to explore at a later stage exactly what is the relationship between market abuse in terms of that clause and what the Financial Services Authority may determine is market abuse in terms of its code.
I believe that there are still some very real difficulties to be resolved before the Bill reaches the statute book. I must indicate to the Minister that, until they are resolved, I am, if one likes, neutral on the question as to whether or not it is desirable to introduce into the Bill the concept of the "regular user" of the market. The noble Lord, Lord Grabiner, made an extremely telling and worthwhile point in Committee. He said that if one examines the Bill properly and looks at what is contained within Clause 115(10), it is clear that one must have regard not only to a "regular user" but to a "reasonable" regular user of the market. That seems to me to be a concept trundled up on an omnibus from Clapham.
In some senses, it may be quite helpful to grasp what we are trying to establish as the test against which one examines conduct in the market. However, I am not quite sure about that because, before I come to a personal view on whether or not that is desirable, I need to know whether we properly understand what the FSA can do within its code in relation to inclusion of examples or indications of what is unacceptable market conduct.
I believe that the importance of the role of the Financial Services Authority can be described as follows. One reason that London has become preeminent in the world as a centre for financial services is because over the past 10 or 20 years it has been extraordinarily innovative. It may be that some of the innovation which those who practise financial services in the City would like to introduce is simply unacceptable and should not be allowed to continue. I have difficulty in grasping the idea of the "reasonable regular user" of the market when confronted with a novel, innovative approach to marketing or a financial product. I am concerned about trying to determine whether or not that is market abuse. That "reasonable
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regular user" of the market will simply have to shrug his shoulders and say, "I don't know whether that is the sort of conduct that I expect".
It seems to me that, in the circumstances of that type of innovation, one desirable feature of the FSA would be to place people in a position where they could stand back and examine exactly what is going on. In its code, the FSA could indicate, "We understand that that is innovative; that it is clever and new", and say, "Either that is completely unacceptable and you cannot do that any more without suffering the risk of being prosecuted or convicted for market abuse" or "Yes, that is acceptable, innovative and helpful to the international competitiveness of the City of London". The Minister will understand that that is something of a hobby-horse of mine.
However, I do not understand how one tests the desirability of such a change in the way that the market works if one holds only to the idea of a "regular user" of the market who in the past has never encountered such a product or marketing approach. I shall return to this issue when I come to Amendment No. 133BA.
Earlier today, the Minister indicated, in a slightly tart fashion, that something of our approach has been dilettante and irrational. I would indicate to the Minister at this stage that there seems to be a coherence in the approach that I take to what my noble friend advances, and in the queries I raise with my three amendments.
9.15 p.m.
Lord Newby: My Lords, I suspect that all of us can agree that Clause 115(1)(c) contains some of the most tortuous wording in the Bill. I think that is for a very good reason.
This subsection is seeking to strike a balance between, on the one hand, allowing action to be taken where there is market abuse but, on the other, not providing too tight a framework—a framework which might in people's minds stifle innovation and arrest an activity that would be perfectly legitimate. This is a balancing act. Like many balancing acts, it is slightly inelegant.
This amendment is the result of a process which any of your Lordships who have done much drafting will have been through when grappling with a complex problem. You start with a short statement which seeks to encapsulate it; you then realise that it might not quite work, so you add in a subordinate clause and another phrase. The Government have done a fair bit of that. The Opposition have said that it is now far too complicated and that we should have a much shorter, clearer definition. In the process, the use of the phrase "falls below" introduces a rather vaguer concept than that in the Bill. Everyone has been seeking clarity, but not always feeling that we have found it.
Of the two choices on offer, however, the Bill is certainly clearer to me, as a layman, than what is suggested by the Opposition. We would therefore prefer to leave the Bill as it stands.
Lord McIntosh of Haringey: My Lords, I am sorry that my noble friend Lord Eatwell has chosen to

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separate out his group, because I much prefer to be the pig in the middle. I can always argue that if people are attacking me from both sides, there must be something right about what I am doing—a feeble argument, I know, but good enough for your Lordships after dinner! "Don't annoy them", the Chief Whip is saying!
I am grateful to the noble Lord, Lord Kingsland, for the way in which he has spoken to this amendment and I am grateful to him for what may be seen to be terseness, although I think he has another word for it—"telegraphic", rather.
I say to the noble and learned Lord, Lord Fraser, that I may be tart on occasion, but I have never accused him of being dilettante. I have always taken his arguments extremely seriously.
The effect of Amendment Nos. 132 and 133 would be to delete the reasonable regular user from the test in Clause 115(1)(c) and make the relevant standard for determining whether the abuse had occurred that of the person doing the abuse. This is absolutely critical.
The amendments would change Clause 115(1)(c) so that behaviour which meets the other conditions in Clause 115 would amount to abuse only if it is behaviour—if I may do a Keeling schedule on the noble Lord's amendment—"which falls below the standard of behaviour reasonably expected of the person or persons concerned in his or their position in relation to the market".
If the regular user is deleted from Clause 115(1)(c), I am not clear as to who would then be deciding whether there had been a failure to observe expected standards. I am particularly puzzled, as the noble Lords have chosen to leave the regular user in subsection (2) of Clause 115.
The noble Lord, Lord Kingsland, said in Committee that the reason that he sought to remove the expression "the regular user" was that it imported a subjective element which he wished to exclude. I simply do not understand this. There is no subjective element in the test as it stands. It is an objective test.
The view of the reasonable regular user is the view which an impartial third party who regularly uses the market would take, on an objective and reasonable basis, of the question of whether a particular person's behaviour represented a failure to observe the standard of behaviour reasonably to be expected of someone in that position.
I thought that the noble Lord, Lord Grabiner, made that entirely clear in Committee. He said in relation to Clause 115(1)(c) that,
"[it] is drafted in entirely objective terms; it is not subjective at all. I emphasise the words in the first line which states:
'which is likely to be regarded by a regular user'.
That does not mean that the person who is, so to speak, being charged with market abuse on a particular occasion; it concerns 'a regular user'—the nominal person; the anthropomorphic version of the human being we are concerned with".—[Official Report, 21/3/2000; col. 215.]
Removing the "regular user" from this element of the definition of abuse would, at a stroke, remove much of the certainty which the new test builds in. Most market participants are "reasonable regular
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users" themselves and will know what is okay and what is not. That is the whole point of the test. It is the bad apples who do not observe expected standards—the standards that the markets rely on to work properly—who are the target of the new regime.
The second amendment, Amendment No. 133, does something quite strange. Currently Clause 115(1)(c) refers to the standard of behaviour reasonably expected of a person in the position of the abuser. That person is not the abuser himself, but a hypothetical person. For example, if the alleged abuser is a company, then the person in the position of the abuser for the purposes of this clause is a.n. other company director.
If the behaviour is something which fulfils the other elements of Clause 115—for example it involves a squeeze coming with Clause 115(2)—the question the reasonable regular user is addressing is whether there was a standard of behaviour reasonably expected of any person in the same position in relation to the market as the squeezer. He does not decide whether there is a standard of behaviour reasonably expected of a person in the position of the alleged abuser by looking at the personal characteristics of the alleged abuser. That would be absurd. One would reasonably expect a dishonest person, for example, to commit abuse.
However, that is precisely the effect of Amendment No. 133. I think it should be immediately clear that this would produce a bizarre result. Why should one expect any other standard of behaviour from an abuser than a very poor one? And if that is the case, how could the FSA take action against him? How would market protections be enhanced?
I must say that I am not sure that it would be possible to drive a more damaging coach and horses through the market abuse regime than would be done by these amendments.
The noble and learned Lord, Lord Fraser, referred in advance to the relationship between market abuse and the FSA's code. I understand that he intends to return to that with his later amendments so I shall restrict my remarks to saying that what constitutes market abuse will be determined by the provisions of Clause 115. At the heart of the test set out in the clause is the concept of the reasonable person who regularly uses the market concerned.
I believe that it is within the bounds of the concept of the reasonable man that he can take a view on the acceptability of innovative behaviour, to which the noble and learned Lord, Lord Fraser, was referring, as well as on the acceptability of well-rehearsed behaviour.
The code is not determinative of what market abuse is. However, where a person acts in accordance with the code, he will have a completely safe harbour. A person who acts in contravention of the code will not automatically be found to have engaged in market abuse. But the fact that he has acted in contravention of the code will clearly carry evidential weight. But we can return to that matter on the later amendment.

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I return to Amendments Nos. 132 and 133. They would be extraordinarily damaging if they were to be agreed to and I urge noble Lords not to press them.
Lord Kingsland: My Lords, I am not surprised by the Minister's reply. He, equally, will not be surprised to hear that, having read in Hansard, tomorrow morning what he has said I shall probably think it prudent to retable this amendment on Third Reading. Meanwhile, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 133 not moved.]
Lord Eatwellmoved Amendment No. 133A:
Page 56, line 5, at end insert (", acting in the interests of the market as a whole").
The noble Lord said: My Lords, on Second Reading and in Committee, my noble friend Lord Lipsey and I expressed considerable reservations about the regular user test that is the foundation stone of the definition of market abuse in Part VIII of the Bill.
Our reservations derive from two characteristics of the regular user test. First, as currently formulated, the use of the concept of the regular user to define market abuse seriously weakens current defences against market abuse by authorised persons. I provided examples at Second Reading. At no time has the Minister sought to refute those examples. I must presume that he accepts their validity.
Secondly, we believe that the regular user test provides no clear standard of acceptable behaviour by any market participant, authorised or not, since the regular user of the market, albeit a reasonable person, might, in the light of longstanding custom and practice in a given market, reasonably expect behaviour to occur, even if that behaviour was not in the interests of the operation of the market as a whole.
Noble Lords may remember that in earlier debates I illustrated the latter point by reference to an analogy drawn from the game of association football. Everyone knows that shirt-pulling has become endemic in modern professional football; and yet a regular user—that is, a reasonable professional footballer—would expect his colleagues to pull shirts, even though such behaviour is damaging to the game as a whole.
Noble Lords will be relieved to know that that is the last reference I shall make to that particular analogy, but I believe that it aptly covers the case. Most worrying of all, the point made that what is customary is what is expected by the reasonable person has not been answered by the Minister at any time. I hope that he will answer that point tonight. The point that I beg him to consider is, if in the financial services industry behaviour that abuses the market were typical of the participants in that market, why would the regular user, however honourable he might be, not reasonably expect that standard of behaviour from others? Indeed, it would be irrational to do otherwise.
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I had not intended to refer to the remarks made in Committee by my noble friend Lord Grabiner, as he is not here this evening. However, since he has been quoted extensively by the Minister, I feel that I must take up his arguments. My noble friend's argument was essentially that a regular user, being a reasonable person, could reasonably expect participants in the market to behave in an honourable manner and not to abuse the market; that is, a reasonable person will be a person of high standards and would expect others, too, to have high standards. I must say that at the time when I listened to my noble friend's argument, I found it a little odd. Even if the regular user is a person of high standards himself, why should he reasonably expect others to share those standards?
I have consulted colleagues at the University of Cambridge who hold appointments in law in an attempt to discover whether that is an oddity and is one of those charming foibles of English law designed to confuse non-lawyers. The consensus among those dons I consulted was that my noble friend presented a good case, but not a decisive case.
That is the problem with the Government's position on the regular user test. They have an argument, but it is not a conclusive argument. It is quite possible that, as currently formulated, their position will fail in the courts. In that case, the entire market abuse section of the Bill would collapse. I cannot for the life of me understand why the Government are prepared to take such a risk with that section of the Bill and with the reputation of financial services regulation in this country.
In Committee, the Minister kindly offered to meet my noble friend Lord Lipsey and me in order to allay our fears about the characterisation of the market abuse regime in the Bill. I am grateful to the Minister and to his officials for giving up their time to that meeting. Sadly, the meeting had exactly the opposite effect from that for which we had both hoped. I am even more convinced that Part VIII is seriously flawed. That is because up until the time of the meeting I had believed that Clause 116 provided a defence against the damaging interpretation of the regular user test to which I have just referred. As noble Lords will be aware, Clause 116 requires the FSA to produce a code containing such provisions as the authority considers will give appropriate guidance to those determining whether behaviour amounts to market abuse.
That, I hoped and believed, provided the opportunity for the authority to set standards and even to raise standards. The noble and learned Lord, Lord Fraser of Carmyllie, pointed out in Committee that there is a certain ambiguity in Clause 116. He has made that argument again this evening. The authority is to produce a code, but it is to provide guidance about the views of the regular user. That is the core of the ambiguity.
Sadly, when I put this point to the Minister and his officials they declared that there was no ambiguity because what is meant by Clause 116 is that the FSA should simply codify the views of the regular user. It should not express its own views. The Government's

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intention is that, in constructing the code, the authority should simply mirror the views of the regular user. Indeed, the Minister made exactly that point in reply to the noble and learned Lord, Lord Fraser of Carmyllie, a few moments ago. That interpretation may be regarded as rather odd particularly in the light of Clause 116(2) but, never mind, the Government's view is that the regular user rules, and not the authority.
That brings us back to the basic definition in Clause 115. In his defence of the regular-user test, the noble Lord, Lord Grabiner, told us that the regular user is a hypothetical individual of decent moral standards. But even a hypothetical person must draw his or her views from actual experience of the market, from the environment in which he or she works.
So let us consider how the views of a reasonable person might interact with the environment in which he or she works. Let us take as an example of a reasonable person a barrister, perhaps even a QC. Let us suppose that our barrister is an expert in tax law. Is it not reasonable to expect that our QC will, when acting for taxpaying clients, seek to identify all measures to minimise their tax liability within the bounds of the criminal law on tax evasion? That is his job. That is what he would expect a reasonable person to do. Is that not exactly how a large number of very rich people manage to pay very little tax today? Is it not that minimisation of tax payments within the law exactly what a regular and reasonable person would expect, and yet is it not clear that it is that kind of tax avoidance by the wealthy that brings the operation of the whole tax system into disrepute? That point has been well recognised by the Chancellor of the Exchequer who is now trying to correct it.
My fear is that the market abuse regime, as defined in the Bill, will have the same outcome: that the boundary to the behaviour reasonably expected by a regular user of the market will be the boundary defined by the criminal law, so that the whole attempt in this Bill to define an entirely new regime to police market abuse other than by the criminal law will fail. Noble Lords will be well aware of the fact that the criminal law regime against market abuse has not performed very well and that that failure has damaged the reputation of the City of London.
The amendment in my name and that of my noble friend Lord Lipsey seeks to rescue the regular-user test by providing that the action reasonably expected by the regular user should be such as to be,
"in the interests of the market as a whole".
The importance of this qualification should be clear from my example of the tax QC. If tax avoidance, although within the criminal law, were against the interests of the fiscal regime as a whole, perhaps by bringing it into disrepute, then in the spirit of Amendment No. 133A, it would be shunned. By analogy, behaviour that is damaging to the market as a whole would be shunned by the reasonable regular user since it would amount to market abuse if this amendment were to be accepted.
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I hope that my noble friend the Minister is minded to accept at least the spirit of this amendment. If, sadly, he is not, I ask him this: would he deem acceptable behaviour which meets the criteria of Clause 115(1)(c), as currently drafted, but which is not in the interests of the market as a whole? Would he deem that acceptable? The new market abuse regime is a vital part of this Bill and I fully support the Government's objectives in framing it. Acceptance of this amendment would secure the Government's goal beyond all reasonable doubt. Rejection of it would place the Government's goal at risk. I beg to move.
9.30 p.m.
Lord Lipsey: My Lords, this has been one of the livelier debates in the always lively proceedings on this Bill, featuring as it did at one stage in Committee a debate on whether this amendment would apply to financial markets the moral standards of the late Sir Stanley Matthews or of Diego Maradona.
This is the second cut by my noble friend Lord Eatwell and myself to try to improve the clause so as to make it clear that we want Sir Stanley Matthews financial markets. In our first attempt we suggested that there should be a reasonable and ethical user, but that did not meet the approval of the referee, so we are trying again with this amendment.
I cannot improve on the arguments set out so brilliantly by my noble friend. However, when we have discussed this matter with Ministers and their advisers, their general line has not been that we are aiming at the wrong point, but that the clause as drafted will broadly have the effect that we seek. If that is so, that is fine. The only point that I make is that it is not enough that it will have that effect, or that Ministers think it will have that effect, or even that if it came before a court that the court will consider that it will have that effect. It is terribly important that the regulator, who has to decide how, when and where to use the clause to cope with market abuse—to cope with Diego Maradona—believes that the clause will have that effect.
I do not easily understand why it is hard for the Government to accept this amendment if it is true that it is of nil effect. I believe that it would merely clarify the situation. But at least I ask that, in reply, the Minister gives the regulators the comfort that they require to make them confident that the clause indeed has the effect that he and the Government believe that it has and, therefore, that it can be effective in ensuring that Sir Stanley rules and not Mr Maradona.
Lord Fraser of Carmyllie: My Lords, the practice of indolent judges who cannot be bothered to prepare their own judgments is to say, "I concur in the judgment previously delivered". There is little in what the noble Lord, Lord Eatwell, has said that would not lead me to conclude that I could offer up the same view.
His words seem to be exceptionally apposite. They penetrated with great clarity of analysis exactly the problem about the market abuse provision that is allowed for in the Bill. I hope that the noble Lord on

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the Front Bench will not find some contentment in the idea that, if he is criticised from behind and from this side of the House, in some bizarre fashion he must have achieved an acceptable balance. This is a situation that he ought to acknowledge and understand as one that he should take away and reflect on carefully.
I do not have the advantage of being president of Queens' College, Cambridge. I greatly admire the position of the noble Lord, Lord Eatwell, and the opportunity that he has to consult such distinguished legal academics as are to be found in Cambridge. I certainly hope he talked to Dr Ferran, who contributed in such a distinguished fashion to the Joint Committee.
I hope that the Government understand that nobody is trying to attack what is being done about market abuse. We are still intent, one way or another, on achieving a regime that will be beyond challenge once it is put in place. I still have a grave concern that the provisions that are to be found in Clauses 115 and 116 simply do not mesh together. The outcome will not be a reduction of the abuse of the market that there is in London, in particular, and in the UK generally; but it will simply provide a field day for lawyers to work their way through these two sets of provisions and find that, far from being an advantage to those who wish to stamp out abuse, it will exacerbate the situation.
If the Minister looks back to such problems as there have been in relation to insider dealing—I acknowledge that his government were not in office at the time—he will realise that the one thing that all sides of the House must seek to achieve is a regime that is settled; one that is direct; and one that brings to account those who abuse the market.
I have been intrigued by this amendment. For my purpose, had the amendment been put within Clause 116, which requires the FSA expressly to put together descriptions of behaviour that amounts to market abuse, acting in the interests of the market as a whole, that might have been another route to the same objective. I am not trying to draft on my feet. I hope that those on the Government Front Bench do not regard this set of opinions as the opportunity to say that there is such a degree of division that we cannot come to an acceptable and satisfactory arrangement. We have the same objectives. I hope that the Minister will appreciate, even at this relatively late hour, that this is not a destructive approach to this part of the Bill; we want to improve it.
I am not entirely sure that my Front Bench will always agree with me. But I am not averse to the idea, as my later amendments will indicate, that the FSA should have a role in that. The only point with which I disagree in the approach of the noble Lords, Lord Eatwell and Lord Lipsey, is that I have difficulty in believing that the reasonable, regular user of the market—that objective creature—will be sharp enough to pick up the sort of abuse that may be emerging. It is important to understand that, if people wish to engage in financial services in the City and they are not sure whether or not what they propose is
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acceptable, as I understand Clause 116 and other provisions, they will have the right to go to the FSA and say, "This is what we propose to do. Is it acceptable?". If the FSA says that it is acceptable, they have their safe harbour.
In those circumstances, the FSA is in a far better position than anyone else to know about, to listen to, and to determine upon innovations in the City and then come to a conclusion as to whether or not specific innovations are acceptable. It can be spelt out there and then if it is an abuse. It follows from that that those who then pursue that innovation will suffer the penalties that flow from it. Alternatively, if the FSA regards it as being acceptable behaviour and an innovation it wishes to see continued in the City, that will not be trammelled in any way.
I have difficulty in believing that simply relying on this reasonable, regular user of the market, will provide a complete solution. I could continue to speak on this matter for a long time. It is not difficult to envisage a circumstance—there are some distinguished court practitioners in your Lordships' Chamber tonight who can also do this—when those who are reasonable, regular users of the market give evidence in the best of faith to a tribunal or other body but come to completely different conclusions. In such circumstances, what possible conclusion could the tribunal draw? The only definite view one could reach is that no decision is more obviously amenable to judicial review than that.
9.45 p.m.
Lord Newby: My Lords, these debates have been conducted on a theoretical plane and my question on the amendment is really for those who tabled it. My question relates to the more practical work that the FSA has been doing in terms of the code. As noble Lords will be aware, the authority has already gone some way towards drawing up a draft code. The matter was put out to consultation and received feedback, which was all published. What emerged and what, I suspect, the draft code will become—noble Lords will correct me if I am wrong—is the equivalent of the rules of the game, to continue the football analogy.
It seems to me that there are already equivalent provisions within the code against shirt pulling. Indeed, there are provisions against the Maradona method of scoring goals. If rules are drawn up in consultation with practitioners—that is to say, the regular users—which command broad support not just in the market place but also among the other audiences, including Members of this place, who have a chance to study such documents, I believe that we shall then have, arguably, a series of rules that will avoid many of the theoretical concerns expressed by noble Lords.
The key final point is the fact that the FSA is the referee. Indeed, if the authority were a good referee at the moment, it would, like all good referees, be penalising people who were shirt pulling; and would, equally, be penalising the Maradona. I would welcome any comments from noble Lords opposite explaining

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why, in their view, this procedure and the drawing up of the code gives them such concern about the proper avoidance of the abuse that everyone is keen to stamp out.
Lord McIntosh of Haringey: My Lords, the amendment would provide that the reasonable regular user, when considering the behaviour engaged in by person X, would look at whether that person had failed to observe the standard of behaviour reasonably expected of a person who was,
"acting in the interests of the market as a whole".
I am grateful for one thing that has emerged from this debate; namely, that my noble friend has promised not to use football analogies any more. As he knows, I am out of my depth in that respect. My noble friend the Chief Whip tells me that shirt pulling in the penalty area would immediately attract a penalty kick against the person responsible. So perhaps the analogy is not perfect. But at least we can leave that and talk in properly theoretical and metaphysical terms.
It is a fact of life that people who engage in transactions in the market do not do so because it is in the interests of the market as a whole; they do so because it is in their own interests or in those of their clients. Therefore, if we were to insert the words,
"acting in the interests of the market as a whole",
it would raise all sorts of questions about what acting in the best interests of the market meant in an individual case. Indeed, it would introduce a new standard into this area.
Let us suppose, for example, that the market is going through a volatile period. Would selling shares during that time be something that would represent acting in the interests of the market as a whole? Arguably, it might not be, but clearly we do not want to stop people selling shares during a volatile period. Perhaps another such example might help to illustrate the difficulties with this approach. I may, for example, be about to sell a large holding of shares. To minimise the impact on the market, and thus the price I can get, let us suppose that I decide to sell off those shares in small parcels. It is possible that my doing so might give a mistaken impression of supply and demand. There would be nothing wrong with what I was doing and clearly it would not fail to meet expected standards, but what if the provision were amended so that the regular user was considering my action against what he would expect from a person who is acting in,
"the interests of the market as a whole"?
if I am acting in the interests of the market, should I, or should I not, tell people that I am selling off a large number of shares? I am afraid that it is not clear that the phrase which this amendment would add to the Bill relates to what happens in financial markets even when people are not doing anything which by anyone's standards—those of the noble Lords, Lord Eatwell and Lord Lipsey, of the noble and learned Lord, Lord Fraser, or my own—is wrong in itself.
However, while people who engage in transactions in the market act in their own interest, that does not mean that anything they do in their own interest is, by
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definition, acceptable behaviour. Whether someone has committed market abuse or not depends on whether he has failed to observe expected standards. Of course markets depend upon those who use them having confidence in their fairness and efficiency. It follows, therefore, that the standard of behaviour which is reasonably to be expected of persons using such markets will be one which takes into account the need for the market as a whole to operate fairly and efficiently, which is in the interests of all users. That is implicit in the test for which Clause 115(1)(c) makes provision and it does not need to be further stated.
My noble friend drew an analogy with a tax lawyer. That analogy does not hold good because a reasonable person would expect a tax barrister to use the arguments most favourable to his client's case. That is his job as an advocate. The reason able user test is based on an objective and disinterested view of what is appropriate behaviour.
I was asked about the role of the code and whether we should use the FSA to raise or set standards. The regime rests on the definitions in Clause 115. Clause 115(2) specifically picks out three elements of behaviour: insider trading; false or misleading impression of supply or demand for investments; and distortion of the market. In constructing the code, the FSA can set down its opinion of what constitutes market abuse, but, to be abuse, market behaviour has to fail to meet expected standards. The FSA should reflect those standards. It is not for the FSA to say what the expected standards are; otherwise we could get rid of all the definitions in Clause 115 and say that market abuse is what the FSA says it is. That is not what we are doing here.
The noble Lord, Lord Lipsey, mentioned a similar point. The statute book would be several times the length it is if unnecessary words were inserted in order to make things clear which in our view are already clear. I assure noble Lords that the effect of these provisions is not to allow the worst standard of conduct which might prevail to prevail but neither is it to allow the FSA to determine what is best for markets.
As I said, on the basis that the standard of behaviour which is reasonably to be expected of persons using such markets will be one which takes into account the need for the market as a whole to operate fairly and efficiently, which is in the interests of all users, I invite my noble friend not to press the amendment.
Lord Eatwell: My Lords, I am grateful to the Minister for his reply. However, he will not be at all surprised to hear that I find it enormously disappointing. In fact, I find it distressing in the sense that he has reiterated the point—in a way he answered the point made by the noble Lord, Lord Newby—that the FSA cannot be, in the words of the noble Lord, Lord Newby, the referee. It cannot determine the rules. However, it is the regular user whom the Government believe to determine what the FSA can say. I find that position very worrying.
The noble Lord has pointed out the difficulties of the approach taken by myself and the noble Lord, Lord Lipsey. I have some sympathy with the strictures

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which he has brought to bear upon our formulation. However, I find his argument that the reasonable regular user and reasonable persons would expect the markets to be free and fair naive in the light of behaviour in financial and commodity markets around the world. That is not how markets work. I regret to say that we shall have to return to this matter at Third Reading if by that time the Government have not considered these matters further and taken the steps which will rescue this part of the Bill and allow them to achieve the goal they seek. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmylliemoved Amendment No. 133AA:
Page 56, line 18, leave out ("may") and insert ("shall after consultation with all relevant interests").
The noble and learned Lord said: My Lords, we have had such an interesting and important debate that it is something of an unnecessary interlude to interject this amendment. I cannot wait to get back to the next part of our debate, which I promise the Minister will be somewhat shorter than the first part.
The amendment seeks to ensure that the Treasury will consult with all relevant interests before prescribing the markets to which the clause applies. If the Minister's response is, "Of course", that will be more than sufficient for my purposes. I beg to move.
Lord McIntosh of Haringey: My Lords, I do not think that I can quite get away with saying, "Of course", and then sitting down.
As a general point, we did, of course, twice debate in Committee obligations for the Treasury to consult on proposals to make secondary legislation; we did so on 20th March and 30th March 2000. I shall not repeat the detailed explanations that I gave there, but the Treasury will act in accordance with the usual procedures for making secondary legislation. There is a presumption in favour of consultation, and noble Lords will be aware that the Treasury has already consulted on drafts of a number of draft statutory instruments to be made under this Bill.
Specifically on the power to make orders under Clause 115, the Treasury has consulted on the proposed regulations to be made under Clause 115(3). A draft of the order was published in June 1999 in a consultation document entitled Market abuse: prescribed markets. This proposed that the regime should cover the markets run by the six recognised investment exchanges and the investments traded on them.
I should point out that we consulted more widely than would strictly be required by the amendment. As the Treasury has already done what is required by the amendment—and, indeed, gone further—I hope that the noble and learned Lord will consider that I have said the equivalent of "Of course".
Lord Fraser of Carmyllie: My Lords, I believe that the Minister could have said "Of course". I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingslandmoved Amendment No. 133B:
Page 56, line 43, at end insert—
("( ) Behaviour does not amount to market abuse within subsection (2)(b) if the impression given is misleading only because of information which the individual whose behaviour it is does not know about it because it was withheld from him in conformity with control of information rules.").
The noble Lord said: My Lords, in moving Amendment No. 133B, I shall speak also to the other two amendments in the group, Amendments Nos. 133E and 133F.
So far as concerns Amendment No. 133B, the Minister in another place—I think it was the honourable lady Patricia Hewitt—said in Committee that it was important that the FSA rules should be a safe harbour because they would provide for stabilisation and for Chinese walls. I think that this observation is so crucial that it ought to be stated on the face of the Bill. If the Minister were to glance at government Amendments Nos. 202 to 206, he would see that it is so stated—or, rather, that the Government intend it to be so stated—in relation to the criminal offence of market manipulation. All the Government have to do is to follow the logic of that criminal offence into the offence of market abuse.
In this case, exemption should apply where a person makes a statement, promise or forecast without knowing that it is misleading, false or deceptive because the relevant information was withheld from him in compliance with the control of information rules. In addition, the company itself should be treated as not knowing or being reckless if the individual making the statement, promise or forecast was not aware of the relevant information and was not told to make it by someone who was.
Amendment No. 133E complements opposition Amendment No. 132. The Minister will recall that Amendment No. 132 removes from Clause 115(1)(c) the expression,
"which is likely to be regarded by a regular user of that market who is aware of the behaviour as a failure on the part of the person or persons concerned to observe".
Amendment No. 133E inserts that concept in a separate part of the Bill. The Minister will recall that a similar approach was taken by the Opposition at the Committee stage.
Finally, Amendment No. 133F to Clause 119(2) is designed to bring in another ground on which the authority cannot impose a penalty. It seeks to reintroduce a situation where no penalty can be imposed if the accused did not realise that he could be misinterpreted in what he was saying or doing. The two conditions referred to in the amendment are the market abuse limbs, consisting of misleading or distorting the market. I beg to move.
10 p.m.
Lord McIntosh of Haringey: My Lords, clearly we have not succeeded in communicating the extent to which we have introduced changes to the Bill to improve protections in this area on top of those made at earlier stages of the Bill's passage through Parliament.
First, Clause 119(8) now provides that behaviour does not amount to market abuse if it conforms with FSA rules which include a provision saying that behaviour does not amount to abuse. That was inserted to remove any uncertainty that compliance with specified rules— for example, those on control of information: "Chinese walls rules" as they are known—and compliance with price stabilisation rules will provide a safe harbour from a charge of market abuse.
Secondly, we improved the protections for those who take reasonable precautions and exercise due diligence to avoid engaging in market abuse, and for those who believe on reasonable grounds that their behaviour does not amount to market abuse. In addition to these safe harbours, the Government in another place provided that behaviour which complies with express provisions of the code of market conduct, which the FSA is required to produce under Clause 116, cannot amount to market abuse.
The amendments do not make any improvements to the safe harbours we have already introduced. Amendment No. 133B would provide that it is not market abuse if an individual gives a misleading impression as a result of not knowing about something because it was withheld from him in conformity with control of information rules. We shall shortly discuss these rules in the context of government Amendment No. 156.
This is a statement of the obvious. While FSA rules on control of information could cover this situation, it is clear that the person concerned would not be breaching expected standards, and indeed that he would have reasonable grounds for believing that his behaviour was not abuse.
There may be some misunderstanding in the area of control of information. The concern is not so much with the position of the individual, who is clearly protected, but his firm. Even if various parts of the firm do not have all the information as a result of Chinese walls, the firm considered as a whole clearly will have all the information. The danger is that if one person in a firm dealing with a client does not have information which another person in the firm knows about, there is a danger that the firm, taken as a whole, will have misled the client.
While we could specify this situation and others in the Bill —for example, behaviour in conformity with price stabilisation rules—we think that the better approach is to leave it to the FSA. The FSA has discretion to make control of information rules and price stabilisation rules. It will do so, and work is in hand. But the legal position is that it does not have to. So putting explicit safe harbours on the face of the Bill rather than leaving it to the FSA to decide when safe
680
harbours should apply does not really change the position. In any event we want to provide flexibility here since there may also be other rules which the FSA would want to form a safe harbour from market abuse.
The FSA will, of course, have to consult on all of its rules. In doing so, it may identify the need for further protection or conclude that it does not want to give protection in all circumstances. The unscrupulous are very good at exploiting loopholes.
Amendments Nos. 133E and 133F concern the circumstances in which the FSA can impose a penalty for market abuse or issue a public statement. As I have said, this is an area where we made improvements in Committee.
I am rather surprised by Amendment No. 133F. In Committee, noble Lords opposite tabled an amendment which sought to restrict the protection for "belief", which was present in the previous version of Clause 115, to situations where someone believed "on reasonable grounds" that he had not engaged in market abuse.
We met the substance of this amendment when we included the protections that are found in Clause 119(2). But noble Lords now follow it up with an amendment which would provide a safe harbour for someone who had given a misleading impression or distorted the market if he did not "anticipate" that his behaviour would do this. Where have the "reasonable grounds" gone on which noble Lords were so keen in Committee? Are they now saying that it is all right if someone does not have reasonable grounds for his belief?
If I assert that I really did not anticipate that my behaviour would lead to regular users being given a misleading impression, should that be the end of it, even if I did not have reasonable grounds for that anticipation? If noble Lords are not seeking to remove the "reasonable grounds" element, then this amendment adds nothing to what is already in Clause 119(2). If the noble Lord, Lord Kingsland, is seeking to remove what he previously desired to include in the Bill, I must resist that as strongly as I welcomed the previous position.
Amendment No. 133E would introduce a change which would be at best unnecessary and at worst extremely damaging. It is unnecessary if by the amendment the noble Lord, Lord Kingsland, means that the behaviour satisfies the expected standards of behaviour which a reasonable regular user of the market would expect a person in the alleged abuser's position reasonably to observe. That is already provided for. But if the noble Lord means that behaviour which is widespread can never be market abuse, then it would be a terrible change to make. I am sure that that cannot be the noble Lord's position. There is a big difference between "accepted market practice" and "acceptable market practice".
Perhaps I may give an example. Let us suppose that insider dealing were rife on a market. Would that mean that, just because everyone is "at it", it should fall outside this regime? Clearly it should be capable of being caught. That is what the regime does by

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introducing the concept of the regular market user, a reasonable man who knows right from wrong, and by looking at the expected standards of the market from his perspective. We cannot accept these amendments.
Lord Kingsland: My Lords, I thank the Minister for his response. In view of later government amendments, I was rather surprised to hear what the noble Lord said about Amendment No. 133B. However, I shall reflect on what he has said and, if necessary, reintroduce the amendment at Third Reading; likewise with respect to the noble Lord's remarks on Amendment No. 133E.
As regards Amendment No. 133F, here we have probably arrived at a point of deadlock. So, when we reach that amendment, I shall seek to test the opinion of the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 116 [The Code]:
Lord Fraser of Carmylliemoved Amendment No. 133BA:
Page 57, line 11, leave out ("among other things").
The noble and learned Lord said: My Lords, I have tabled three amendments that seek to amend Clause 116. It may be surprising, in view of what I have hitherto argued, but essentially they seek to restrict what should be included within the code. Thus, if my amendments were accepted, the code would not allow for a specification or description of behaviour that in the opinion of the authority amounted to market abuse. All that the code would contain would be descriptions of behaviour that in the opinion of the authority did not amount to market abuse, or factors that in the opinion of the authority should be taken into account in determining what behaviour did not amount to market abuse.
It seems to me—it follows from what the Minister said—that in the context of market abuse, the code provides for nothing more than a safe harbour; that is, if the code says that something is not market abuse, it does not matter what a reasonable regular user of the market thinks about the conduct. Under Clause 118, if the code says that certain behaviour is not market abuse, that is the end of it. Therefore, one is wholly safe, provided that what one does is within the code.
What surprises me about the Government's approach is that I believe it to be equally appropriate that the code should contain descriptions of behaviour that in the opinion of the authority amount to market abuse. In previous debates, I have indicated a special context in which I believe that that is particularly applicable; namely, where, following informal consultation with the FSA, an approach to marketing or new financial products is brought to its attention and it decides whether it is acceptable or unacceptable. If the FSA decides that that is unacceptable to someone who works in that sector, that behaviour should be capable of amounting to market abuse. However, given the way in which this part of the Bill is constructed, the matter is not as clear cut as that. If one looks at Clause 118(2), one finds that,
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"the code in force under section 116 at the time when particular behaviour occurs may be relied on so far as it indicates whether or not that behaviour should be taken to amount to market abuse".
Confronted with that provision, lawyers will believe that all their Sundays have come at a single moment. One must consider the view of the reasonable regular user of the market and, in some fashion, weigh that against what is provided for in the context of the code. The code is not to be definitive or overriding, but in some obscure way it is only to be "relied on". It is not unreasonable to envisage circumstances in which it is impossible to arrive at a clear, simple, unanimous view of what the reasonable regular user of the market would regard as acceptable. The problem is infinitely compounded if one must then look at what is in the code and decide whether one must rely on it.
My only concern in this matter, in the best interests of the financial services sector, is to achieve the greatest possible degree of certainty. I believe that, far from bringing about that desirable result, exactly the opposite is achieved because of the way that the provisions have been put together. I understand that already lawyers in the City have concluded that if the code says that something is market abuse, the arrangements will prove to be wholly unworkable. They boast about it. At an earlier stage the noble Lord asked that those people should be named. I have no intention of naming them; I shall not allow them a greater professional advantage than they might otherwise enjoy. But the Minister should understand that there are those who have already reflected on the provisions and concluded that they are unworkable. I want to ensure that they are workable.
I repeat the primary point. I am not so much concerned about those marketing arrangements which are already well established where the regular reasonable user can offer an opinion, but those where the situation is completely innovative, either in market technique or product. In those circumstances, the FSA will be in future in a far better position to come to a conclusion and say, "If you carry through such behaviour it is unacceptable". On the other hand, if it is acceptable, that is a safe harbour.
I want a framework of certainty and clarity; otherwise I am concerned that we shall achieve neither and the relationship between the two provisions will be such a muddle that it will be a happy market for lawyers but will do nothing to enhance the reputation of the United Kingdom financial services sector.
10.15 p.m.
Lord McIntosh of Haringey: My Lords, I sympathise with the intentions underlying the amendments and with what the noble and learned Lord said about the need for certainty.
Clause 116 places a duty on the FSA to prepare and issue a code which will help people to get a better understanding of what behaviour is abusive and what is not. This is called the code of market conduct.
In many circumstances, it will be obvious when abuse has occurred. I have already given some examples. You do not need a code to tell you that

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buying or selling shares while in possession of inside information is likely to fall short of expected standards of behaviour unless there is a very good reason—for example, if circumstances forced the sale. Equally, you do not need a code to tell you that it is not market abuse if, say, a pension fund placing a big buy or sell order in the ordinary course of its business moves market prices. We have accepted that uncertainty exists at the margins. The purpose of the code is to provide greater certainty.
Perhaps I may give the analogy of the Highway Code. The Highway Code gives people a better idea of what it means to drive with or without due care and attention. What it does not do is provide a template on which a decision can be made on whether in an individual case a charge should be brought of driving without due care and attention, or whether there should or should not be a conviction in the courts on that charge. The Highway Code provides assistance but not a definitive answer in any individual case; and it is not intended to do so.
There has been plenty of consultation on the code. The FSA is engaged in an extensive consultation exercise on a draft code, Consultation Document 10. It is revising the code with the help of a practitioners group and a group of exchange and clearing house representatives.
Amendments to Clause 116 leave me a little puzzled. They would reduce the certainty which the code can provide to market participants as to whether or not their behaviour was likely to be abusive.
Amendment No. 133BA makes a drafting change which would cast doubt on what the code could contain. At present the code is not limited to specifying things described in subsection (2). So it would be possible for the code to set out the general background which might assist people in understanding the descriptions it contained, or contain descriptions of particular situations in which people should take extra care about what they do.
Under Amendment No. 133BA, it may still be possible for the code to do that. The power in subsection (2) remains permissive. But it would cast doubt on this in an unhelpful way.
Amendment No. 133BB deletes subsection (2)(a). I presume that the intention is that the code should not be able to specify descriptions of behaviour which amount to market abuse. I think that the effect would be to reduce the certainty people are looking for from the code. They would have to fall back solely on the provisions contained in Clause 115 in coming to a judgment about whether their behaviour was likely to be abusive. People would be less clear than they otherwise would be about whether the FSA would be likely to take action against them.
One of the main issues raised on the market abuse provisions during consultation and the Joint Committee scrutiny was the need for certainty. The effect of the amendment would be to reduce that. The third amendment, Amendment No. 133BC, would
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have the same effect, making people less clear as to when they might be likely to find themselves being proceeded against for market abuse.
Of course the code cannot set out all the situations in which behaviour does not amount to market abuse. That would be impossible. The result would be that by not saying whether certain behaviour was abusive, or whether certain factors might he relevant in deciding whether abuse had taken place, people would only have certainty where the FSA had said that something was not abuse.
That is not the way in which the code should be drafted in order to provide guidance. No one has suggested in consultation that it should be drafted in the way in which the noble and learned Lord proposes, and I hope that he will not press his amendment.
Lord Fraser of Carmyllie: My Lords, I am a little surprised that the noble Lord has not grasped the technique I have deployed in the three amendments. It is the tried and tested one of looking at what I regard as an enfeebled set of provisions and suggesting their deletion—although I should wish to see them strengthened—in the hope that the Minister might be in a position to explain to me that I am wrong and that they are not as enfeebled and useless as I regard them to be.
I have said at least four times today that I believe that the FSA, particularly in regard to certain developments in the market, should be in a position to say, "That innovation is potentially abusive and we will set out in our code that if anyone pursues it he will suffer penalty". I am still completely at loss to understand why the Government are so resistant to that.
When the Minister, in a somewhat condescending fashion, referred me to the Highway Code, it did not seem to be an entirely apt comparison. If within that code the FSA says, "This behaviour is not market abuse. It matters not what any reasonable regular user of the market regards it as being", that is a total and complete safe haven for the individual who embarks on that behaviour.
That does not seem to me to be anything like an appropriate parallel with the Highway Code.
Lord McIntosh of Haringey: My Lords, I made it clear that that is the easy bit. It is the other side of the coin that is more difficult.
Lord Fraser of Carmyllie: My Lords, the noble Lord is at long last right on this matter. That is the important point that we are seeking to make.
I believe that the relationship between the two clauses is important and I was therefore strongly minded to divide the House on the matter. However, I hope that my faith is not misplaced. While I did not entirely agree with the amendment moved by the noble Lords, Lord Eatwell and Lord Lipsey, they seemed to understand what is important about establishing a clear and unequivocal relationship between Clause 115 and the code in Clause 116. I am still at a loss to

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understand why the Government cannot bring forward their own amendments in order to put the matter beyond doubt.
I hope that between now and the next stage of the Bill the Minister will consult with those who are concerned about it. If he does not know that I am not alone in having these concerns, he ought to consult more widely. In the, I hope not vain, expectation that he will do just that, or that the noble Lords, Lord Eatwell and Lord Lipsey, may have greater powers of persuasion on the Minister, it is with considerable reluctance that I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 133BB and 133BC not moved.]
Clause 119 [Power to impose penalties in cases of market abuse]:
Lord Kingslandmoved Amendment No. 133C:
Page 58, line 37, after ("If") insert ("the court on the application of").
The noble Lord said: My Lords, as the Minister will doubtless remember, this amendment and the others in this group were tabled in Committee. They seek to extract from the Government a reaction to the proposition that the imposition of a penalty by the FSA following an investigation is likely to be a contravention of the European Convention on Human Rights.
As I understand the jurisprudence of the court, a clear distinction is made between the investigative function and the function of adjudication and penalising. If the Minister follows through the logic of that jurisprudence, he will see the incompatibility of the authority either imposing or even recommending a penalty at the end of an investigation. It is in that context that these amendments have been tabled. I beg to move.
Lord McIntosh of Haringey: My Lords, this is a long list of opposition amendments with a number of government amendments in the middle. In the case of market abuse penalties, in principle there is no reason to insist that a penalty of this kind can be imposed only through the medium of the courts following an application to them by the FSA. The noble and learned Lord, Lord Donaldson, made that point when we discussed similar amendments in Committee. When there was a debate on whether the regime was criminal or non-criminal—and I am afraid that we have agreed to differ on that point—the noble and learned Lord said:
"I make it clear that I do not agree with the noble Lord, Lord Kingsland. Despite the fact that I believe this matter falls under criminal law, it does not follow that one ought to refer it to the courts".
The reason why the Bill provides for reference to the tribunal rather than application to the courts is that we consider that there are positive advantages for all concerned in that approach. The tribunal will deal solely with financial services cases. The Lord Chancellor will be able to appoint to it people with
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appropriate knowledge and experience. Over time, we can expect the tribunal to build up a considerable body of expertise in financial services, as other tribunals have done in other areas. As it will be concerned solely with referral from the FSA, the tribunal will also provide a quick and relatively inexpensive route for cases to be heard.
Although we would lose some of those comparative advantages by providing that market abuse penalties could be imposed only by the courts, I cannot see what we would gain. The Bill provides plenty of safeguards if a person wishes to contest the decision of the FSA to impose a penalty on him. The tribunal is a first-instance tribunal. It is able to look at all the facts and consider all the merits of a case. It is not inferior to the courts. It will be run as part of the court service; its members will be appointed by the Lord Chancellor; and it will ensure that people enjoy their right to a full and fair hearing under Article 6 of the European Convention on Human Rights, with which it will be fully compliant. Our amendments to this clause simply align the procedures through which the FSA must go if it proposes to impose a penalty or publish a statement about market abuse with the procedures applying more generally in the Bill.
Amendments Nos. 134 and 136 simply align the wording of Clauses 122 and 123 with that which applies elsewhere in the Bill in respect of penalties and statements. Amendments Nos. 135 and 137 delete subsection (3) of both clauses. This provision is necessary in order to avoid multiple notices and multiple rights of referral to the tribunal in respect of the same matter by the same person. The reason that those subsections are being deleted is because they are no longer needed following the introduction of Clause 388 in Committee. Clause 388(2) has the same effect as subsection (3) of Clauses 122 and 123. I commend the government amendments in this group to the House and urge the noble Lord not to press his amendments.
Lord Kingsland: My Lords, I have listened with great care to what the Minister has said and I shall reflect on it before considering whether to return to this matter at Third Reading. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 133CA not moved.]
[Amendments Nos. 133D and 133E not moved.]
Lord Kingslandmoved Amendment No. 133F:
Page 59, line 7, at end insert ("or
("(c) in relation to market abuse which satisfies the condition set out in section 115(2)(b) or the condition in section 115(2)(c), he did not anticipate that his behaviour would satisfy that condition.").
The noble Lord said: My Lords, I beg to move.
10.31 p.m.
On Question, Whether the said amendment (No. 133F) shall be agreed to?
Their Lordships divided: Contents, 18; Not-Contents, 81.

Division No. 1

CONTENTS

Anelay of St. Johns, B.

Eccles of Moulton, B.

Astor of Hever, L.

Eden of Winton, L.

Attlee, E.

Elliott of Morpeth, L.

Bagri, L.

Elton, L.

Barber, L.

Ferrers, E.

Beaumont of Whitley, L.

Flather, B.

Blaker, L.

Fraser of Carmyllie, L.

Boardman, L.

Gardner of Parkes, B.

Bowness, L.

Garel-Jones, L.

Brabazon of Tara, L.

Geddes, L.

Bridgeman, V.

Goschen, V.

Brougham and Vaux, L.

Gray of Contin, L.

Burnham, L. [Teller]

Hayhoe, L.

Buscombe, B.

Henley, L. [Teller]

Byford, B.

Higgins, L.

Campbell of Alloway, L.

Hogg, B.

Campbell of Croy, L.

Holderness, L.

Carlisle of Bucklow, L.

Howe, E.

Carnegy of Lour, B.

Howell of Guildford, L.

Chilver, L.

Hunt of Wirral, L.

Clark of Kempston, L.

Hylton-Foster, B.

Cope of Berkeley, L.

Jenkin of Roding, L.

Courtown, E.

Kingsland, L.

Cranborne, V.

Kirkham, L.

Dean of Harptree, L.

Knight of Collingtree, B

Dundee, E.

Liverpool, E.

579

Luke, L.

Platt of Writtle, B.

Lyell, L.

Prior, L.

McCarthy, L.

Rawlings, B.

McConnell, L.

Reay, L.

MacFarlane of Bearsden, L.

Renton, L.

Mackay of Ardbrecknish, L.

Roberts of Conwy, L.

Marlesford, L.

Rotherwick, L.

Masham of Ilton, B.

Ryder of Wensum, L.

Mayhew of Twysden, L.

Seccombe, B.

Miller of Hendon, B.

Sharpies, B.

Monro of Langholm, L.

Shaw of Northstead, L.

Mowbray and Stourton, L.

Shrewsbury, E.

Moynihan, L.

Skelmersdale, L.

Strathclyde, L.

Northbrook, L.

Thomas of Gwydir, L.

Norton of Louth, L.

Trumpington, B.

Onslow, E.

Vivian, L.

Oppenheim-Barnes, B.

Waddington, L.

Park of Monmouth, B.

Wedderburn of Charlton, L

Pearson of Rannoch, L.

Willoughby de Broke, L.

Pilkington of Oxenford, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Grenfell, L.

Addington, L.

Hardy of Wath, L.

Ahmed, L.

Harris of Greenwich, L.

Archer of Sandwell, L.

Harrison, L.

Bach, L.

Haskel, L.

Barnett, L.

Hayman, B.

Blackstone, B.

Hilton of Eggardon, B.

Blease, L.

Hogg of Cumbernauld, L.

Bradshaw, L.

Hollis of Heigham, B.

Bragg, L.

Holme of Cheltenham, L.

Brett, L.

Hooson, L

Brooke of Alverthorpe, L.

Howie of Troon, L.

Brookman, L.

Hoyle, L.

Brooks of Tremorfa, L.

Hunt of Kings Heath, L.

Brace of Donington, L.

Irvine of Lairg, L. (Lord Chancellor)

Burlison, L.

Carter, L. [Teller]

Islwyn, L.

Christopher, L.

Janner of Braunstone, L.

Clarke of Hampstead, L.

Jay of Paddington, B. (Lord Privy Seal)

Clinton-Davis, L.

Cocks of Hartcliffe, L.

Jenkins of Putney, L.

Crawley, B.

Judd, L.

David, B.

Kennedy of The Shaws, B.

Davies of Coity, L,

Kirkhill, L.

Davies of Oldham, L.

Laird, L.

Dholakia, L.

Lea of Crondall, L.

Diamond, L.

Lester of Herne Hill, L.

Dixon, L.

Lipsey, L.

Donoughue, L.

Lockwood, B.

Dormand of Easington, L.

Longford, E.

Dubs, L.

Lovell-Davis, L.

Eatwell, L.

Macdonald of Tradeston, L.

Elder, L.

McIntosh of Haringey, L.[Teller]

Ezra, L.

Falconer of Thoroton, L.

McIntosh of Hudnall, B.

Falkland, V.

MacKenzie of Culkein, L.

Farrington of Ribbleton, B.

Mackenzie of Framwellgate, L.

Faulkner of Worcester, L.

Mackie of Benshie, L.

Filkin, L.

Maddock, B.

Fitt, L.

Marsh, L.

Gale, B.

Mason of Barnsley, L.

Gavron, L.

Massey of Darwen, B.

Geraint, L.

Monson, L.

Gladwin of Clee, L.

Morris of Castle Morris, L.

Goldsmith, L.

Morris of Manchester, L.

Gordon of Strathblane, L.

Murray of Epping Forest, L.

Goudie, B.

Newby, L.

Gould of Potternewton, B.

Nicol, B.

Graham of Edmonton, L.

Patel of Blackburn, L.

Gregson, L.

Peston, L.

580

Pitkeathley, B.

Smith of Leigh, L.

Plant of Highfield, L.

Stallard, L.

Powell of Bayswater, L.

Stoddart of Swindon, L.

Prys-Davies, L.

Strabolgi, L.

Puttnam, L.

Symons of Vernham Dean, B

Ramsay of Cartvale, B.

Taylor of Blackburn, L.

Redesdale, L.

Tenby, V.

Thomas of Walliswood, B.

Ress-Mogg, L.

Thornton, B

Richard, L.

Tomlinson, L.

Rodgers of Quarry Bank, L.

Tope, L.

Roll of Ipsden, L.

Tordoff, L.

Russell, E.

Uddin, B.

Sandberg, L.

Varley, L.

Sawyer, L.

Warwick of Undercliffe, B.

Scotland of Asthal, B.

Weatherill, L.

Serota, B.

Whitaker, B.

Sharman, L.

Whitty, L.

Sharp of Guildford, B.

Wilkins, B.

Shepherd, L.

Williams of Crosby, B.

Shore of Stepney, L.

Williams of Elvel, L.

Simon, V.

Williams of Mostyn, L.

Smith of Clifton, L.

Woolmer of Leeds, L.

Smith of Gilmorehill, B.

Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

Division No. 2

CONTENTS

Anelay of St. Johns, B.

Henley, L. [Teller]

Astor of Hever, L.

Kingsland, L.

Blatch, B.

Lyell, L.

Boardman, L.

Mackay of Ardbrecknish, L.

Brougham and Vaux, L.

Mancroft, L.

Burnham, L. [Teller]

Marlesford, L.

Byford, B.

Newton of Braintree, L.

Elton, L.

Northbrook, L.

Fraser of Carmyllie, L.

Shrewsbury, E.

NOT-CONTENTS

Acton, L.

Howells of St Davids, B.

Addington, L.

Howie of Troon, L.

Alli, L.

Hoyle, L.

Archer of Sandwell, L.

Hughes of Woodside, L.

Bach, L.

Irvine of Lairg, L. (Lord Chancellor)

Blackstone, B.

Borrie, L.

Jay of Paddington, B. (Lord Privy Seal)

Bragg, L.

Brett, L

Judd, L.

Brooke of Alverthorpe, L.

Kirkhill, L.

Brookman, L.

Lea of Crondall, L.

Burlison, L.

Lipsey, L.

Carter, L. [Teller]

McCarthy, L.

Christopher, L.

Macdonald of Tradeston, L.

Clarke of Hampstead, L.

McIntosh of Haringey, L. [Teller]

Cocks of Hartcliffe, L.

Crawley, B.

MacKenzie of Culkein, L.

Davies of Coity, L.

Mackenzie of Framwellgate, L

Davies of Oldham, L.

Massey of Darwen, B.

Desai, L.

Miller of Chilthorne Domer, B

Dixon, L.

Morris of Castle Morris, L.

Donoughue, L.

Newby, L.

Dubs, L.

Nicol, B.

Eatwell, L.

Pitkeathley, B.

Elder, L.

Plant of Highfield, L.

Evans of Parkside, L.

Prys-Davies, L.

Farrington of Ribbleton, B.

Ramsay of Cartvale, B.

Faulkner of Worcester, L.

Rea, L.

Filkin, L.

Sawyer, L.

Gale, B.

Scotland of Asthal, B.

Gavron, L.

Sharman, L.

Gladwin of Clee, L.

Simon, V.

Goldsmith, L.

Smith of Leigh, L.

Goudie, B.

Symons of Vernham Dean, B.

Gould of Potternewton, B.

Thornton, B.

Grenfell, L.

Tomlinson, L.

Hardy of Wath, L.

Wedderburn of Charlton, L.

Harris of Richmond, B.

Whitaker, B.

Harrison, L.

Whitty, L.

Hayman, B.

Williams of Mostyn, L.

Hilton of Eggardon, B.

Woolmer of Leeds, L.

Hollis of Heigham, B.

Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.
10.40 p.m.
[Amendments Nos. 133G and 133H not moved.]
Clause 120 [Statement of policy]:
[Amendments Nos. 133J to 133N not moved.]
Clause 122 [Warning notices]:
[Amendment No. 133P not moved.]
Lord McIntosh of Haringeymoved Amendment No. 134:
Page 60, line 23, leave out subsection (2) and insert—
("(2) A warning notice about a proposal to impose a penalty must state the amount of the proposed penalty.
(2A) A warning notice about a proposal to publish a statement must set out the terms of the proposed statement.").
The noble Lord said: I beg to move.
[Amendments Nos. 134A to 134D, as amendments to Amendment No. 134, not moved.]
On Question, Amendment No. 134 agreed to.
Lord McIntosh of Haringeymoved Amendment No. 135:
Page 60, line 24, leave out subsection (3).
On Question, amendment agreed to.
Clause 123 [Decision notices and right to refer to Tribunal]:
[Amendment No. 135A not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 136 and 137:
Page 60, line 30, leave out subsection (2) and insert—
("(2) A decision notice about the imposition of a penalty must state the amount of the penalty.
(2A) A decision notice about the publication of a staternent must set out the terms of the statement.").
Page 60, line 31, leave out subsection (3).
On Question, amendments agreed to.
Clause 124 [Notice for payment]:
Lord McIntosh of Haringeymoved Amendment No. 138:
Leave out Clause 124.
On Question, amendment agreed to.
Clause 129 [The Financial Services and Markets Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 139:
Page 62, line 16, after ("by") insert ("or under").
The noble Lord said: My Lords, Clause 129 establishes the financial services and markets tribunal. Subsection (2) specifies that the tribunal should have the functions which are conferred on it by the Bill; that is to say, those which are set out on the face of the Bill. In a number of specific instances, such as in Clause 258, which deals with open-ended investment companies, the Bill does not directly confer jurisdiction on the tribunal, but contains a power to make secondary legislation conferring jurisdiction on the tribunal. Amendment No. 139 is a technical amendment intended to take account of that tact. I beg to move.
On Question, amendment agreed to.
[Amendment No. 140 not moved.]
Lord Fraser of Carmylliemoved Amendment No. 140ZA:
Page 62, line 17, after ("may") insert ("after consulting the Lord President of the Court of Session").
The noble and learned Lord said: My Lords, I believe that I can move the amendment very shortly. If I get a bloody nose over it, I shall be more than content. My interest is not in any sense to restrict the writ of the Lord Chancellor. For reasons I have previously indicated, I should like to see the powers of the financial services and markets tribunal operate on a UK basis. That is what I understand is proposed. However, I want to ensure that the Lord Chancellor, when making rules for the tribunal, should consult the Lord President of the Court of Session as the senior judge in Scotland as well as the Council on Tribunals. I have a lurking suspicion that if there is not an expressed statutory obligation to do that, it is always implicit in the arrangements. If I am reassured on that matter, I shall readily withdraw the amendment. I beg to move.
10.45 p.m.
Lord Kingsland: My Lords, I wish to speak to Amendments Nos. 140A to 140E, which are grouped with Amendment No. 140ZA. These amendments relate to the composition of the financial services and markets tribunal. It is possible that when the Government first considered the qualifications for membership of the tribunal they concluded that it did not require to be made up of persons of very high standing in so far as their legal qualifications are concerned. Schedule 13 requires the members of the panel of chairmen to have at least seven years' standing as a qualified lawyer.
Today these qualifications seem inadequate given the importance now attached to the role of the tribunal. We believe that the tribunal justifies the presence of a High Court judge or a judge of the Court of Session to be its president and deputy president. We also believe that the seven-year qualification requirement for other members of the panel of chairmen should be increased to 10 years.
Lord McIntosh of Haringey: My Lords, the answer to the noble and learned Lord, Lord Fraser of Carmyllie, takes a page, but I do not need to say it. Yes, it is implicit. The reason why we have not included it is because there are other people to consult, such as the Lord Advocate, representing the Scottish Executive, the Law Societies of England and Wales, Northern Ireland and Scotland, the Bar Council and many others.
As regards the main opposition amendments, Amendment No. 140A required the Lord Chancellor to appoint judges of the High Court or Court of Session as the president and deputy president. The Bill provides that he must appoint the president and deputy president of the tribunal from the members of the panel of chairmen which he also appoints.
690
The current legal qualifications for these appointments under paragraphs 2(5) and 3(2) are sufficient for the proposed new tribunal and are fully in line with appointments for other tribunals. The president of the tribunal must have a 10-year legal qualification.
Of course we want the tribunal to have a high level of expertise and authority. The Lord Chancellor can make appointments at a higher level of seniority if there is a case for doing so. But we do not believe that the nature and volume of the workload of the tribunal warrants taking the unusual step of making such an appointment. The amendment would impose too much inflexibility on the appointment of the president. It would appear to prevent at a future date the appointment of, say, a retired High Court judge or even a more senior judge, should it be found that the workload justified such an appointment.
Amendments Nos. 140B to 140E require all members of the panel of chairmen to have a 10-year legal qualification as opposed to seven years. The provisions in the Bill for the panel of chairmen ensures that suitable people are appointed to the tribunal with the necessary qualification. We do not believe that it needs to be changed. It is the normal practice for other tribunals to appoint people with a seven-year qualification, such as the VAT and Duties Tribunal, employment tribunals and the transport tribunals.
If there is a case which raises legal issues of a particularly complex or ground-breaking nature, then the tribunal may appoint one or more experts to provide assistance. It can also bring in additional members of the panel of chairmen with the relevant expertise to the case in question. I hope that noble Lords will not press these amendments.
Lord Fraser of Carmyllie: My Lords, I am certainly satisfied. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 140A to 140E not moved.]
Schedule 13 [The Financial Services and Markets Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 141:
Page 267, line 13, at end insert—
("( ) for the suspension of decisions of the Authority which have taken effect;").
The noble Lord said: My Lords, in moving this amendment I would like to speak also to Amendments Nos. 142 to 149 inclusive. This is a central part of the Government's rationalisation of the procedural provisions to ensure fairness and consistency. The Government's amendments to Part IX, most of which were circulated in draft when we were in Committee, improve the way in which the decisions of the tribunal are given effect and put beyond doubt the tribunal's ability to consider all the relevant evidence.
Amendment No. 141 makes it clear that the tribunal rules made under Clause 129 may include provision for the tribunal to suspend the effect of decisions that

691
come into effect before they have considered the matter. That reflects the need to allow for supervisory decisions which need to take effect while the matter is still open to review. It is only right that in these circumstances the tribunal should have discretion to grant relief from whatever requirement or restriction has been imposed.
Amendments Nos. 142 and 149 are drafting amendments, consequential on the drawing of the distinction between supervisory notices, warning and decision notices.
Amendment No. 143 is a drafting improvement. We are anxious to make it as clear as possible that the tribunal can consider any evidence, regardless of whether it was available to the FSA or not. That is the intended effect of the current wording, but we were concerned that it may seem ambiguous so decided to put the point beyond any doubt.
Amendment No. 144 concerns the manner in which the tribunal's decisions are given effect. As the Government explained in another place, the existing drafting left the tribunal with the responsibility for giving effect to its own decisions unless it decided to remit the matter back to the FSA.
The Tribunal should not be responsible for taking the necessary administrative action to give effect to its own decisions. We have been concerned that that may lead the tribunal to be a competent authority for the purposes of the European directives, which could embroil the tribunal in much unnecessary administration. So the responsibility for giving effect to the tribunal's decisions will rest with the FSA, which has all the relevant powers. Naturally the amendments ensure that the FSA will he bound to take whatever action the tribunal determines.
Amendment No. 145 takes us back to the issue of when a decision takes effect. As we made clear in Committee, it is not our intention that the FSA should be able to demand payment of penalties or restitution, or make public statements, during the period when the person concerned has a right to refer the matter to the tribunal.
Amendment No. 145 makes that clear. The FSA cannot give effect to a decision contained in a decision notice pending a reference to the tribunal, or appeal from the tribunal to the higher courts, or while a decision remains open to such a reference being made. Once the review process is complete, action will be given effect to by a final notice under Clause 385. The final notice must then give effect to the determination made by the tribunal or, if its decision is appealed, to the judgement of the higher courts.
Amendments Nos. 146 to 148 are consequential changes. I beg to move.
Lord Kingsland: My Lords, these amendments are a series of amendments to Clause 130 and there is one to Schedule 13. The first amendment makes it clear that there can be a reference to the tribunal after a supervisory notice as well as after a decision notice, which is welcome. The second makes it clear that the tribunal can consider all evidence, even if it were available to the authority at the time of reaching a decision. The present version suggests that the tribunal can consider only evidence that was not available to the authority at the time. That is also welcome.
Subsection (4) is replaced by a series of provisions that provide for the tribunal to decide the appropriate action for the authority to take and then directs the authority to take it, which is sensible. If the reference relates to a supervisory notice, the tribunal cannot direct the authority to take action which would have required the giving of a decision notice. The two categories of offences, respectively covered by the two notices, are to be kept separate. That also seems appropriate.
Finally, the tribunal can also make recommendations as to the authority's rules or procedures. It cannot actually require changes, but presumably a recommendation would be enough.
The amendment to page 62, line 40 provides that the authority cannot take action pursuant to a decision notice during the period within which the matter to which the decision notice relates may be referred to the tribunal and, if the matter is referred to the tribunal, until the reference and any appeal is disposed of. In another place, during the Committee stage, and at every opportunity thereafter in another place and in your Lordships' House, we had been asking for this. We are very pleased to see it. I hope that the Minister will not mind me reminding him of the number of times that we have had to ask the Government to provide that.
The few final amendments merely tidy up the clause. I do not need to comment on them.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for his support. On the matters on which he has been clearer than I have been in expounding the government amendments—I am sure there are many—I hope that his text can be used in Pepper v. Hart rather than mine.
On Question, amendment agreed to.
Lord Kingslandmoved Amendment No. 141A:
Page 268, line 19, at end insert—
("(3) At the commencement of any proceedings a party (other than the Authority) to those proceedings may elect either that the provisions of sub-paragraph (2) must apply, or instead of subparagraph (2), that the Tribunal has discretion to order one party to the proceedings to pay the whole or part of the costs or expenses incurred by the other party in connection with the proceedings.").

693
The noble Lord said: My Lords, I must say that if the Minister would make that Pepper v. Hart concession to all my speeches in your Lordships' House on this Bill, I would be most content and much obliged.
Under paragraph 13 of Schedule 13, the tribunal may award costs against a party to proceedings only if that party has acted "vexatiously, frivolously or unreasonably" or, in the case of the authority, if the decision of the authority was unreasonable. There will be cases where the authority acted reasonably, but where the tribunal finds in favour of the other party to the proceedings. In those cases, although the authority loses the proceedings, it will not have any responsibility for the costs incurred by the other party, which could be substantial.
We accept that any alternative proposal on costs should not favour one party over another. Amendment No. 141A seeks to achieve that balance by giving the non-authority party to the proceedings the choice, at the commencement of the proceedings, either to accept the present provision in paragraph 13, in which case he will not have to pay the authority's costs if he loses but does not receive from the authority any contribution towards his costs if he wins; or to opt for the proposed alternative, which will allow the tribunal to decide costs. We believe this to be a fairer structure which does not prejudice the position of the authority. I beg to move.
Lord McIntosh of Haringey: My Lords, the aim of Amendment No. 141A is to widen the circumstances under which the tribunal can award costs. The current drafting of the Bill allows the tribunal to award costs against either party if they have acted "vexatiously, frivolously or unreasonably". In addition, subparagraph (2) makes explicit the tribunal's power to award costs against the FSA where it considers that the FSA decision giving rise to the reference was unreasonable.
As I understand it, Amendment No. 141A would give the party other than the FSA the option at the start of the proceedings to elect either that the provisions of sub-paragraph (2) "must" apply—I do not understand whether that means any more than that it just applies—or that the tribunal should have the discretion to award costs against either party regardless of whether they have acted "vexatiously, frivolously or unreasonably". That seems to go against the thrust of the Joint Committee's recommendation.
The Joint Committee recommended that we restrict the discretion of the tribunal to award costs to those cases where the tribunal considered that one or other party had acted unreasonably, vexatiously or frivolously. The committee was, I believe, concerned that a broad power to award costs could act as a deterrent to people using the tribunal.
694
After considerable reflection and consultation with the Lord Chancellor's Department, we were persuaded that we had provided an unusually broad power for a tribunal of this nature and so it was narrowed in another place. We understand that the Opposition have introduced this new element of an option for the party other than the FSA in order to meet the concerns about the possible deterrent effect. However, we do not think that it is right or proper to apply this sort of provision to tribunal proceedings. We are unaware of any precedent for such a provision, and it seems inherently unfair for one party to any dispute to be able to determine the basis on which costs may—or must—be awarded.
These are fundamental questions. I hope that the noble Lord will not press his amendment
Lord Kingsland: My Lords, the noble Lord will be relieved to hear that I do not intend to press the amendment, but I shall reflect on what he said. However, the proposition that just because something has not been done before, it ought not to be done now is one which I would have thought was alien to the culture of the Government. Perhaps the Minister will surprise me.
Lord McIntosh of Haringey: My Lords, pure conservatism.
Lord Kingsland: My Lords, I leave noble Lords with that observation by the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 130 [Proceedings: general provision]:
Lord McIntosh of Haringeymoved Amendments Nos. 142 to 149 en bloc:
Page 62, line 26, after ("notice") insert ("or supervisory notice").
Page 62, line 31, leave out from ("evidence") to end of line 32 and insert ("relating to the subject-matter of the reference, whether or not it was available to the Authority at the material time").
Page 62, line 33, leave out subsection (4) and insert—
("(4) On a reference the Tribunal must determine what (if any) is the appropriate action for the Authority to take in relation to the matter referred to it.
(4A) On determining a reference, the Tribunal must remit the matter to the Authority with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination.
(4B) In determining a reference made as a result of a decision notice, the Tribunal may not direct the Authority to take action which the Authority would not, as a result of section 383(2), have had power to take when giving the decision notice.
(4C) In determining a reference made as a result of a supervisory notice, the Tribunal may not direct the Authority to take action which would have otherwise required the giving of a decision notice.
(4D) The Tribunal may, on determining a reference, make recommendations as to the Authority's regulating provisions or its procedures.").
Page 62, line 40, leave out from beginning to ("until") and insert ("The Authority must not take the action specified in a decision notice—

695

(a) during the period within which the matter to which the decision notice relates may be referred to the Tribunal; and

(b) if the matter is so referred,").

Page 62, line 41, leave out ("decision,") and insert ("determination.").
Page 63, line 1, leave out ("If a matter is remitted to the Authority,").
Page 63, line 2, leave out ("decision of) and insert ("determination of, and any direction given by,").
Page 63, line 5, at end insert—
696
("( ) "Supervisory notice" has the same meaning as in section 390.").
On Question, amendments agreed to.
Lord McIntosh of Haringey: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at eleven o'clock.

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