Sitting of 29 May 2002

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

London Traffic
Lord Renton of Mount Harryasked Her Majesty's Government:
Whether the speed at which traffic is moving in London is satisfactory.
The Minister of State, Home Office (Lord Falconer of Thoroton): My Lords, the Government recognise that London has traffic flow problems. However, it is the responsibility of the Mayor of London and Transport for London to deliver improvements. The mayor's traffic management plans are outlined in his transport strategy, which he published last summer.
Lord Renton of Mount Harry: My Lords, I thank the noble and learned Lord for that Answer. Surely the Government cannot pass the buck entirely to the Mayor of London; the Government must take basic responsibility. Does he agree that no congestion policy is ever going to succeed, not even a congestion charge of £5 per day, unless there is adequate public transport? Can we have an assurance from the Government that, by next February when the congestion charge is due to come into effect, many improvements will have been made, for example, to the Underground? If not, is not Mr Livingstone likely to face the same fate as Mr Byers?
Lord Falconer of Thoroton: My Lords, it is the job of the Mayor of London to deliver improvements. To help in that, the Government's 10-year plan for transport allocates a great many resources to London, but it is for the mayor to decide on the priorities. That is made clear in statute. The mayor is making improvements in, for example, bus services. Those improvements are making a significant difference to public transport in London. Noble Lords know that the mayor has proposed a congestion charging scheme for London. It is very much his scheme rather than the Government's and therefore he must consult and form a view about it.
Lord Bradshaw: My Lords, can the Minister tell the House whether the measures to improve bus priority in London through the use of cameras have been or are being successful? Are plans in place to extend the facility to the rest of the country?
Lord Falconer of Thoroton: My Lords, progress is being made on bus lanes and the use of cameras. We shall decide later precisely what is to happen in relation to the proposal.
Lord Strabolgi: My Lords, are the Government aware that the chaos outside the restricted zone is
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going to be far greater than it is now? Do they not agree that this is too big a decision to be left to the Mayor of London? It should be taken by central government. Why are they avoiding it?
Lord Falconer of Thoroton: My Lords, as I made clear in my original Answer, the decision in relation to congestion charges is one for the Mayor of London. Issues about the effect in relation to congestion created outside the restricted area are plainly matters for the mayor to take into account when reaching his decision.
Lord Peyton of Yeovil: My Lords, is the noble and learned Lord aware that my noble friend has posed a serious dilemma which the Government would do well not to shirk? Is he also aware that, when he refers to the Government's transport strategy, he is wandering off into the far distant beyond, which has no meaning?
Lord Falconer of Thoroton: My Lords, of course one has to bear in mind what is being said in connection with issues of congestion and in connection with the improvement of public transport. Those were the points made by the noble Lord, Lord Renton. They are matters of great importance to which the Government attach high priority. That is why a 10-year plan for transport has been put in place. It has strategic outcomes which have been set down, for example, in relation to rail services.
Lord Faulkner of Worcester: My Lords, does my noble and learned friend agree that the most anti-motorist policy which the Government could adopt is to allow congestion to grow unchecked, and that building new roads is not a solution for any of our towns and cities? Does he recognise that great support has been achieved for the view expressed by the Commission for Integrated Transport; namely, that there will have to be congestion charging in at least 20 local authorities if we are to tackle the problem over the next 10 years?
Lord Falconer of Thoroton: My Lords, congestion is a very real problem. The ability to impose congestion charges is a tool given by the Government to specified regional and local authority bodies, but we have made it clear that it should be introduced only when public transport services have been improved.
Baroness Trumpington: My Lords, according to taxi drivers, and certainly according to my own observations, the traffic lights in London have been changed so that red lights stay red for much longer, while green lights are hardly there at all. Can the Minister say whether that is the case? Furthermore, can he tell me whether those huge pavements at the crossing at Vauxhall Bridge have improved the flow of London's traffic? To be quite honest, I am now getting road rage every day.
Lord Falconer of Thoroton: My Lords, perhaps I may say on behalf of the people of London that we tremble at the thought of the road rage being

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experienced by the noble Baroness. I can answer neither of the questions raised by the noble Baroness, but I shall write to her. I do not know whether the sequencing of London's traffic lights has been changed or what has been the effect of the new paving at Vauxhall Cross. However, I shall certainly write to the noble Baroness.
Baroness Hanham: My Lords, does the Minister agree that the volume of traffic in London demonstrates a complete lack of confidence by the travelling public in London's public transport? Does he recall that during the passage through the House of the Greater London Authority Bill assurances were given that congestion charging would be introduced only if there were significant improvements in public transport? Those assurances were given by the Government and, in my opinion, they cannot be palmed off to the mayor. How has this matter been monitored?
Lord Falconer of Thoroton: My Lords, as to the noble Baroness's first point, there are many reasons why car traffic is increasing in London, including an increase in the population and increased activity in the area. However, in many places public transport has also increased. So the first point is not as simple as the noble Baroness said.
As to her second point, I made it clear in my Answer to the noble Lord, Lord Renton, that congestion charges should be introduced only where there were improvements in public transport. I also made it clear that it was a matter to be decided at local level. That seems to us to be the right approach.
Baroness Strange: My Lords, is the Minister aware that I had to wait 25 minutes for a bus this morning; that four of them came together; and that they found great difficulty in getting along the road because of all the amazing bits of concrete and rubbish and so on which had been planted there—I imagine by the Mayor of London? Is he further aware that those of us who travel by bus suffer from bus rage?
Lord Falconer of Thoroton: My Lords, most of the House seems to be in a state of incoherent rage—or coherent rage; I apologise. No, I was not aware that the noble Baroness had to wait 25 minutes for a bus this morning; no, I was not aware that four of them came along at the same time; and I am not aware of the plantations to which she referred. I shall write to her. Well, I do not think that I can write to her; there is nothing that I can say in a letter that would be of any relevance. I express my commiserations on behalf of the House for what the noble Baroness suffered this morning.
Lord Watson of Richmond: My Lords, does the Minister agree that traffic will never move faster in London until we get the railways right? I am not
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complaining of suffering from rail rage, but it is a fact that in many suburban stations you can now no longer miss a train because none of them arrive on time.
Lord Falconer of Thoroton: My Lords, we have made it absolutely clear that the Government are committed to a fundamental improvement in the railways. That has been made clear in the 10-year plan. We agree that it is vitally important to make the railways right.

UN Convention on the Rights of the Child
2.46 p.m.
Lord Paulasked Her Majesty's Government:
What steps they are taking to implement the commitments made by the United Kingdom at the United Nations General Assembly Special Session on Children and reflected in the outcome document A World fit for Children.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the Government strongly support the Special Session commitments on the implementation of the UN Convention on the Rights of the Child. Domestically, we shall ensure that we continue to take account of our obligations under the convention when developing policies and services for children and young people. Internationally, we shall continue to focus our assistance on the achievement of the millennium development goals and in support of country-owned poverty reduction strategies.
Lord Paul: My Lords, I thank my noble friend the Minister for that encouraging Answer. Is the outcome of the UN General Assembly Special Session likely to be a commitment to ensure better education for both girls and boys? I commend the UK Government for launching the Commonwealth Education Fund. How will the fund be distributed and how will the Government ensure that girls in particular are helped?
Baroness Amos: My Lords, the Commonwealth Education Fund was launched earlier this year. We are committed to the achievement of the millennium development goals in education, which include gender equality. The fund will be distributed through NGOs. A key part of the fund will be to ensure that girls have equal access to education.
Lord Avebury: My Lords, while welcoming the Government's commitment to the outcome document, A World fit for Children, and the statement by the Chancellor of the Exchequer in New York, even though there were not any figures attached to it, does the Minister agree that, whereas some of the commitments in the declaration—to health, education and so on—demand enormous resources, others demand acts of political will, such as the injunction for all states to sign up to the declaration on the rights of the child and the optional protocols dealing with

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matters such as child prostitution? Will the Government use all their endeavours to persuade other Commonwealth partners to sign up to the convention and protocols? In the case of child soldiers, does the Minister agree that we have acquired particular expertise through our experience in Sierra Leone which might be made available to other members?
Baroness Amos: My Lords, I agree with the noble Lord, Lord Avebury, that some elements of the outcome of UNGASS require political will rather than resources. We do everything that we can to encourage other governments to sign up to the declaration. As to the optional protocol, we have signed the optional protocol ourselves and are encouraging other governments to do so. Where we can use our expertise, we will.
Lord Hylton: My Lords, does the Minister agree that the children most at risk overseas are street children, whether or not they happen to be fully homeless, and children in danger of sexual exploitation, very often because of the poverty of their families? Does she further agree that these are not matters about which the United Nations, by itself, can do a great deal, but are dependent on the efforts of individual states? Can that message be urged very strongly?
Baroness Amos: My Lords, all would agree that the plight of street children and the situation regarding the sexual exploitation of children are very grave indeed, and that international measures are needed to deal with the problems. The Government have signed the new convention against trans-national crime, which includes a protocol on the trafficking of women and children, and we are working directly with NGOs and governments to address this problem. For example, we are providing a £2.9 million project covering parts of Cambodia, China, Thailand and Vietnam. We shall do all that we can to ensure that individual governments take seriously their responsibilities in this area.
Lord Dholakia: My Lords, will the Minister comment on the Government's plan to disperse over 3,000 refugee children across the country for the purpose of care? Does the plan meet the UN Convention on the Rights of the Child and our commitment as regards the document, A World Fit for Children?
Baroness Amos: My Lords, what we are trying to ensure in regard to refugee children—whether in the United Kingdom or elsewhere—is global consideration of such matters. For example, the issue of refugee children is being discussed as part of the UNHCR global consultation. We want to ensure that the plight of refugee children is taken on board. That is a key component of our policy. This is an area in
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which the Home Office leads, but I know that it is concerned that refugee children have, for example, adequate access to education and other services.
Lord Elton: My Lords, recognising the duty that we have to our own children, should we not be attempting to reduce the large proportion or children in this country who are being drawn into crime, and to prevent it by the most effective means—which is often voluntary agencies, particularly in areas such as Liverpool, where I see today there is a plan to withdraw such help?
Baroness Amos: My Lords, I am unable to comment specifically on the programme in Liverpool to which the noble Lord refers. He will know that a key part of the Government's crime prevention strategy is to tackle child crime. We are examining these matters across the board. We have initiatives not only within the Home Office but also within the Department for Education and Skills. We see this as an issue that needs to be addressed across government. It is not simply a matter of criminal activity, but of activity that affects other areas as well.

Transport Policy
2.52 p.m.
Baroness Seccombeasked Her Majesty's Government:
Whether they have any intention of changing their 10-year strategy for transport.
Lord Falconer of Thoroton: My Lords, the 10-year plan is an unprecedented long-term framework for increased investment to improve our transport system. It marks an end to years of under-investment and "stop-go" funding policies, and was widely welcomed as such. Like any long-term programme, it will need to be reviewed periodically to assess progress and take stock of events; but we remain committed to delivering the plan's long-term objectives and providing the funding needed to do so.
Baroness Seccombe: My Lords, I thank the noble and learned Lord for that reply. Does he accept the view of the Select Committee of another place that transport policy is a shambles? The Deputy Prime Minister is openly criticised by his colleagues as a failure, and his successor has humiliatingly resigned, after hanging on for far too long. Is the noble and learned Lord aware that we now know that this Government have spent less in real terms on transport than their Conservative predecessors? When will the Prime Minister get a grip on this utter mess—which the public have to endure on a daily basis?
Lord Falconer of Thoroton: No, my Lords, I do not agree with the characterisation given by the noble Baroness or the Select Committee. Transport poses real problems. The 10-year plan is unprecedented. It involves a 44 per cent real terms increase over the

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previous 10 years. Over many, many years, there has been a huge period of under-investment in the railways. Until this Government came to office, there had not been a government committed to the importance of the railways. If you speak to people engaged in the railway industry now, they will say that the foundations are being laid for a better and improved rail service. So it is difficult; it will take time; but we are committed to it.
Lord Berkeley: My Lords, is my noble and learned friend aware that one of the successes of the 10-year plan is a 6 per cent increase in bus use in London? Does he agree that that is due to bus lanes? There are now more buses on the road and fewer cars. Only 6 per cent of journeys in London are now made by car—although I suspect that the proportion to and from this House is rather higher. Is not that a significant benefit; and does it not indicate the success of the 10-year plan in regard to London?
Lord Falconer of Thoroton: Yes, my Lords. I was aware of the points made by the noble Lord. The importance of bus traffic, not only in London but throughout the whole country, is very great, and is improving. People should recognise improvements when they occur.
Lord Peyton of Yeovil: My Lords—
Lord Swinfen: My Lords, has the Government abrogated all responsibility for London in their 10-year plan?
Lord Peyton of Yeovil: My Lords, is the Minister aware—
Noble Lords: Order!
Lord Falconer of Thoroton: My Lords, I apologise to the noble Lord, Lord Peyton, but the noble Lord, Lord Swinfen, did ask a complete question—he put his question and then sat down in a manner which indicated that the question was complete. We have not abrogated responsibility for London. We have provided responsibility in the GLA Act that was passed in the previous Parliament. That gives the setting of priorities and the delivery of transport policy in London to the mayor—and that is sensible.
Lord Bradshaw: My Lords, will the noble and learned Lord confirm that any transport plan must put the needs of railway passengers before those of shareholders? Does he accept that some form of restraint on the use of the private car in congested places will be necessary? Does he agree that we need a real policy, rather than the gossip and rhetoric that we are getting from the other side?
Lord Falconer of Thoroton: My Lords, I agree with the noble Lord's final remark. "Gossip and rhetoric" would be too kind a way to describe the Conservatives'
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contribution to the debate. Yes, I agree that it is very important that the needs of the travelling public should come first. This Government have taken the difficult decisions that seek to get rid of the conflict between the interests of shareholders and those of the travelling public.
Lord Peyton of Yeovil: My Lords, is the Minister aware that promises, commitments and strategies will not help? What really matters is performance. The Government have now been in office long enough to show some signs of performance as regards their promises. So far, there has been none.
Lord Falconer of Thoroton: Yes, my Lords, delivery is critical in relation to transport. That requires political will—for example, in relation to the commitment to the railways—to make a difference. That is what the Government are doing.
Viscount Astor: My Lords, there is a certain "end of term" feeling to the Minister's answers this afternoon. We wonder why. But is he not finally just slightly embarrassed that the Transport Select Committee in another place—on which there were 11 members of his party, a majority on the committee—published a unanimous report whose conclusion was that the Government's plan is ill balanced?
Lord Falconer of Thoroton: My Lords, I do not remotely have an end-of-term feeling. It seems to me that the rest of the House has an end-of-term feeling. As I said in reply to the noble Baroness, Lady Seccombe, we do not accept the characterisation in the Select Committee's report. The 10-year transport plan sets out a strategic programme for sustained investment over 10 years. What has been lacking for all too long in relation to transport is a long-term commitment to the future of public transport—and that is what the 10-year plan included.
Baroness Howarth of Breckland: My Lords, will the Minister reassure the House that in the 10-year plan there is adequate concern for rural communities? I am fascinated by this debate. It takes me two minutes to catch a train on the Jubilee Line to an excellent Underground system that gets me to the House in halfan-hour, whereas I have no transport at all in my home town—indeed, from one village, there is not one bus. I simply seek reassurance that we are looking at rural communities as well as spending so much time worrying about the urban communities.
Lord Falconer of Thoroton: My Lords, transport in rural areas is vitally important. Since this Government

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came to power, there have been 1,800 extra bus services in rural areas because of the importance that we attach to it.
Lord Faulkner of Worcester: My Lords, does my noble and learned friend—
The Earl of Onslow: My Lords—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, it is the turn of the Labour Benches.
Lord Faulkner of Worcester: My Lords, does my noble and learned friend endorse the comment of the rail regulator, Mr Winsor, in the aftermath of the recent Potters Bar accident, about Railtrack's contractual arrangements? He said that Railtrack was replacing "discredited contracts" with "stable, long term relationships" and taking more direct engineering responsibility. He went on to say:
"They are taking more control and direction of the contractors, and I think that Railtrack's contracting strategy, which I have criticised severely in the past, is now being reformed—and Railtrack is reforming in exactly the right way".
Has not the late Secretary of State left behind a very important legacy?
Lord Falconer of Thoroton: My Lords, yes, it is an important legacy. I also draw attention to the fact that the rail regulator, Mr Tom Winsor, also pointed out— I do not know whether it was in the same interview—that the response to the Potters Bar crash involved a much more unified industry in which the regulator, SRA, Railtrack and central government all acted together to try to identify the problems and deal with them as quickly as possible. That represented a real change, and it represents something that the late Secretary of State did.

Government Advertising
3.3 p.m.
Lord McNallyasked Her Majesty's Government:
What plans they have to strengthen independent oversight, audit and scrutiny of government advertising paid for from public funds.
The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Lord Macdonald of Tradeston): My Lords, as noble Lords will be aware, there is independent oversight, audit and scrutiny of government accounts through the National Audit Office and the Committee of Public Accounts. Following a quinquennial review of the Central Office of Information, the chief executive of the COI will have an additional role as the Government's chief adviser on marketing communications and information campaigns, working with the director of communications and strategy at No. 10 Downing
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Street. This will strengthen the co-ordination and planning of departmental publicity strategies across Whitehall.
Lord McNally: My Lords, will the Minister confirm that, as the Answer makes clear, the last line of control in these decisions is a political appointment in the shape of Mr Alastair Campbell? Did the Minister have an opportunity last Sunday to see the "Panorama" programme? It contained some of the most public and stringent criticism I have ever heard of government malpractice by a former permanent under-secretary; namely, the noble Lord, Lord Armstrong. Does the Minister not think that it is time for a Civil Service Act which gives civil servants the strength to condemn government abuse of power before they retire?
Lord Macdonald of Tradeston: My Lords, Mr Alastair Campbell will not be able to intervene in the Central Office of Information. Carol Fisher, the executive, will continue to report to me as Minister for the Cabinet Office. I did have time to see the programme in question, and I noted that the noble Lord, Lord Armstrong, was concerned about the increase in government spend between a pre-election year and an election year. In 1999–2000, the figure increased from £118 million to £192 million. Looking back, however, I discovered that during the noble Lord's tenure as Cabinet Secretary, real-terms spending trebled from £66 million in 1985–86, two years before the general election, to £192 million in the year of the election itself. So there is a cycle in these matters. That is undoubtedly one of the issues that will arise if there is consultation—to which the noble Lord, Lord McNally, may wish to contribute—on a Civil Service Act.
The Earl of Northesk: My Lords, going back to the 1980s, does the noble Lord recall these words:
"You can see quite clearly that the purpose of this is not to give us, the public, the facts, but is to sell the government's political message and that's quite wrong"?
Can the noble Lord explain what has happened since 1988 to make the Prime Minister change his mind so radically?
Lord Macdonald of Tradeston: My Lords, one of the differences between the type of advertising campaigns used in the 1980s, to which I have referred, and more recent ones is that whereas much of that exceptional trebling of spend in the year before the 1987 general election was devoted to privatisation advertising for British Gas and BP, advertising before the most recent election focused on issues such as recruitment to the Armed Forces, the police and nursing. The latter campaigns turned out to be extremely effective.
Lord McNally: My Lords, when will the Minister realise that this Government were elected to change behaviour from the behaviour they "inherited" from the last lot, not to offer us the defence, "Well, they did the same"? When is the penny going to drop that

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excessive spinning and abuse of public funds for political ends works against the Government and their reputation, not in their favour?
Lord Macdonald of Tradeston: My Lords, I stress that very clear and well-established conventions guide government information officers in commissioning advertising. The conventions have been place for 20 years and dictate that the subject matter should be relevant to direct government responsibility, should be objective and explanatory in tone and not tendentious or polemical, should be conducted in an economic manner, and should not be liable to misrepresentation as being party political. I suggest that that is the case with this Government's advertising.
Lord Stoddart of Swindon: My Lords, does the noble Lord agree that, above all, advertising by the Government should not be economical with the truth? Does he also agree that a good deal of government advertising is worthless in that it does not do the intended job? In those circumstances, will the Government examine the advertising budget to see whether a lot of money is being wasted that could be saved?
Lord Macdonald of Tradeston: My Lords, I remind the House of the famous quote that 50 per cent of every advertising budget is wasted; the only difficulty is working out which half. The COI's total advertising spend in this area is £192 million, as opposed to BT's spend of about £100 million. Considering the volume of government expenditure, that is a very small percentage of total turnover. There is not only a rigorous system of scrutiny by an advisory committee on advertising, but audit through the National Audit Office, and oversight by Cabinet Office Ministers to ensure that the money is well spent. The quinquennial review gave a very good bill of health to the Central Office of Information.
Lord King of Bridgwater: My Lords, as there obviously is concern about potential abuse in this sphere—from which the Government gain very considerable power and access to the public exchequer—and since neither the NAO nor the Public Accounts Committee are necessarily the appropriate people to study the propriety of these matters, will the Minister advise us on whether the Committee on Standards in Public Life has been asked to examine the situation and, if so, whether it has done so? If not, and if the Government are so confident of their position, will they undertake to remit the matter to the Committee on Standards in Public Life for examination?
Lord Macdonald of Tradeston: My Lords, as I said, we have a very thorough system of oversight, audit and scrutiny. We have had no complaints on this matter from the National Audit Office. Moreover, the chief executive, Carol Fisher, has made it quite clear that, as accounting officer to the PAC, she stands accountable
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to Parliament on these matters. We therefore believe that allegations of weighting advertising towards the last quarter of the financial year are tendentious. It was very forcibly alleged, for example, that the 50 per cent spend in the final quarter of the financial year was deeply reprehensible. However, one should compare that 50 per cent to an average spend of 49 per cent in the same quarter in the past seven years. As I said, and as an examination would reveal, there were similar changes in expenditure under previous governments.

Millennium Dome
3.9 p.m.
Lord Falconer of Thoroton: My Lords, with your Lordships' leave, I shall make a Statement on the future of the Dome and the Greenwich peninsula.
English Partnerships has today entered into legally binding contracts with Meridian Delta Ltd, a consortium consisting of Lendlease plc and Quintain Estates and Development, and with the Anschutz Entertainment Group, for the redevelopment of the Dome and approximately 170 acres of land on the Greenwich peninsula. Under the deal, Anschutz will construct a world-class standard 20,000 seat arena inside the Dome, capable of hosting a wide range of entertainment and sporting events. No specific price is being paid for the land under the arena, but its value is reflected in the deal as a whole with MDL. Anschutz is committed to investing £135 million, and EP will be entitled to a share of profits made by the arena, after a priority return to Anschutz.
In the outer rim of the Dome, and spilling out into the northern tip of the peninsula, MDL and Anschutz plan to construct a mix of eating, entertainment and leisure facilities—this part of the development is known as the Dome waterfront. Again, the land value is reflected in the deal as a whole with MDL. MDL and Anschutz are committed to investing at least £65 million. Again EP will share in profits.
All risk in respect of the Dome will transfer to Anschutz and MDL, who are required to maintain the Dome until 2018. Should they decide at that time to remove the Dome structure and redevelop the land, English Partnerships will be entitled to a 50 per cent share of redevelopment proceeds. This protects English Partnerships' position on the redevelopment value of the land.
In respect of the rest of the peninsula land in the deal (around 146 acres), English Partnerships and MDL have agreed that they will develop the site jointly. Development is to take place over the next 20 to 25 years, with an end date of 2025. The detailed terms provide for English Partnerships to retain ownership of its land until individual plots are required for development. The payout will work as follows: first, an agreed minimum land value, on the sale of any parcel of land—this protects against any downturn—secondly, the uplift in the value of land, after planning permission and at the point of sale to a developer, to reflect development value. Calculation of the split

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varies across the phases of development, but broadly evens out to 50:50—after costs—assuming development of about 14 million square feet.
Where MDL develops land itself, English Partnerships will receive the agreed minimum land value plus a share of sale proceeds, or the value of the development—both after costs—once the development is complete.
Under the terms of the original acquisition of the land, British Gas is entitled to 7.5 per cent of sale proceeds or open market value across the site. This would apply in relation to any onward sale of land on the Greenwich peninsula by English Partnerships.
No negotiations between English Partnerships and British Gas have yet taken place on how exactly British Gas's entitlement is to be interpreted in the context of the deal with MDL and Anschutz. English Partnerships will ensure that the outcome of those negotiations represents good value for money for the public purse.
The deal's three parts—Dome, Dome waterfront, and the rest of the land—are subject to the grant of planning permission. Participants envisage making an application in the autumn. Until planning permission is granted the site will remain the responsibility of English Partnerships.
In agreeing to accept the terms of this deal, the Government have focused on four main aspects: value for money; regeneration benefits for the area; deliverability and a proper use for the Dome.
As regards value for money, we have made it clear that we would only proceed with any deal if it provided proper value for money for the Government. That included comparison with the value for money which could be delivered by demolishing the Dome, or by alternative development scenarios retaining the Dome. The net present value of the agreements that I have just outlined to English Partnerships, assuming the full scheme is developed, is around £240 million as estimated by independent advisers. The expected cash to be received over a period of around 20 years will be up to £550 million.
The division of these proceeds between the Millennium Commission and English Partnerships has not been finally agreed. At the time of the Legacy deal a formula was agreed. Because that deal was of an entirely different sort from this one, the precise application of the formula to this deal needs to be considered further. But a fair split will be worked out. The process of working out that split does not affect the deal English Partnerships has done with MDL and Anschutz. On the basis of independent advice, we are satisfied that the deal is good value for money.
If the site had been sold outright now with no joint development agreement, the estimated value of the site—the amount we would have obtained in the market—was considerably less than the net present value of the deal of around £240 million. This is so whether the Dome was there or not.
The other main comparator that we have considered is whether this current deal would have produced a higher return had the Dome been demolished and the
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land under it dealt with in the same way as the wider peninsula lands. Independent advice from Jones Lang Lasalle satisfies us that the value to the Government of demolishing the Dome would produce a lower return for the Government than preserving the Dome, and developing the site in the agreed way. To make available more land by the demolition would not increase the amount of land which could be developed because the constraints on development over the period of the development are not the amount of land but planning and transport.
Moreover, we have received professional advice that the establishment of a successful and iconic venue enhances the value of the rest of the development.
These agreements allow the Government to participate in the increasing value of the land across the peninsula. This is sensible, and in the public interest. As the development proceeds, land values will increase. This will be reflected in the land value element in the payment to English Partnerships when the land is sold for development.
The deal also ensures a return to English Partnerships if the Dome site is redeveloped at some point in the future. In addition, English Partnerships will share in profits from the arena and from the Dome waterfront development.
The deal contains no promise by the Government to a particular crossing across the Thames. There is no commitment of any sort in the deal or associated with it. MDL has confirmed this.
The issue of enhancing the transport infrastructure is of huge importance to many communities in and around London. The increased activity on the Greenwich peninsula which comes from this development will inevitably be a factor which will bear on those decisions. But there is no promise on this issue in connection with the deal. The question of river crossings is a very complex regional issue, extending well beyond the Greenwich peninsula and relating to traffic flows across the region, not just in respect of individual developments.
As regards regeneration benefits, the Greenwich peninsula has for decades been contaminated and badly connected to the rest of London. It has been decontaminated and the Jubilee Line extension brings with it good transport links. This development will bring tens of thousands of jobs and up to 7,000 new homes, many of them affordable. We believe that it will have a significant regeneration effect. It will create a new mini city. The MDL scheme outperforms any other scheme in regeneration benefits.
As regards deliverability, the participants in the development include players with established records in delivering developments of the size and quality this project requires. This is their core business.
Anschutz Entertainment Group is part of the Anschutz Corporation, one of the largest private corporations in the United States of America. It has world-wide sporting and entertainment interests including the Staples Centre arena in Los Angeles. It

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has the resources to develop and the track record which shows that it can do it. It has the energy and commitment to deliver.
Lendlease is a major development company. It is quoted on the Australian stock exchange, operates in 40 countries and has a market capitalisation of around £2 billion. Quintain is quoted on the London stock exchange and has gross assets of £637 million.
Lendlease owns Bovis in the UK and has successfully developed the Sydney Olympic village and Bluewater shopping centre. It is currently project manager for the ground zero project in New York.
These players have the resources, the experience and the ability to deliver.
As regards a suitable use for the Dome, by creating an arena and associated entertainment and leisure facilities we have found an appropriate use for what is widely acknowledged to be a high quality landmark building. Public access is assured. Keeping the Dome as the lynchpin of the development has been welcomed by the London Borough of Greenwich and the Mayor's office.
The agreements represent excellent value for money. The deal brings substantial regeneration benefits for the immediate area and beyond. It brings into the development players of proven ability and resource. It ensures that the public sector can participate in the increase in value of the whole estate as the development proceeds. It represents a fitting use for the Dome which will enhance the value of the whole project and attract people and economic activity.
A huge amount of work has gone into this deal. It represents a very secure foundation on which the Government and their private-sector partners can proceed to deliver the benefits that are available to be harvested from the Dome, and for the peninsula. We considered all other options but none offered comparable benefits.
The deal will deliver excellent value for money, thousands of jobs and homes, an exciting use of one of London's landmark buildings and the continued regeneration of a key site in the evolution of Greenwich, London and the Thames Gateway. I believe that the Government are making the right choice in entering into this deal.
3.20 p.m.
Viscount Astor: My Lords, I thank the Minister for making the Statement. I understand that it is the last Statement he will make on behalf of the Department for Transport, Local Government and the Regions because he is moving to the Home Office. I wish him luck in his new department. I ask at the outset: will he take with him ongoing responsibility for the Dome?
I shall be charitable to the noble and learned Lord; I am not going to ask him to list the times he announced to the House that the Dome would not need further funding but, unfortunately, had to come back and to tell us that funding would again be required. The management of the Dome has been a
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disaster for the Government. They took a good idea and ruined it. That culminated in the awful millennium night, with its dreadful parody of English culture.
I have various questions for the noble and learned Lord. What is his final—and I mean final—estimate of the cost so far of the Dome? He has always promised that taxpayers would not bear any costs for the Dome. What costs have they borne so far? Is it not the case that taxpayers will have to fund the costs until planning permission is agreed? That cost will be at least £3 million a year. How will taxpayers be repaid? Will it be through English Partnerships? Will the Minister tell us what the alternative plan is if planning permission on the 130-acre site is refused? Can Meridian Delta drop out and, if so, will it be recompensed? When is planning permission expected to be received?
Will the Minister confirm that Meridian Delta, Anschutz Entertainment Group, Lendlease or Quintain—or their directors—have not been donors to the Labour Party? What is the nature of the priority return, mentioned by the noble and learned Lord, which is due to Anschutz? Can the Minister tell us whether the Millennium Commission will receive 50 per cent of the sale proceeds or 50 per cent of the profits originally agreed with English Partnerships? I remind the noble and learned Lord that it was conditional for the commission advancing further funding to the Dome that it received that share of the money back.
The Millennium Commission will be wound up in two years. What will happen to the share that it is owed if not all the money is paid? Why have the Millennium Commission and English Partnerships not been able to come to an agreement?
The Minister said that British Gas and its property company, Lattice, are due 7.5 per cent of the profit on any land sale. He said that no negotiations have taken place between English Partnerships and British Gas. If we are to rely on English Partnerships to conduct those negotiations, how can he assure us that best value for the taxpayer will be guaranteed? Is not British Gas due about £40 million?
Previously, in response to questions, the Minister refused to tell Parliament what his advisers estimated the value of the site to be, with the Dome and without it. What is the actual estimate—without any conditions, such as developing the site in an agreed way—of the value of the site if the Dome was demolished? The noble and learned Lord must answer that question.
We know that the Dome has an estimated life of only 25 years, but it does not seem to be standing up very well to the elements. Can the new owner apply to demolish it prior to 2018 if it starts falling down?
The Minister said that a bridge across the Thames is planned. Who will pay for it? The Mayor says that he cannot. The Minister has not made a commitment that the Government will fund the cost of £200 million. Who is going to pay for the bridge?

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The Dome has never been value for money, as the Minister said. It has cost more than £800 million. There will be a return of £550 million, he estimates, but after 20 years. Not much value for money there, my Lords.
The Dome will stand as a decaying monument to new Labour. It has cost a fortune. It was all promise but no delivery. At the end of the day, like most government policies, it was only full of hot air.
3.25 p.m.
Viscount Falkland: My Lords, we on these Benches thank the noble and learned Lord for the Statement. As the noble Viscount, Lord Astor, said, the noble and learned Lord is moving on to new responsibilities. We on these Benches greet that with mixed feelings. Whenever I speak across the Chamber to the noble and learned Lord, I always feel after the event—such is the smoothness and skill of his delivery and powers of persuasion—that I must surely have missed something and that there must be something good in whatever proposal is involved. I shall feel the same today. His move means, I understand, that we shall no longer have the brusque and human style of the noble Lord, Lord Rooker.
Does not the deal presented to us involve giving away the Dome—that catastrophic project—for the promise or expectation of profits that will repay the enormous investment, including lottery investment, way in the future? The phrase "value for money" features many times in the Statement. We have been rather beaten over the head with that phrase. If I am correct, it appears in the Statement half a dozen times. It makes one a little suspicious if people keep repeating things. That reminds me of the situation when people say, "To cut a long story short." One knows that the story will be long. When one hears the phrase "value for money" too many times, one begins to wonder whether there is any real value for money. Talking of long stories, I suggest that this story has a great deal further to run.
The Statement is complex and there are many questions one could ask. The noble Viscount, Lord Astor, raised a number of them. I shall mention one or two further matters. The Statement refers to a proper use for the Dome. One wonders what an improper use would be. Was it necessary to make that point in the Statement? Obviously, the Dome will not be turned into a brothel or a venue for rave parties. We understand that it will be an eatery, an entertainment centre and a sporting centre with a rather clever name—Dome waterfront. I wish someone had thought of that name previously; it has a catchy feeling. There might have been more visitors if it had had that name. The pseudo-entertainment/education mix that it turned out to be largely accounts for its failure as an attraction.
The question of Lattice and British Gas is interesting. I do not expect the Minister to respond to that point today. There has been comment in the press about the bitterness and wrangling over the future of the 77.5 per cent entitlement in relation to land values.
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The Statement leaves very opened-ended the way in which that will be resolved. I hope that the Minister will say a word or two about it.
As we understand it, there is no cash at all in the venture—no cash, indeed, until the parcels of land are developed. I also find strange the reference to the fact that profits will come back in future—and, presumably, go towards the repayment of lottery funds, about which I, as spokesman on culture, media and sport, am very concerned. The Statement also contains the suggestion that if Dome waterfront is profitable, moneys will come back from the entertainments, sporting events and other activities. Will the Minister tell us more about that? Under what timescale does he expect that to happen?
I shall not follow the noble Viscount, Lord Astor, down the road of recriminations. We have done enough of that and we are all tired of it. I do not want to start beating the noble and learned Lord around the head with my own vernacular. We have heard enough today about value for money and other terms of that kind. The Dome has not been a success. We have not got out of the situation quickly and it appears that we shall not be doing so.
The Dome has contributed to a disappointing result for the lottery in recent times. People are buying fewer lottery tickets. There have also been problems in relation to the national stadium and investment in that project. What of the moneys that have been sunk into the Dome? Can we expect any repayment of those moneys and, if so, when might they be forthcoming? I expect that we shall return to this matter often in the future.
3.30 p.m.
Lord Falconer of Thoroton: My Lords, I thank both noble Viscounts for what I took to be their warm best wishes in relation to my new job in the Home Office. I may have misunderstood, but I shall be charitable and treat them as warm best wishes. I believe that today is my last day of responsibility for the Dome. That is a matter of great sadness from my point of view.
Perhaps I may begin by answering points raised by the noble Viscount from the Liberal Democrat Benches. He summarised the deal by saying that there was no money up-front in relation to the Dome and the Dome waterfront and that there was a profit-share arrangement in relation to the rest of the land. I shall summarise the arrangement. In relation to the Dome and the Dome waterfront, the purchasers are, in effect, agreeing to make an investment which totals just in excess of £200 million. They are undertaking the whole risk in relation to the Dome and the Dome waterfront. After they have made a specified return on t hose, English Partnerships will be entitled to participate in a share of the profit.
There will, in effect, be a trading entity in relation to those two parts of the deal. In respect or the rest of the North Greenwich peninsula—an area of approximately 146 acres—a joint development will be carried out on plots. As each plot owned by English Partnerships is developed, that body will receive a

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minimum land value and an amount which reflects the increase in the land value as a result of development. The fact that there is no up-front payment in relation to the arena or the Dome waterfront will not cost the taxpayer any money. We have received advice that there will be a limit on the amount of development that can take place on the Greenwich peninsula. It will be possible to develop an area in the region of 14 million or 15 million square feet on the rest of the land. We are also advised that an identifiable destination such as the Dome enhances the value of the development.
As a separate matter in relation to the wider peninsula, an arrangement whereby we participate as a government in the increase of the value of the land will be in the interests of the taxpayer. Everyone advises us that an outright price obtained for the land now will be lower than that obtained as the peninsula is developed over 20 to 25 years as the value of the land increases. A minimum land value will protect us against a significant downturn in the market.
Therefore, we believe the deal to be good value for money. We have independent advice that it is a better deal than either the outright sale of the land without the Dome or an identical agreement to that which has been reached but with the Dome knocked down. I am not prepared to say what the figures are for the estimated net present value of the sale of the site with no Dome on it or for the alternative development without the Dome because that could prejudice subsequent negotiations.
So far as concerns the specific questions raised by the noble Viscount on the Conservative Benches, the total amount of money invested by the lottery in relation to the Dome is in the region of £603 million. In a separate arrangement, £237 million has been invested by English Partnerships in the wider peninsula. In addition, £187 million has been invested in the North Greenwich interchange and the Jubilee Line approaches. The total of that is in the region of £1.024 billion. The private sector investment that has, or will, come back is expected to be between £4 billion and £5 billion.
In relation to the question of continued liability for the Dome, its approximate maintenance cost is £250,000 per month. That will continue to be a liability for English Partnerships until the deal goes unconditional. The deal will go unconditional upon the granting of planning permission. If planning permission is not granted, the deal will not go unconditional. Whether or not planning permission is granted is a matter for the London Borough of Greenwich and the applicants, or, if the matter is called in, for the Secretary of State and the applicants.
So far as concerns the Millennium Commission's rights, as I indicated in the Statement, an agreement in principle was made at the time of the Legacy arrangement that would ensure a fair return to the commission. This deal is different in form from that envisaged at the time of the Legacy arrangement. Therefore, it will be necessary to work out precisely how much that means in relation to the Millennium Commission's entitlement, but that will be done.
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As to the position of British Gas, or Lattice, and its entitlement, British Gas has a contractual entitlement to 7.5 per cent. That must now be negotiated in a way that ensures good value for money.
The noble Viscount from the Liberal Democrat Benches asked what would constitute an improper use of the Dome. I can think of many improper uses. However, the usage envisaged here—namely, a world-class arena housing 20,000 people, making it possibly the best arena in Europe—is a perfectly proper and sensible use of the Dome.
Although a large number of questions were asked, I believe that, on the basis of independent advice that we have received, this is a very good deal in terms of value for money, and neither noble Viscount suggested a better deal.
3.37 p.m.
Lord Crickhowell: My Lords, we are deeply grateful to the noble and learned Lord for making this—his last—Statement as Minister for the Dome and prefabs, and we wish him well in his new appointment. But, as I listened to the Statement, I could not help thinking how fortunate it is that we have the National Audit Office to analyse the structure of the deal, the risks that are being incurred by government and the eventual outcome. We shall wait with great interest to see its report and to discover whether it is as critical in the future as it has been on occasions in the past.
The nature of this deal appears to be that the Government are effectively giving away the Dome in return for a highly speculative long-term venture. The noble and learned Lord would not tell us the exact basis of current land values, but he admitted that, until planning permission is granted, there will be an ongoing liability of well over £3 million a year. Another payment of over £40 million may have to be made to British Gas—perhaps up front. And he was vague about when the poor Millennium Commission is to receive the money that it was promised would be returned to it. But he appears to be saying that the commission might have to wait almost as long as the Government for such a return.
Therefore, we do not have quite such a marvellous deal as the noble and learned Lord indicated. He spoke about a 50/50 return after costs. I noted with care the words "after costs". I suspect that in reality the Government will have very little control over the future management of the venture or over the nature of those costs. Therefore, I suspect that the speculative nature of this long-term bid is even greater than the Minister suggested. Is it not true that he is giving away the Dome after enormous expenditure for a highly speculative and very uncertain long-term return?
Lord Falconer of Thoroton: My Lords, I thank the noble Lord for his good wishes. He describes me as moving on from being the Minister for the Dome and prefabs. I am not sure what that was a reference to, but I thank him for his good wishes anyway. I have gone through the matter in some detail because it is right that noble Lords should know the facts so that they

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can make an assessment of the situation. Like the noble Lord I welcome the opportunity provided by an NAO inquiry into the sale, so that the detail can be considered. That should give noble Lords confidence that a proper consideration of all the facts will take place. Ultimately the Government have to make decisions about the best deal that can be obtained on the Dome and the surrounding land. We believe we have that.
In picking up some of the points that have been raised, I hope that I shall not repeat myself. We are not giving away the Dome. There is a commitment to the development of the Dome and the Dome waterfront in exchange for a share of profits. In addition, there is the development agreement in relation to the rest of the site, which is a common form land development agreement that permits the landowner to participate in the expected increase of value. Yes, the noble Lord is correct to say that there is a risk in relation to that. However, a landowner in such circumstances has to ask whether one is better off taking all the money for the land up front and watching the developer take all the profits as the development takes place, or whether one would be wise to participate in the development over a period of time. With proper protections, we believe that the latter, rather than the former, is the correct course. That is the judgment we have made. The 7.5 per cent of £40 million to which the noble Lord referred has to be negotiated, but that was an agreement reached in relation to the land and would apply to any deal that we struck.
In relation to costs, the noble Lord is absolutely right. The cost to which we refer is the infrastructure improvement costs that MDL has agreed to undertake under the agreement. That is why the agreement contains appropriate engagement of English Partnerships in the process by which those decisions are made. All the points made by the noble Lord apply in practically every joint development. We believe that we have reduced the risk as much as possible.
Lord Corbett of Castle Vale: My Lords, has my noble and learned friend received any recent communication, expression of regret or even apology from the former chairman of the Millennium Commission who altered the rules on the siting of the Dome after the tender bids had been submitted and went against the site chosen by the preferred operator to take the Dome exhibition to the NEC, the Birmingham Solihull site? Does he accept that the noble Lord, Lord Heseltine, is the father of this grief, and that had the original bid gone forward as it should have done, the millennium exhibition would now be encased in the marvellous National Exhibition Centre, the premier exhibition centre in the country?
Lord Falconer of Thoroton: My Lords, I feel that it would be unwise of me to go into the question of where the Millennium Dome should have been sited in the first place. However, the noble Lord, Lord Heseltine, to whom my noble friend refers, was a strong supporter of the Dome from the outset. Throughout the whole period of the existence of the Dome, he has
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remained consistent and supportive and he stands by his decisions at the outset. Whatever else one could say about the noble Lord, Lord Heseltine, he has been totally consistent.
Baroness Maddock: My Lords, I extend to the Minister my best wishes in his new role. I have enjoyed working with him on housing matters, inside and outside the Chamber. We shall miss the presence of a housing Minister in this House. I have two questions on the Dome. First, does the Minister have any estimate of how long the planning permission will take and when the contract will go live? Secondly, on affordable homes, how many will there be and when will they be built? Quite often affordable homes are built after more expensive ones.
Lord Falconer of Thoroton: My Lords, I am very grateful to the noble Baroness for her genuine kind wishes. It is difficult to estimate how long the planning permission will take. I t will depend on whether the application is called in. The applicant's intention is that an application should be made in the autumn. It is hoped that the planning permission will he granted in such time to allow building work to start in 2003. On the affordable housing point, the master plan envisages that up to 35 per cent of around 7,000 homes to be built on the site will be affordable homes. I cannot say in what sequence the houses will be built. That is a matter to be discussed between the London Borough of Greenwich and the applicant.
Lord Jopling: My Lords, in view of the murky background that has surrounded so many of the deals of this Government, ending in the humiliation of yesterday, will the Minister answer the question put by my noble friend on the Front Bench as to whether a check has been made to see whether any of the individuals from outside companies involved in making this deal or any of their associates has been involved in contributing to the Labour Party? Would it not be better to come clean now rather than to leave it to the press to make a discovery in the months ahead?
Lord Falconer of Thoroton: My Lords, I apologise for not answering that question. I am not aware whether any of the three parties involved has made a contribution. If any of the parties had, it would not have made a jot of difference as far as the deal was concerned.
Lord Campbell-Savours: My Lords, would not those who were responsible for that monument to dereliction, the Battersea power station, do well to keep their heads down in relation to the Dome?
Lord Falconer of Thoroton: My Lords, in a number of respects those on the other side are pretty shameless.
Lord Naseby: My Lords, will the noble and learned Lord answer one question asked from the Front Bench? What return is guaranteed on the £200 million

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investment? Is he aware of the Public Accounts Committee report of 15 years ago, when the noble Lord, Lord Sheldon, was chairman, in which it was specifically required that every government contract should contain a clause to ensure that the Government had a share in any extraordinary windfall gains? Is he certain that there is such a clause in the agreements in relation to the Greenwich peninsula development?
Lord Falconer of Thoroton: My Lords, there is no guaranteed return in relation to the investment of £200 million. That investment is not being made by the Government; it is being made by Anschutz and MDL. The agreements in relation to the arena and the Dome waterfront legally commit them to make an investment in excess of £200 million. They are entitled to a specified return before we receive our share of the profit. I shall not say what the share of the profit will be, as that is commercially confidential. On windfall profits, the deal has been so constructed that the Government will participate in any profits in relation to the increase in the value of the land and in relation to any subsequent redevelopment of the Dome.
Lord Hylton: My Lords, following the question posed by the noble Baroness, Lady Maddock, will the Government ensure that the opportunity for securing housing for essential public service employees is grasped and that they have priority in the process of housing development?
Lord Falconer of Thoroton: My Lords, there is a significant element in the housing proposal relating to affordable housing. The precise amount of such housing—how much will be full social housing and how much will be for key workers—is a matter to be resolved in the context of the planning application which is a matter between the London Borough of Greenwich and the applicants or the Mayor, or, if called in, the Secretary of State.
Lord Stoddart of Swindon: My Lords, does the noble and learned Lord agree that it is fortunate that this House is sitting today—the House of Commons has taken an extra week's holiday—as it has enabled him to make an early report to Parliament about the deal? When the House of Commons resumes on 10th June will a similar report be made to that House so that it has an opportunity to discuss what is on offer?
I have a second question. The public have been sold a lot of pups. In the end, if things go wrong, they always have to pick up the tab. I think particularly of the part-privatisation of air traffic control as regards which it seems that the good deal announced to this House and another place has turned sour and the taxpayer may very well be picking up the bill. I hope that this will not be another such deal.
That brings me to my third question about the sale of the land. I understand the necessity of ensuring that the Government and the taxpayer get the enhanced value of land over a period of time. But, rather than selling the land, would it not be better to allow its
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development on a long lease? That would ensure that the Government share in the increased land value and the profits, but it would, nevertheless, retain the land in the long term under public ownership, or am I wrong about that?
Lord Falconer of Thoroton: My Lords, indeed it is fortunate that the House of Lords is sitting today. As the noble Lord has acknowledged, once the deal was done I came at the first opportunity to describe its full details. I am very grateful for the opportunity to do so.
Secondly, as to a similar Statement in another place, that is a matter for another place. Thirdly, as regards the enhanced value of the land, the nature of the landholding will be a 999-year lease that will be granted to developers.
Baroness Carnegy of Lour: My Lords, the noble and learned Lord is a distinguished lawyer. Clearly, the success of this scheme depends upon planning permission. Should it be refused and the application be called in, does he consider that the European Convention on Human Rights would consider it right and be happy that the Secretary of State, who has such a big interest in the deal, should arbitrate?
Lord Falconer of Thoroton: My Lords, so far as concerns call-in, it does not occur when planning permission is refused but before any decision is made in relation to planning permission. Before the Secretary of State made any decision about this he would have the views of an independent planning inspector. Issues in relation to the application of human rights and the planning law have been considered in the Alconbury case. As the noble Baroness knows, it was broadly concluded that because it is a democratically-based system the full rules of natural justice do not apply. So I am confident that the system would be able to accommodate this case.
Baroness Jay of Paddington: My Lords, I apologise to the House and to my noble and learned friend for not being here at the beginning of his Statement. Does he accept that there are many noble Lords who would like to congratulate him on the assiduous and good-humoured way in which he has reported regularly to the House during his time as Minister for the Dome? I think that he has served Parliament very well in that capacity.
Lord Falconer of Thoroton: My Lords, I thank my noble friend for those remarks.
Lord Tebbit: My Lords, can the Minister tell us for how long the profit-sharing deal on the Dome will continue?
Lord Falconer of Thoroton: My Lords, it will go on for the length of the agreement; that is, for as long as

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Anschutz continues to operate the Dome and the Dome waterfront—the Dome waterfront being operated by Anschutz and MDL together.
Lord Tebbit: My Lords, it is rather important that the Minister answers that clearly. Is he saying that in the event that the present consortium were to sell on the business to another consortium the profit-sharing deal would end?
Lord Falconer of Thoroton: My Lords, as I have made clear in the Statement, there is provision for English Partnerships to participate in any redevelopment of that kind.
Lord Mackie of Benshie: My Lords, can the Minister tell us under what conditions the companies concerned can withdraw from the deal?
Lord Falconer of Thoroton: My Lords, there are a number of conditions that are not significant, save for one. The one significant condition is planning permission.

Business of the House: Debates this Day
3.54 p.m.
Lord Williams of Mostyn: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Woolmer of Leeds set down for today shall he limited to three hours and that in the name of the Lord Harrison to two hours.—(Lord Williams of Mostyn.)
Lord Renton: My Lords, can the noble and learned Lord make clear that the Joint Committee will have power—
Lord Williams of Mostyn: My Lords, that is not the Motion.
On Question, Motion agreed to.

House of Lords Reform
3.55 p.m.
Lord Williams of Mostyn: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
The terms of the Motion have been agreed unanimously by the usual channels in both Houses. I wish to say a few words about the subsequent procedure for appointing the Joint Committee. The matter we are now engaged on is the first Motion. A second Motion will be moved in the Commons sometime after the Whitsun recess agreeing, I hope, to set up the committee and to propose Members from that House. We shall then receive a message telling us that that has been done. At that point there will be a
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final Motion in this House setting out the proposed names of the Lords' Members and the powers the committee will have. It is the work of the Committee of Selection to draw up that list.
Moved, That it is expedient that a Joint Committee of Lords and Commons be appointed—

(1) to consider issues relating to House of Lords reform, including the composition and powers of the second Chamber and its role and authority within the context of Parliament as a whole, having regard in particular to the impact which any proposed changes would have on the existing pre-eminence oft he House of Commons, such consideration to include the implications of a House composed of more than one "category" of Member and the experience and expertise which the House of Lords in its present form brings to its function as the revising Chamber; and

(2) having regard to paragraph (1) above, to report on options for the composition and powers of the House of Lords and to define and present to both Houses options for composition, including a fully nominated and fully elected House, and intermediate options;

and to consider and report on

(a) any changes to the relationship between the two Houses which may be necessary to ensure the proper functioning of Parliament as a whole in the context of a reformed second Chamber, and in particular, any new procedures for resolving conflict between the two Houses; and

(b) the most appropriate and effective legal and constitutional means to give effect to any new parliamentary settlement;

and in all the foregoing considerations, to have regard to—

(i) the report of the Royal Commission on House of Lords Reform (Cm 4534);

(ii) the White Paper The House of Lords—Completing the Reform (Cm 5291), and the responses received thereto;

(iii) debates and votes in both Houses of Parliament on House of Lords reform; and

(iv) the House of Commons Public Administration Select Committee report The Second Chamber: Continuing the Reform, including its consultation of the House of Commons, and any other relevant Select Committee reports.—(Lord Williams of Mostyn.)

3.56 p.m.
Lord Strathclyde: My Lords, it may be inappropriate but I am sure no one will mind if I say a few words about the noble Lord, Lord Carter, the Government Chief Whip, who I understand has today stood down from that position. He has occupied that post for some five years. As a former Chief Whip and now Leader of the Official Opposition, perhaps I may say what a great pleasure it has been to work with him, sometimes during very difficult times.
The noble Lord took over in 1997 when there was an overwhelming majority in the House against the Labour Party. He dealt with the enormous changes

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and ramifications of the 1999 Act. It is a record of which he and his family should be justly proud. I should also like to welcome his successor, but I understand that the name has yet to be announced. We very much look forward to working with him in the same way that we have worked with the noble Lord, Lord Carter, when that announcement is made.
I turn to the Motion so ably, albeit briefly, moved by the noble and learned Lord the Leader of the House. As he said, we have agreed it. I welcome it. I welcome it because it marks the end of the reform of Parliament as the property of one party and the beginning of true and lasting parliamentary reform, discussed, agreed and designed in Parliament in the public interest.
I repeat what I said the other day in response to the Statement of the noble and learned Lord the Lord Chancellor. I said that the Joint Committee must be a forum to tease out and reconcile differences of opinion on the future of this House and of Parliament as a whole. It must not be a forum in which to try to force through whatever may be the latest will of Cabinet—or any part of it.
That is why it should be a committee of authority and independence, large enough to embrace all shades of opinion in this House and in the other place. And large enough, too, to give a strong voice to Cross-Bench opinion. That is such a distinctive and valued voice in this House. I welcome the fact that this approach is shared by the Government.
Our main objective is an outcome that will strengthen Parliament and this House. As the House knows, the shadow Cabinet has set out what it believes is an effective way to achieve that. I freely recognise that there is some division on this side of the House, just as the noble and learned Lord the Lord Chancellor found that there was a division on the other side when he set out to sell the Government's proposals to his Back-Benchers in another place. There is division on the other side; there is division on this side. That is why no solution can be imposed from the Front Benches and why the Joint Committee is the best way forward.
I welcome the breadth of the terms of reference of the committee. I think that the wording could have been marginally better. It might have been more explicit to say that there will be no sensible conclusion on composition without a view of the role, powers and functions of the House.
I read the Motion as meaning that nothing is ruled in and nothing ruled out. It means that powers and composition can be examined together. Role, powers and authority must always be the begetters of composition and not the other way around. This could be the most far-reaching, non-partisan parliamentary examination of Parliament's future for a very long time. No committee charged with this task would want that to be any different.
I also hope that the committee can look at the workings of another place. It is too large and too docile in the face of the executive and has procedures poorly fitted to revise or reform the law. I suggest that to
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address the problems of this place without considering the problems of another place is to call to mind the beam in one eye and the speck of dust in the other. We cannot achieve a stable parliamentary settlement with a Parliament functioning strongly in the interests of the people unless we consider genuine reform of another place, as my party has said that it will.
We have debated reform of this place for more than 90 years—since 1911. Some, such as the Leader of the House in another place, Mr Robin Cook, say that the committee must complete the task in 90 days. We cannot square the great question of strengthening Parliament and securing its future in 90 days. If we could, the Government would already have come up with the answer.
We bungled reform once in 1999. We cannot repeat that mistake, otherwise the opportunity may not recur for a century or more. If the Joint Committee takes more time, I am prepared to accept that as long as it keeps its eye on the objective of a stronger Parliament. We need the maximum consensus on how that could be achieved.
No one should underestimate the scale of legislation involved here. It is a far larger undertaking than that dealt with in the 1999 Act, which was accepted by large majorities in both Houses of Parliament after the statesmanlike agreement between my noble friend Lord Cranborne and the noble learned Lord the Lord Chancellor. Even so, a short Bill with a limited if distasteful aim took many days to pass.
That is why the route of a Joint Committee, long advocated by my party and by the Liberal Democrats, is wise. Let it take its time, as long as it does so for the purpose not of delay but of consensus and quality. Of course, I hope that when it reports, it will remain closest to the ideas that I have proposed, but we will consider whatever it produces constructively and respond as swiftly and as constructively as we can, provided that the end result is a stronger, more authoritative and even more effective House of Lords.
That is what I have worked for ever since I entered this place; it is what I believe in with deep conviction; and it is what I hope for from the Joint Committee that we are creating today.
4 p.m.
Baroness Williams of Crosby: My Lords, on behalf of noble Lords on these Benches, I add a few words of regret and deep respect for the former Government Chief Whip, whom all of us in the House greatly like and who behaved with astonishing patience and understanding. He has friends in all parties and conducted himself throughout with an extraordinary degree of dedication to making this House the best place that he could possibly help to make it. He won great respect and friendship from all sides of the House for his modesty, generosity of spirit and conscientiousness.
Noble Lords: Hear, hear!
Baroness Williams of Crosby: We very much hope that his family will understand how closely and dearly

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we in the House hold his reputation and we hope that he will have a happy retirement—or if not, that he will make many contributions to the House in future. We shall listen to him with great interest and attention.
Like the noble Lord, the Leader of the Opposition, I should like to welcome the successor to the noble Lord, Lord Carter, but of course we wait to find out who it is.
I shall be brief. I am delighted that the Joint Committee is to be set up. Those of us who remember the history of the matter will recall that long ago, in the Cook-Maclennan agreement of 1997, there was a recommendation for a Joint Committee. In that context, I congratulate my noble friend Lord Maclennan of Rogart and the then Foreign Secretary, Robin Cook. I also thank my noble friend Lord Rogers of Quarrybank for the part that he played in pressing for a Joint Committee along with the Leader of the Opposition, the noble Lord, Lord Strathclyde.
The purpose of the Motion is simple and I need not detain the House. It is extremely well expressed in paragraph (2)(a), which states that one of the main purposes of the Joint Committee will be,
"to ensure the proper functioning of Parliament as a whole".
It must be the purpose of all of us to make this House as efficient and effective a scrutiny and watchdog House as it can possibly be and in every way to complement the other House—I share the view of the noble Lord, Lord Strathclyde, that that House will also need closely to consider how it carries out its constitutional responsibility.
We in this House will take the Joint Committee very seriously, recognising that the time for reform cannot be permanently delayed, but that there is a great will in the House to make us as effective as possible. Once again, I thank the Government and in this House the noble and learned Lord the Leader of the House for the manner in which he has proposed, and the phraseology that has been used to describe, the work of the Joint Committee. We on these Benches wish it every possible success.
The Earl of Onslow: My Lords—
Lord Craig of Radley: My Lords—
Lord Williams of Mostyn: My Lords, perhaps we can hear from the noble and gallant Lord, Lord Craig of Radley.
Lord Craig of Radley: Thank you, my Lords. First, I add on behalf of noble Lords on these Benches our thanks and appreciation for everything that the noble Lord, Lord Carter, did during his period as Government Chief Whip. He has been a marvellous person to work with. He has often reminded me that I could not speak for anyone else on these Benches, but at the same time he was always extremely helpful and courteous and I have greatly enjoyed working with him. He will be sadly missed by me and, I am sure, by all noble Lords on these Benches.
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I have only two points to make. I was grateful to hear the noble Lord, Lord Strathclyde, make the point that Cross-Bench representation is an important feature of the Joint Committee. I shall draw the attention of the committee to the fact that, whereas from the other place there will be representation from parties, there will be no representation from independents or Cross-Benchers. Therefore, the total representation of the Joint Committee should contain sufficient Cross-Benchers to ensure that their points of view are well represented. In this case, the formula 2:2:1:1 does not work towards that result.
My second point, which is important, is that eventually we shall receive several options from the Joint Committee and it is not clear to me from the terms of reference whether it will be for the Joint Committee to determine the order in which it believes that the two Houses should address those options or whether it will be for the Government to put them to the House in a particular order. It is perhaps an unfair comparison, but I am thinking of the way in which the nominations for the Speaker in the other place were dealt with last time. If several options are to be put to us, the order in which and how they are presented will be important. I hope that the Joint Committee will address that in its deliberations.
The Lord Bishop of Durham: My Lords, we on these Benches would also like to be associated with the tributes paid to the noble Lord, Lord Carter, whom we have always found to be courteous and often accommodating in our dealings with him. We wish him well for the future.
We have already made it clear that we welcome the proposal to set up a Joint Committee and I underline that welcome now. Of course, in order for the committee to be effective and persuasive it will need to show itself as wise and just in the complex range of issues that have so challenged previous efforts at reform of this House. Those include both the functions and composition of the House—how individuals become Members of the second Chamber is relevant to both of those considerations.
Submissions on behalf of the Church of England on those matters have made it clear that, while we welcome the idea of art elected element, we do not believe that election is the only means of conferring legitimacy. Nor should it be assumed necessarily to offer the best means of equipping the future House with the expertise and range of insights and viewpoints to lend distinction and value to its work. Of course, one area where that is relevant is the future shape and scope of the religious and spiritual aspects of its composition. I do not imagine that, in the eyes of many Members of either House, that will be the most urgent challenge. However, that does not make it unimportant. In a constitutional arrangement that vests sovereignty in the monarch in Parliament under God, it can hardly be so unimportant. We believe it will be sensible for the committee to include among its members someone with the experience and expertise needed to inform its deliberations on these and other

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matters touching on the religious and spiritual dimension of our national life. That should be engaged with in this Chamber.
As noble Lords will be aware, we on these Benches have been enthusiastic proponents of widening the religious presence both in terms of Christian denominations and of other faiths. My friend, colleague and successor, the right reverend Prelate the Bishop of Rochester has already raised here the proposal for a Lord spiritual to serve on the Joint Committee. The Government's response to that request was far from discouraging, and we are grateful also to have had the support of the Leader of the Opposition.
We do not seek this role in a narrow and self-serving way, but in the firm belief that the Joint Committee should be able to do justice to the many challenges it faces. I want therefore to urge that the Joint Committee will be less strong, less representative and more narrowly drawn than would be good or appropriate if it failed to contain an explicit representative of the religious dimension of our constitution, upon which much of the work of Parliament frequently rests.
Lord Barnett: My Lords—
The Earl of Onslow: My Lords, our side.
Lord Strathclyde: The noble Lord is a Privy Counsellor.
The Earl of Onslow: Is he? I beg his pardon.
Lord Barnett: My Lords, I want first to share with the House my view of the former Chief Whip, my noble friend Lord Carter. We have had one or two disagreements—minor ones—but I endorse everything that has been said about him.
I was interested to hear the noble Lord, Lord Strathclyde, say that there was some modest disagreement on his side on the issue. I assume that he still wants 80 per cent of the Members of your Lordships' House to be elected. I found one Conservative who agreed with him; he will know who that is.
I want to ask my noble and learned friend the Leader of the House a few questions. From the reference in the Motion to the "category" of Member, I take it that he now accepts that a hybrid House would create huge problems. He has previously replied, in a pleasantly jocular way, that it already was a hybrid House. Certainly, there are differences of opinion in the House, but a hybrid House, with elected and unelected Members, would create huge problems. I am glad to see that the Motion accepts that; I hope that he does.
Secondly, I want to ask my noble and learned friend about options. We could all put options on the back of an envelope. That should not take too much time, but it would be a different matter when it came
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back to both Houses. Paragraphs 2(a) and (b)—in particular—of the Motion refer to legal and constitutional matters. Can my noble and learned friend define that, or do we need my noble and learned friends Lord Falconer of Thoroton and the Lord Chancellor to explain what it means in respect of anything that the committee will consider?
I should also be interested to know from my noble and learned friend what percentages of which House are being referred to. What will be the size of the House? How will we get to a reasonable figure from the 700 to 800 or 900 that might arise from the eventual views of the committee? Will the committee have the opportunity to take written and oral evidence and travel abroad to see how other Houses operate? My noble and learned friend has referred constantly to consensus. How will he get consensus on this? Is it still the Government's policy to get consensus on whatever new House we have as a second Chamber? If it is his view that we need consensus, we will never have any changes in your Lordships' House.
I want also to know about the timescale. My right honourable friend the Leader of the House in another place has spoken of 90 days. Is that 90 days for the setting up of the Joint Committee? It seems more likely that that should be the case than that we should get a report from it in that time. However, assuming that we get a report before, say, Christmas, does my noble and learned friend envisage our moving forward to a Bill in the next Session? I should be grateful if he could tell us.
4.15 p.m.
The Earl of Onslow: My Lords—
Lord Williams of Mostyn: My Lords, it is the turn of the noble Earl, Lord Onslow, to speak, but, before he does, I should like gently to remind your Lordships of paragraph 4.14 of the Companion:
"Debate must be relevant to the Question before the House".
We are simply discussing the terms of the Motion, not any consequential questions, fascinating though they may be.
The Earl of Onslow: My Lords, I express, first of all, a minor regret that hereditary peerages are no longer being created. The noble Lord, Lord Carter, would certainly deserve to be elevated to one.
As someone who has advocated reform of the House for a long time, I believe that the Government have, on this occasion, got the thing absolutely right. They must be congratulated on that. Funnily enough, it may be because we have had five years of shilly-shallying, waffle and, for want of a better word, cock-up—is one allowed to say that? I think one can—that there is now an emerging consensus in the country in favour of a partially elected—more than 50 per cent—and partially appointed House. That seems to be the general view. I know that the noble Lord, Lord Barnett, does not like the word-hybrid", but I see nothing wrong with it.
The committee will have the opportunity to make as good a constitutional settlement as our forebears did in 1688. It must seize that opportunity, and we must

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get it right. We must redress the balance in Parliament, so that we can go back to the ideals of our Whig forebears and have a proper, balanced Parliament that can hold the executive properly to account. The Joint Committee looks as if it can do that, and, if it can, it will deserve the justifiable thanks not only of our fellow subjects but of future citizens.
Lord Trefgarne: My Lords, I add my welcome to those given by my noble friend Lord Strathclyde and the noble Baroness, Lady Williams of Crosby, to the setting up of the Joint Committee.
May we be assured that the committee's terms of reference will allow it to address the question of the accountability of the executive to Parliament, to which the noble and learned Lord attached such importance, when he was discussing the working practices of your Lordships' House? Secondly, I know that there was some difficulty about the timing of the meeting of the Committee of Selection that will select the members of the Joint Committee. I understand that, in the end, the timing was changed to meet my convenience. I am extremely grateful for that, especially to the noble Lord the Chairman of Committees and to the noble and learned Lord the Leader of the House, who assisted in that regard.
Lord Renton: My Lords, I spent 34 years in another place, including seven years in government. Four and a half of those years were spent in the Home Office, where I helped Lord Butler of Saffron Walden pilot the Life Peerages Act 1958. I have also spent 23 years in your Lordships' House. In those years, there have already been tremendous constitutional changes, and there have been changes in the membership of another place that we should bear in mind, however courteous we are in our expression of those changes.
Fortunately, the Motion refers to our great responsibility as a revising Chamber. If we are to exercise that responsibility in a way that really helps the constitution, we must retain a vast amount of the expertise found in your Lordships' House but no longer found elsewhere. Therefore, if I may say so, it is essential that the committee should bear that in mind. In order that the committee may inquire into that matter as deeply as possible, will the noble and learned Lord please tell us whether, under the powers given by the resolution, the committee will have power to take evidence from witnesses? There is nothing in the resolution about that, but I express the hope that that will be possible.
Lord Dubs: My Lords, I pay tribute to my noble friend Lord Carter. Over the years he has ensured that we stayed until the early hours of the morning when necessary, but he did so in a way that earned him our respect and affection. That is a difficult combination. Had he given me advice before today's debate, he would have said, "Speak if you must but for God's sake, keep it short". I shall obey my noble friend even though he is no longer sitting in his former place on the Front Bench.
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I appreciate that it is not for the Government to tell committees how to do their work or when they should do it. But is my noble and learned friend prepared to drop the tiniest hint as to the timescale of the committee's work, and if it were to sit, dare I say it, in September, would that not be for the good of the House and the benefit of all of us? Secondly, is it intended that the committee should sit for a period and then give both Houses its report, or is it intended that the House will get a first report, and then both Houses will pass resolutions about powers and composition and the committee will then return to its work in more detail?
Thirdly, will my noble and learned friend clarify a point in paragraph (2)of the Motion, which states that the committee should,
"report on options for the composition and powers of the House of Lords and … define and present to both. Houses options for composition"?
Is that one and the same process, or is the slight ambiguity in the wording the result of the compromise that had to be achieved? If so, what does it mean?
Lord Renton of Mount Harry: My Lords, as a relatively new Member of this House I want to add my thanks to the noble Lord, Lord Carter. I remember his help when two or three years ago I introduced a Private Member's Bill on the subject of areas of outstanding natural beauty. With his help I found it a great deal easier to get a Private Member's Bill at least through some stages of the process here than I ever did in my 25 years in the House of Commons. I was pleased that the following year the Government adopted a number of my proposals and included them in the Countryside and Rights of Way Act 2000. I shall never forget the help given to me by the noble Lord, Lord Carter, in that instance.
I am very pleased to welcome the Joint Committee. It has, as my noble friend Lord Strathclyde said, a chance to make historic decisions leading to a new constitutional settlement that will be of enormous importance. I am delighted with the terms of reference and am pleased that it will investigate the,
"powers of the Second Chamber and its role and authority within the context of Parliament as a whole".
A few of your Lordships will remember that I introduced another Private Member's Bill earlier this Session, which had its Second Reading on 16th January. Its purpose was to amend the Parliament Act 1949 to restore the ability of the second Chamber to delay Public Bills for two years once we had elected Members. I cannot pretend that I expected to change the British constitution in this manner, but I thought that it was a good opportunity, and I was supported by noble Lords from all parts of the House. I thought that it was an opportunity at least to have a discussion about the powers and duties of a reformed upper Chamber. I felt that until then, we had not had enough discussion about that. We had had a great deal of debate about the proportion between elected and appointed Members but we had had none about what a changed upper Chamber would do. Arguably, that should have come before the question of composition.

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I am therefore very pleased to see that it is spelt out so clearly in the terms of reference of the Select Committee. On the evening on which we discussed the Second Reading of my Bill, I thought that the Lord Privy Seal somewhat pooh-poohed the idea that once we had elected Members, the second Chamber would certainly be more legitimate. We would be reversing the process of the last century in which powers were taken away from the upper House—in 1911 and again in 1949—because of the presence of hereditary Peers and no elected Members.
At that time I thought that the Lord Privy Seal did not really agree with my point that once we were in part elected, legitimacy in some sense would return to the second Chamber and there was a case for more powers along with more duties. I thought that the reason was not only that the issue was extremely complicated—it would be difficult to persuade the Commons to give a second Chamber more powers—but that Ministers were pleased with the present arrangement. The noble Lord, Lord Skidelsky, speaking from the Cross Benches, said that we had,
"reached a situation of executive supremacy with which Ministers are wholly comfortable".
He added that the Government would tend to say:
"Let us not change that".—[Official Report, 16/1/02; col. 1116.]
I am sorry that the noble Lord, Lord Skidelsky, is not with us today. I know that he is in Moscow improving his Russian, otherwise I am sure that he would say more on this issue.
The position of executive supremacy must change. I very much hope that the Joint Committee will study how it can be changed as that is very much a part of the process of reaching a new sensible constitutional settlement for the century ahead.
Paragraph (2)(a) refers to the Joint Committee considering and reporting on,
"any new procedures for resolving conflict between the two Houses".
It is very important that the Joint Committee should look at what happens in Senates or upper Houses in other parts of the world—in Australia, Canada, the United States and perhaps most particularly, in Germany. It has a relatively new constitution, largely shaped and formed by the British in 1945. Its means of avoiding gridlock between the two Houses is to have a joint mediation committee so that whenever the Bundestag and Bundesrat do not agree, a joint mediation committee, comprising 16 Members from each House, meets. It is required to seek a compromise that is acceptable to both Houses, which is the sort of avenue that a Joint Committee should be exploring.
That said, I know that the Lord Privy Seal will be very pleased to hear that in the light of those terms of reference I do not intend that my Bill should proceed to Committee stage.
Lord Sheldon: My Lords, one of the most pleasant surprises in coming to this House was to see the difference between the retiring Chief Whip and the
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ones whom we used to know. His civilised attitude did not impair the passage of legislation or the work that was being done, which is a tribute to him.
Turning to the matters before us, will my noble and learned friend bear in mind the kind of conflict that could arise between elected Members and non-elected Peers? Elected Members will have constituents, and they may tread on the toes of other Members of Parliament. Constituents will say that they were not successful with their Member of Parliament but that they can go to Lord so-and-so. To a number of people, that continues to have resonance and dramatic conflicts could arise. Both groups will have electorates, but one could be seen as better placed than another.
Furthermore, two classes of Peer in this House will be difficult. Some will have research assistants, secretaries and the offices to go with them—then there will be the rest. They will not be quiet. During Question Time they will not give way in the courteous manner which we are used to. They will have to satisfy their constituents and they will demand to be heard. I am sorry if some Members do not understand that, but the other Chamber is like that and becoming more so. Having two classes of Peer will lead to some form of Speaker who will be able to choose who speaks and who puts the relevant questions. I have previously urged for that and it will become not only essential but vital.
Finally, we must exclude a list system. It is a kind of appointed system and there is little difference between the two systems. Other than that, I look forward to hearing the results of the work of the committee. It will need to take a large amount of evidence outside this House and this country and I look forward to seeing the solutions which it eventually puts forward.
4.30 p.m.
Lord Williams of Mostyn: My Lords, before we hear anyone else, perhaps I may remind your Lordships what we are discussing—I beg your pardon, what we are supposed to be discussing.
Lady Saltoun of Abernethy: My Lords, I want to ask the noble and learned Lord one brief question. But before doing so, I want to say how sorry I am that the noble Lord, Lord Carter, is no longer Chief Whip. I do not like change much, as many noble Lords know, and this is a change that I do not like. In any event, how is the chairman of the Joint Committee to be chosen?
Lord Maclennan of Rogart: My Lords, we are not supposed to be discussing the retirement of the Government Chief Whip. None the less, I hope that I will not incur the wrath of the Leader of the House if I, as a new Member—possibly the newest of those who have spoken—express my gratitude to him for the way in which he has accommodated Members such as myself with his great consideration.
Perhaps I may say how pleased I am—and I hope that this is what we are supposed to be discussing—by the terms of reference which have been agreed by discussions through the usual channels in both

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Houses. They appear to be wide enough to enable the committee to carry out the task which was discussed by Robin Cook, myself and our colleagues when we first recommended this outcome more than five years ago. We hoped that the proposal for the future of this House, which is so important to the distribution of power, might commend itself to those who know best how our two Houses of Parliament can work effectively. It was with that hope that the original recommendation was made.
Having taken some five years to arrive at the terms of reference, notwithstanding the obvious attractions of reaching conclusions, I hope that the committee will be permitted to take evidence—oral and written—and to take time to order its preferences in a way which enables it to have influence over the minds of those who will ultimately have to decide.
Lord Elton: My Lords, first, I want to make the briefest of comments to the noble Lord the former Chief Whip. To have earned the popularity and affection of his own party was no mean achievement. To have earned it of my party was a triumph and I congratulate him on it.
I have one query about the words on the Order Paper and I am sure that the noble and learned Lord the Leader of the House will be able to tell me the answer. In the first numbered paragraph appears the word "category" of Members. Will he kindly tell me what is the meaning of the word "category" as printed in inverted commas and what the meaning would be if there were no inverted commas around it? They are plainly there for a purpose and those who read the Motion need to know what that purpose is.
Secondly, I turn to a larger issue, but I shall again be brief. I want to say a few words to the Committee of Selection whose Members are before us. Will they recall that for 700 years this House consisted only of the hereditary peerage? No, that is not true: there were of course the Law Lords and the Bishops and I am most grateful to the Clerk of the Table for his expression in drawing me to order. Nevertheless, the bulk of your Lordships were here by hereditary succession. Some of us remain here—in some cases a trifle reluctantly and working a good deal harder than we had either wished or expected—in order to try and ensure that whatever comes after us is the least bad or as good as possible. I hope that the Committee of Selection will ensure that someone of worth and experience from the hereditary peerage is a member of the Joint Select Committee.
Earl Ferrers: My Lords, perhaps I may preface my few remarks by saying to the noble Lord, Lord Carter, that he has been a tremendous Chief Whip. It has been great to see him secure the admiration not only of his own side, as my noble friend Lord Elton said, but of all sides of the House. We are all grateful to him.
I wanted to congratulate the Government on bringing forward the Motion for a Joint Select Committee. It is not often that one has found it possible to congratulate the Government on many aspects of House of Lords reform. They began in a
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dicey fashion and then said that there would be an all-party committee. We expected that to be appointed but it was not. The Government then published a White Paper and so forth, but the committee was not appointed. Eventually, they ran into internal problems and realised that the reform would founder. They have therefore produced an all-party Select Committee. I congratulate the Government and the noble and learned Lord the Leader of the House. All I can say to him is that there is joy in the House over one sinner who repenteth and even more joy when there are two —and even more joy when they are both noble and learned Lords.
I look forward to the appointment of the Select Committee whose terms of reference are wide and good. I have no doubt that it will consider the problem of hybridisation, referred to by the noble Lord, Lord Barnett—
Lord Strathclyde: Hybridity!
Earl Ferrers: My Lords, I beg your Lordships' pardon, it was hybridity. That was a most helpful intervention and I am grateful! Huge problems will arise if the House has unelected and elected Members. The noble and learned Lord the Lord Chancellor began the debate by saying that he wanted 20 per cent elected. That so excited my party that Members went momentarily out of their senses by saying that they wanted 80 per cent. I hope that that will not happen because it will result in two classes of citizens. The elected Members will want to be paid but what about the unelected ones? Are they not to be paid? We will get into a muddle and I hope that the committee will address itself to that point. Clearly, "Peer" means equal and one cannot have two groups of people in the same Chamber being totally unequal.
I hope that the committee will also address itself to the question of what will happen to the life Peers. They have always smiled at the demise of the hereditary Peers, but they will have to wipe the smile off their faces because they will be the next to go. If the House is to consist of a certain number of Members, some will have to go. I am sure that the committee members will want to address their minds to that issue. Some noble Lords opposite did not like the House of Lords when they were outside it, but when they came here they liked it. They then realised that it does a good job of work and I am sure that they would be distressed to find themselves removed. However, we hereditary Peers are used to that—we are out one moment; then we are told to come back again; and now we are told to go out again! That will be an innovation for the life Peers.
Baroness Park of Monmouth: My Lords, I shall be very inappropriate and not comment at all on the Motion, except to welcome it. As a Back-Bencher, I simply want to extend a warm thanks to the noble

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Lord, Lord Carter, for whom I have the greatest admiration and respect. I am sorrowful that he is going; indeed, I shall miss him. He is a very nice man.
Noble Lords: Hear, hear!
Lord Williams of Mostyn: My Lords, before I say anything, I think it would be appropriate to allow my noble friend Lord Carter to respond to the well-deserved words of praise.
Lord Carter: My Lords, perhaps I may remove myself from the strictures of the Companion, and say a few words that are not relevant to the Motion. Your Lordships have been much too kind. When the Prime Minister appointed me just over five years ago, he told me that he was giving me the toughest job in the Government. Actually, I have enjoyed every minute of it. I am really proud to have been Chief Whip in your Lordships' House; to have been a member of this Government; and to have played a small part in steering the programme of legislation on to the statute book.
I believe that I have worked with three Opposition Chief Whips: the noble Lord, Lord Strathclyde, the noble Lord, Lord Henley, and the noble Lord, Lord Cope; I have worked with two Liberal Democrat Chief Whips—namely, the late Lord Harris of Greenwich and the noble Lord, Lord Roper—and also with the two Convenors, the noble Lord, Lord Weatherill, and the noble and gallant Lord, Lord Craig of Radley. Everyone of them has been a good friend and a colleague; and, indeed, a great help.
I have found both colleagues and friends—and I choose my words carefully—in every part of the House. I thank all noble Lords very much. However, there is still a good deal of business on the Order Paper. I was Chief Whip until 10 o'clock this morning, so I can say, "Please get on with it!"
Lord Williams of Mostyn: Chief Whip, I shall! I just want to say what a marvellous companion in arms my noble friend Lord Carter has always been, not just on a personal basis to everyone of us. The best tribute to him is that he was a faithful servant to this place. He is standing down after a very, very hard five years. My noble friend was always here early in the morning, and never went home before the close of business. That is an extremely long day. He never lost his temper, nor his patience, despite frequent temptation.
Debates about the future of the House of Lords are just like Chinese take-aways—as soon as you finish one, you feel an overwhelming urge to have another one. If your Lordships will forgive me, I shall attend to the business now before the House. It is simply a perfect reflection of what was contained in the Statement that my noble and learned friend the Lord Chancellor delivered to the House on 13th May to everyone's welcome and enthusiasm.
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There are questions about what "category" means—the word category in inverted commas came directly from the Statement that my noble and learned friend delivered. It is a word of perfect and sublime ambiguity—
Lord Elton: My Lords, would not the ambiguity be removed with the inverted commas?
Lord Williams of Mostyn: No, my Lords; the inverted commas are there mainly to please the noble Lord, Lord Barnett. But apart from that significant constitutional advance, it is there for the committee to come to conclusions. It is a mistake for anyone in this House to attempt to be over-prescriptive. The noble Earl, Lord Onslow, is quite right to say that this is a significant, historic opportunity that needs to be taken.
When the Joint Committee of both Houses is established, it needs to be given its opportunity to work, as my noble and learned friend the Lord Chancellor said, with all deliberate speed. It will be engaged on serious business. Precisely how the committee carries out its work is a matter that should be entrusted to its members. We ought not to prescribe. The noble Lady, Lady Saltoun, asked how the chairman would be chosen. As always, the committee will decide upon its chairman or chairwoman. It is a matter for the committee.
I am grateful for the support that noble Lords have expressed. I shall not engage in dancing on any heads of pins about time-scale, hybridity, or, indeed, whether the Joint Committee may take evidence. That is entirely a matter for the terms of reference, and then for the sound, good judgment of the committee to determine how it accomplishes its work, and how quickly and deliberately it goes about that work. I commend the Motion to the House.
On Question, Motion agreed to, and a message was ordered to be sent to the Commons to seek their agreement thereto.

Business
Lord Davies of Oldham: My Lords, before my noble friend commences his speech for the following debate, I bring good news to the House; namely, that the length of Back-Bench speeches has been extended to nine minutes. However, if noble Lords have prepared speeches of eight minutes and wish to restrict themselves to that time, that will of course be most welcome.

Urban Regeneration
4.44 p.m.
Lord Woolmer of Leedsrose to draw attention to the impact of Her Majesty's Government's regeneration policies upon the economic, social and environmental quality of life of urban areas, especially those most in need; and to move for Papers.

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The noble Lord said: My Lords, in moving the Motion on the Order Paper before the House, 11 am pleased to have this opportunity to introduce a debate that provides the House with the opportunity to explore the Government's commitment to improving,
"the economic social and environmental quality of life in our urban areas".
I warmly welcomed the publication of the Urban White Paper in November 2000, and I have followed with great interest the policy being put into action.
Perhaps I may begin by declaring that I am a non-executive director of a development company with interests in urban regeneration schemes. I am also a partner in two businesses—some of whose clients from time to time are companies with development interests.
My noble friend Lord Rogers of Riverside reported in June 1999, having been set the task of identifying,
"the causes of urban decline in England and to recommend practical solutions to bring people back into our cities, towns and urban neighbourhoods".
I look forward with keen anticipation to my noble friend's contribution to our reflections this afternoon.
The Government's White Paper was published in November 2000, with the title Our towns and cities: the future—delivering an urban renaissance. These are ambitious goals reflecting a feeling that for far too long we had allowed our urban areas to develop, or in some cases to decline without vision, with many older areas gradually losing the vitality of their past. In an age of apparent prosperity and rising living standards, the public face of large parts of our towns and cities was all too often down-at-heel at best, derelict and poverty stricken at worst. And behind the physical contrasts of private affluence and public decline lay a deep and deepening gulf between the haves and the have-nots of society.
Urban regeneration policies can achieve a great deal—I shall comment on those later—but they must take place in a supportive macro framework of policy. Stable economic growth has brought increased living standards overall, increased investment opportunities, increased confidence in the private sector, and increased resources for public investment. In the same way, the gap between rich and poor needed determined action nationally to tackle the problem, whether that individual poverty is experienced in urban or rural environments.
Between 1979 and 1995, noble Lords may recall that incomes rose by 68 per cent for the richest 10 per cent of the population, while the poorest 10 per cent saw their incomes fall. In 1979, 10 per cent of children—one in 10—lived in households with below half the average income. By 1995, that figure had risen to show that nearly a third of all children were living in such homes.
As a result of tax and benefit changes announced by the Labour Government in the previous Parliament, there are now 1.2 million fewer children in poverty than would otherwise have been the case. As part of the next stage of tax and benefit reform, a new tax credit for families with children—the Child Tax Credit—will be introduced next year, building on the
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foundation of the universal child benefit. In addition, extra funds have been made available for Sure Start, Neighbourhood Renewal and the Children's Fund. The Government are now well on the way to meeting their targets of reducing child poverty by a quarter by 2004, halving it by 2010, and eradicating child poverty within a generation.
Under-investment in our schools and health services has also had to be tackled nationally. Only by providing a solid base of increased investment in our schools and health services can we provide better standards all round, while leaving some room to tackle the additional problems of concentrated poverty and deprivation.
Implementation of the NHS Plan, particularly in relation to primary care reform, will have a special impact on urban regeneration. The 26 health action zones (HAZs) set up to tackle health inequalities have been taking forward a range of activity that impacts on the determinants of health.
I anticipate that we shall have a wide-ranging debate this afternoon, touching upon economic, social and environmental issues, and upon the physical and human attributes of urban regeneration. There are those who are impassioned by the need for vision, courage and confidence and by the need to understand and build on the organic and holistic nature of vibrant urban communities. On the other hand, there are those whose sights are firmly focused on the everyday realities of urban deprivation, as it determines and blights the lives of generations caught in its vicious circle. Both approaches are essential for urban regeneration that goes beyond sticking plaster palliatives.
Better design, better architecture, better use of private and public space, vibrant arts and culture are essential if we are to recapture the vitality of urban living in so many of our towns and cities. But for far too many of our citizens, such aspirations might seem like luxuries. The poorest people have become concentrated in areas of acute need and many of those acute differences lie in our towns and cities. Our poorest neighbourhoods often exist in the shadow of some of the most prosperous areas. England's poorest ward, Benchill in Manchester, is only a few miles away from wealthy Wilmslow. Some of the most deprived neighbourhoods lie only a mile or two from prosperous city centres where employers find it hard to fill vacancies.
In my own city of Leeds, over 41,000 net jobs were created in the 1990s. By 2010, a further net expansion of 48,000 jobs is forecast. The city centre is home to the largest financial and business services sector in England outside London. Yet the inner area of Leeds, around that centre and containing almost 230.000 people, has large concentrations of high levels of deprivation and social exclusion. Tackling this two-track economy and society is now a key issue for the Leeds Initiative, which the Government recently credited as the local strategic partnership for the city. Under its neighbourhood renewal strategy, Leeds Initiative is currently targeting three regeneration

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areas, the Aire Valley, Beeston Holbeck and Harehills. All are very different areas with very different problems requiring different solutions. I think that many speakers in today's debate will echo that that is a theme of regeneration issues.
The Aire Valley is an old industrial area spreading out from the centre to the very outskirts of the city. Some 359 hectares in area, currently containing 10,000 jobs, it aims to keep those jobs and has the potential to absorb a further 5,000 jobs. It is one of the most strategically important employment locations in the whole of the Yorkshire and Humber region. It offers job prospects for the many who need them so desperately in the inner-city communities. It has massive environmental clear-up problems and needs major road and public transport investment.
On the other hand, Harehills has 17,000 people, with 17 per cent from black and ethnic minorities, living in one of the most densely populated areas in the whole of Europe. Compared with the average figures for Leeds as a whole, unemployment is three times higher, households in receipt of benefits are twice as high, as is the mortality rate for lung cancer. The crime rate is 50 per cent higher, while the achievement of pupils at GCSE is 50 per cent lower. Some 95 per cent of all properties fall into the lowest band for council tax. Housing issues loom large, involving private landlords and tenants, public sector housing, open spaces, schools, jobs and shopping facilities. On the very doorstep of Harehills is St James's Hospital, with an expansion which will offer a base for innovative employment action.
In the region, the Yorkshire regional development agency, Yorkshire Forward, has been innovative in its strategic approach to urban regeneration issues. It has stood back in order to get a clearer understanding of the potential and requirements for the different urban areas of the region, because each requires a different solution. The aim is to build on the special strengths and contributions of each centre, each township, so that each can prosper and contribute to a regional strength.
One of its initiatives is the Urban Renaissance Challenge programme. Under this, Yorkshire Forward has funded external international quality expertise to work with six towns to develop a vision and long-term development plan to create the conditions for a reinvigoration of each town, attractive to people and to investment. The first six towns are Scarborough, Grimsby, Doncaster, Barnsley, Wakefield and Halifax. A recent weekend public event held in Barnsley to discuss the ideas and proposals being brought forward was attended by 1,200 people, a sign of real community involvement by a whole township. Those are the kind of townships that give character and meaning to regional identity, along with the big cities and the rural villages and countryside. Yorkshire Forward is to be congratulated on its initiative.
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Nationally, in January 2001 the Prime Minister launched A New Commitment to Neighbourhood Renewal: National Strategy Action Plan, which sets out how the Government intend to meet their objectives over the coming 10 to 20 years.
The Neighbourhood Renewal Fund will provide 88 eligible local authorities and their local strategic partnerships with £900 million over three years to improve services in the most deprived neighbourhoods. Funding totalling over £1 billion will be made available for 22 more areas in the second round of the New Deal for Communities.
I am especially interested in the Towns and Cities: Partners in Urban Renaissance project launched in September of last year. Twenty-four towns and cities throughout England are working as an active partnership, together with a team from the Urban Policy Unit and the consultants URBED, the Urban and Economic Development Group Ltd. It is important to learn from the experience of what is happening on the ground.
Quality of life can also be affected by environmental issues and I welcome the Urban Green Spaces Task Force set up to develop proposals for the design, planning and management of green spaces. As noble Lords will know, the task force published its final report this month. I look forward to reading the Government's policy statement which I anticipate will follow in July, addressing the recommendations of the task force.
From my limited observations, so far there are a few lessons that I would share with noble Lords. There has to be a basis for economic prosperity somewhere in the vicinity of a regeneration scheme. Areas of growth and prosperity must not be neglected or seen as a threat to the priorities of regeneration. Problems and hence their solutions differ for each regeneration area. Regeneration requires comprehensive action, not piecemeal action. Previous policies aimed at tackling urban deprivation and renewal were often too piecemeal. Individual projects with quick outcomes are not the basis for long-term regeneration.
Regeneration requires long-term commitment, not a short-term fix. Once we start aiming to regenerate an area, we must stay with it until success is achieved. I worry a little that the time-frame for some of the financial frameworks is currently too short and the horizons too close.
Regeneration does cost and will cost a great deal of money. It is not a cheap option. Purely locally generated resources are not sufficient to tackle deep-seated regeneration problems. This means that regeneration proposals must be realistic from the outset, so that resources are not then diverted from other areas, which then start their own downward spiral.
Some tough decisions have to be taken, priorities established and adhered to. The role of vision and leadership is critical. For example, not all areas and not all housing can or should be saved. Sometimes,

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demolition is required and a fresh start made. Cheaper solutions often mean that good money is thrown after bad.
Partnerships involving both the private and public sectors are essential and all the stakeholders have to commit themselves to supporting the regeneration goals, even though sometimes this will mean changing their own priorities and budgets. That is difficult for some of the agencies involved. Managing those relationships requires a high level of commitment and skills from all sides. That is another area in which there is a skills deficit. Perhaps only time will enable those skills to be developed.
Just as local agencies, enterprises and people need to remain focused and prioritised, so too do the Government. New national initiatives thrown into the middle of existing programmes can create real tensions and problems on the ground.
The Government's ambitions for urban regeneration and reducing urban deprivation are high. The days are still young and I for one wish them well in those ambitions. There is much that I have not covered, and I look forward with great interest to learn from the considerable experience of other contributors to our debate this afternoon. My Lords, I beg to move for Papers.
5 p.m.
Lord Brooke of Sutton Mandeville: My Lords, the whole House is indebted to the noble Lord, Lord Woolmer of Leeds, for initiating the debate, especially given the nature of his background, and for the manner in which he did so.
In the same spirit, I start by especially commending the Government for what they have achieved for rough sleepers, who, to quote the Motion, are among "those most in need", but it would be misrepresentation of the wildest kind to represent myself as any sort of authority on the subject of the debate. However, I had an introduction to it more than 40 years ago in the United States, and nearly a quarter of a century as an inner city MP fed that interest.
My introduction to it was through the late Oskar Stonorov, an American architect who was tragically killed in a small plane crash in 1970 when flying with the late Walter Reuther of the United Automobile Workers to see a country club in upstate Michigan which Stonorov was building for the UAW. Reuther was equally tragically killed in the crash.
Stonorov had been much involved in the regeneration of Philadelphia and the renewal of its inner city area. His nearest neighbour and great friend was Ed Bacon, head of city planning for Philadelphia, author of the book Design of Cities, who, rare among planning officers, had his portrait on the front cover of Time magazine, and, wholly incidentally, the father of Kevin Bacon the film actor.
Stonorov was one of those unusual architects whom highway planners regarded as an expert in their own field. He was co-author of a pre-war book on Corbusier, his own self-designed house at the head of
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a valley was a joy, and he had a powerful capacity to enthuse the young. It was through him that I met Frank Lloyd Wright.
Turning my back on what I was already doing to become an architect was not really available to me as a personal option then, but I know that if I had not done what I have done I would have liked to have been an architect, especially because all human life is there. We are exceptionally lucky that the noble Lord, Lord Rogers of Riverside, will be speaking in the debate. I look forward to a reprise on his most notable report.
I want to concentrate specifically on brownfield sites, which of course derive from the housing forecast debate and, indeed, the Rogers report. There is a risk of being over-telegraphic in a short debate but I am struck, after the immense precision of the forecast for new homes between now and 2016 and the bipartisan concentration on using brownfield sites, by the relative imprecision of brownfield site identification.
Let me sketch a scenario. The House of Commons Environment Select Committee report of 1995, following up on the earlier work in the late 1980s when Sir Hugh Rossi chaired the committee, estimated that there were 20,000 contaminated sites in the country. Throughout the 1990s, those working in the field went through the pain and anguish of triggering Part II of the Environmental Protection Act in April 2000 to place local authorities under a statutory duty to identify relevant sites. My understanding is that, against the 1995 forecast I have just quoted of 20,000, only 30 or 35 sites have so far been identified in the past two years by local authorities, perhaps because of a lack of both money and expertise.
But transfer of responsibility for identification of sites to the Environment Agency, which has responsibility for the worst sites, also looks in present circumstances like a counsel of despair. Those working in the field do not detect any real cohesion and coherence in this area between the Environment Agency's main office and the office in Solihull working on contaminated land, amounting even to uncertainty as to whether a recent senior management change in charge of the latter office has led to a replacement being announced.
This individual uncertainty mirrors uncertainty as to the statistical scale of the problem, and without the latter it is difficult to calibrate how much money will be needed to resolve it. When there is overlaid on this uncertainty the further uncertainty engendered by the EU draft directive, with concepts that do not fit readily or comfortably with British experience, it is no surprise that morale is lower than it should be in so centrally critical an area.
More generally, I am sure that other noble Lords will have received the briefing for this debate from the Royal Institution of Chartered Surveyors. As t is presumably common to us all, I do not propose to rehearse particular paragraphs except where they touch on my own experience.
I first became interested in bringing into use flats above shops during the great planning controversy over Bath in the days of Sir Colin Buchanan's research,

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when the city architect of Bath said memorably that he was prepared to preserve Georgian artisan dwellings if someone would show him Georgian artisans to live in them.
In my own constituency, I recall hosting a lunch in the Commons in the late 1970s for Hugh Rossi, then shadow housing Minister, and that most entrepreneurial, responsible and imaginative of Soho residents, Matthew Bennett, to discuss flats above shops in inner London. It provides a hook on which to hang the observation that Soho has for the past 30 years been a model of an inner city community in its vibrant alliance between residents and commercial interests, who have between them also preserved a Georgian hinterland which 30 years ago was, like Covent Garden a decade earlier, threatened with destruction. Soho is the epitome of mixed use development, in which I passionately believe. I am only sorry that the late Lord Ridley's change of use legislation did not allow other trades and crafts to continue in Soho, as they had in the 17th century when there were 16 Huguenot churches in that small area. But I shall be interested in what the Minister has to say about practical experience with the scheme for flats above shops.
I hope that other noble Lords besides myself will be grateful for a clear exposition from the Minister of how much freedom from Brussels control the Treasury has in altering the pattern of VAT rates in the construction area. We all remember gratefully the VAT announcement on churches some years back, but also that it turned out to be contingent on Brussels approval.
I conclude with a curiosity derived from my former constituency. The Economic and Social Research Council publishes lists reflecting poverty and morbidity for the 659 parliamentary constituencies. The list in relation to poverty calculates the number of households living within the poverty criteria as a percentage of the total number of households in the constituency. The health table reflects the divergence from the standard morbidity tables. In the 1980s, my constituency was high in the tables of both poor and morbid. In the late 1990s, it was still high for poverty—it was the 48th poorest constituency in the country by the definition used; possibly the only Conservative seat in the top 100—but it had become much more healthy at around 385.
I drew this paradox to the attention of the ESRC. The only resolution we could think of was the arrival of asylum seekers, who did not change the poverty figures but whose age sharply reduced the morbidity statistics. That shows how careful one has to be, even when statistics are being adjusted for ward boundary changes in constituencies, and how much can change so swiftly because of some external factor.
5.8 p.m.
Lord Greaves: My Lords, I, too, thank the noble Lord, Lord Woolmer of Leeds, for initiating this important debate. I start by pointing out what seems
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very obvious when one looks at some cities, including the noble Lord's own city of Leeds—that is, that next to areas of quite successful regeneration are areas of dismal poverty. One has only to go down river from here to the Docklands to see the developments there, which are full of people we used to call "yuppies" and some people we now have to call "dinkies". People in those developments are living next to, or in, three London boroughs which are among the five most deprived local authorities in the country—Tower Hamlets, Newham and Hackney. If you take the tram from the middle of Manchester to Salford Quays, the same phenomenon can be seen very clearly indeed.
Within our major cities, and in many other urban areas, there are not only remaining areas of poverty, but areas of deprivation which would not have been so classified 30 or 40 years ago. To a large extent this phenomenon—typified by the areas to which I have referred—is due to a national policy which, for more than 20 years, has placed all the emphasis on economic growth, so sacrificing social progress in those areas. There has been a prescription of financial rewards for business and professional success, allied to increasingly punitive regimes—for example, in relation to benefits—designed to pressure people, whether sick or unemployed, back into work. That has led to inequalities in wealth in this country that are unparalleled in western Europe, and which were unknown in this country for over a century. Twenty years of under-investment in essential public services has created across Britain urban populations blighted by what may be described as multiple deprivation. It has created whole communities characterised by: high mortality; ill health; low educational achievement; poor housing; a worsening physical environment; inadequate youth services; high levels of crime and disorder; and bad transport services—all underpinned by low levels of personal income. And in many areas the situation is not getting any better.
It is not only a question of national policy needing to be addressed. The first important point that I want to make is that, without a national policy aimed at improving the lot of people in such areas, all the local initiatives in the world will constantly be fighting obstacles and difficulties. There are many examples of local good practice. There are also many examples of bad practice.
One of the problems of urban regeneration schemes in the kinds of areas that attract such schemes is the bewildering plethora of quangos which have grown up mainly in the past 10 to 15 years, and mainly at the expense of democratically elected local government. It might be termed the burgeoning "quangocracy". Perhaps I may point out three or four features of these new instruments of governance—as we must now call it—in such areas.
The first is their complexity. Much of local government has been moving—much of it at the instigation of my own party, but not always—towards a much more open and clear means of working, involving people on a far greater scale and making the work of their local authorities much more transparent than it used to be. But alongside that, as I have said, is

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a burgeoning quangocracy. Frankly, most people do not have a clue as to who does what, which organisation does what, or what the whole new range of names of such organisations actually mean. Some have names linked to national initiatives, such as Sure Start. People will say, "Oh, I'm going round to the Sure Start tomorrow morning"—whatever that may mean. Others have official, formal names: a local community economic development body may use that phrase. Many invent local names which mean no thing to anyone in terms of accountability, who is involved and so on.
A friend sent me some information about Leicester. He writes:
"Here in Leicester I have counted 11 city-wide and 10 locality partnerships or Action Zones responsible for the regeneration of separate public service areas which are now to be pulled together and co-ordinated through a Local Strategic Partnership"—
which might make everything a lot simpler; or it might make it even more complicated. That august body, the local strategic partnership, will have just one member who is answerable to the electorate; namely, the leader of the city council. Overwhelmingly, these bodies meet in private. They are neither accountable nor subject to private scrutiny. If they are accountable, they are accountable to greater, better and higher quangos somewhere up the chain at sub-area, county or regional level. Their membership, often self-appointed, is largely drawn from the same hermetic pool of people employed in the statutory, business and voluntary sectors. Local politics has atrophied. 1t has been replaced by a new and exclusive quangocracy. That is my experience in Lancashire too.
The second feature of such bodies has been the creation of a new local ùlite. It is an unelected ùlite, many of whom were already there—people from colleges; those on training schemes; council officials—though not usually councillors; self-appointed community leaders, whose organisations may or may not be legitimate; and local businessmen. It is a new ùlite which builds on skills which were not previously needed. They are people who have a map by which they can personally navigate this extraordinary new system of governance and who have the skills of insider networking. It is almost impossible to remove such people because they do not have to be elected.
These bodies are accountable to further and larger quangos, not to local people—certainly not to democratic local authorities, which are often deliberately kept out of matters. In many cases, the wonderful word "partnerships" is used. But often, it is not a partnership between local people in any real sense; it is a partnership between people who already have power and influence in the community. Where the partnership is between those in the private sector and those in the public sector, there is a great danger that private sector ethics, the private sector ethos—about which I have no complaints in terms of the private sector—gets into and corrupts the public sector.
Noble Lords of a certain age and older will remember the Poulson scandal, which was all to do with inappropriate relationships between private
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sector people and public sector people and the way in which the private sector ethos and ethics were corrupted by commercial values of a certain kind. We shall have a lot of Poulson-type scandals in the coming years; many of them will be generated within partnerships which have been set up for the very best of reasons.
A great deal of good is done in many of these bodies. They contain a large number of people who are working for the good of their communities. But the structure in which they are now being forced to work is not appropriate. It will lead to tears.
5.17 p.m.
Lord Clark of Windermere: My Lords, I am grateful to the noble Lord, Lord Woolmer, for initiating the debate and for providing us with the benefit of his long experience of working in this field. He and I have spent many years in various forums fighting in an attempt to improve people's lives and to improve urban and semi-urban areas. I am delighted that he has introduced the debate.
I declare an interest as chairman of the Forestry Commission. It will come as no surprise to the noble Lord that the aspect that I want to address is the environmental quality of life in urban areas. I strongly approve of the way in which the Government: are trying to "green" aspects of urban regeneration.
It is 32 years since I made my maiden speech in the House of Commons. I took the opportunity to raise the issue of environmental and indeed forestry concerns in the urban metropolitan areas. I have taken great pleasure over the past few months in trying to help to drive forward the "greening" of the urban regeneration of many parts of this country.
I make no apology for my belief that trees, woodlands and forests can enhance the quality of life of many people in this country. We often think of the rather nice parts of the cities with their greenery. I have always argued that all cities ought to have a great deal of greenery.
The great change that has taken place in forestry over recent years is that it is now no longer solely about producing timber. The days have gone when we tried to create a strategic national wood reserve. The Forestry Commission's task now is conservation, recreation, biodiversity and sustainability.
As I never miss such an opportunity, I should acid in parentheses that I am very proud to head an organisation that is the world's first state forestry service to be deemed by international standards as sustainable not only in timber production but in production techniques and woodland management. I was delighted that, only a few months ago, the WWF International gave us its very esteemed "Gift to the Earth".
The result of the change in Britain's approach to forestry has been to re-emphasise the importance of trees and woodlands in our cities. Indeed, the forestry strategies for England, Scotland and Wales—there are three separate strategies—all stress that forestry has an important role to play in the economic regeneration of

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the country and especially of our urban areas. Not only can they improve the environment; they can reclothe the environment and make it much easier to attract industry into formerly derelict areas.
The new strategy also means that we shall be planting thousands upon thousands of hectares of trees particularly in older industrial areas. It is certainly true that, in the next few years, most of the sites for new planting in England will be on brownfield sites. I think that that is a great plus. A couple of months ago, we even went as far as to appoint a forestry conservancy here in the city of London. Although that might seem a little strange, in view of all its trees and woodlands, London is probably the largest urban forest in the world. London has 65,000 woodlands and stands, a very large percentage of which are designated as "ancient semi-natural" or "ancient". We have not utilised those woodlands for the benefit of either tourism or the local communities, but that is what we want to try to achieve. In short, therefore, we see a real opportunity for woodlands to play an increasingly important part in regeneration programmes.
The urban White Paper focuses specifically on the 58,000 hectares of brownfield land which will be used for hard end-uses. The Forestry Commission is particularly interested in the other 100,000 hectares of land deemed unsuitable for hard end-uses that can be used for soft end-uses. Much of that land is contaminated, but it could be cleaned up over the years by planting trees on it and using it as woodland.
We really do have different objectives in relation to the new woodlands—which are about greening the environment, screening development, filtering noise and air pollution, providing habitat for wildlife and providing opportunities for recreation. All those aspects of woodland use enhance the quality of the environment and opportunities for regeneration. In the past 10 years, 10 community forests have been established, but lately the pace of creating such forest has quickened. The Forestry Commission has recently been awarded £9.4 million from a capital modernisation fund to create 1,000 hectares of new public access woodlands in three sites over the next three years.
In the East End of London, 40 square miles in the Thames chase will be planted for access woodland. In the Mersey forest and the Red Rose forest, there will be a great extension of woodlands on brownfield sites. There is also a particularly exciting development in South Lancashire known as the Newlands initiative. Although I shall not follow the argument on partnerships advanced by the noble Lord, Lord Greaves, the Newlands initiative is a £10 million programme resulting from a partnership between the North-West Development Agency, the Forestry Commission and other bodies to reclaim hectare upon hectare of older industrial sites. I recently visited some former colliery sites in South Yorkshire and saw the imaginative work being done in partnership with Yorkshire Forward.
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I have also seen the initiatives in Nottinghamshire, where they have not only reclaimed pit heaps but incorporated fish farms in the vicinity. In Wales, they have targeted a scheme called Cydcoed—I apologise for my pronunciation—to offer Wales's 100 most deprived wards the opportunity to bid for woodland opportunities. All these opportunities have been taken up as part of the effort to alleviate social deprivation.
I hope that I have persuaded noble Lords that there is a very exciting tale to tell about urban forestry. Woodlands have a great deal to offer in a very cost-effective way. They can improve the landscape and the quality of life for all our citizens. They have a critical part to play, particularly in the regeneration of our urban areas.
5.26 p.m.
Lord Rogers of Riverside: My Lords, I declare an interest as chairman of Richard Rogers Architects, as chief adviser to the Mayor of London on architecture and urbanism, and also as adviser to the Mayor of Barcelona. I, too, wish to thank the noble Lord, Lord Woolmer, for drawing attention to the Government's policies on urban regeneration. I am also grateful for the wise words of the noble Lord, Lord Brooke, and the other speakers whom I follow. My contribution will focus on the architecture of our cities and urban public spaces.
In coming years, we shall need 4 million new dwellings in London, more than equal to the current number of dwellings in London. As England is already the third most densely populated country, after Bangladesh, our landscapes and cities will have to be conserved and well planned. Some 90 per cent of us live in towns and cities, which are the centres of our culture and the engines of our economy. Civil society is rooted in the culture of cities. Men build cities, and cities make citizens. At their best, cities are the most beautiful and joyful manifestation of civilised life, from Cornish hamlets to Georgian towns to some of the modern cities.
The built environment provides a physical framework for all our institutions and government programmes on issues such as education, health, crime reduction, jobs and transport. If the city fabric is well designed and maintained, government programmes will flourish. If the fabric is badly designed and fragmented, these public programmes will disintegrate and the money and time invested will offer poor value.
Today our cities are poor shadows of the best cities on the continent. Even in Copenhagen, with its adverse climate and dark winters, one third of all trips are by bicycle; in England, it is less than 2 per cent. Amsterdam has wonderful housing and mixed live/ work communities where decisions are made both bottom up and top down. Barcelona is the ideal example of an enlightened modern city. Five miles of the city's formerly rusting port area have been transformed to create a beautiful urban linear neighbourhood, facing golden beaches and once more linking the city with the sea—a model of imaginative urban regeneration.

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In England, with some exceptions, our towns and neighbourhoods are still squalid and fragmented with whole segments of cities turned into ghost towns from which all skilled labour has fled. Nothing could demonstrate more clearly that urban squalor goes hand in hand with social deprivation and exclusion.
The good news is that, after decades of shameful neglect and under-investment, the present Government have taken up the challenge. They set up the Urban Task Force which I chaired, the mission of which was to identify the causes of urban decline and to establish a vision for urban regeneration. Our report, Towards an Urban Renaissance, was completed over three years ago. We made 105 recommendations of which 22 were deemed to be key. It was extremely well received by all. I was delighted to hear how many speakers have made statements related to it. That created a demand for urban regeneration programmes in many of our cities. Unfortunately, a lack of skills at local level is frustrating the realisation of such programmes.
Symptomatic of that uninformed approach to urban regeneration is the recent announcement by the Minister responsible for culture of the judging panel for the selection of the European Capital of Culture for 2008. Even though the guidelines mention urban regeneration I was shocked to see that not a single architect is included in the panel of 12 which does, however, include five journalists as well as a javelin thrower and a pianist! That demonstrates a serious lack of understanding of the importance of the physical environment as a key ingredient of civic success. That once more puts the UK at a serious disadvantage when compared with continental cities.
The Government have called for an urban summit at the end of the year which I hope that the Prime Minister will address. Spurred on by that I have reconvened the Urban Task Force in order to assess what has been delivered to date, what is currently under way and what has been totally ignored. Unfortunately, though the study has only just commenced, there is real cause for concern. Despite many promises and some limited intervention, the Government have yet to face up to the sheer magnitude of the problem. The record is not impressive: a failure to deliver clear policy and urban vision; a failure to deliver urban education and skills and a failure to offer clear delivery mechanisms. It is still not too late. I ask the Government to recognise that urban regeneration requires the same priority as social exclusion, crime, education, health and jobs. Without that commitment our cities and towns will not be fit to live in.
Finally, my message to the Government is to invest generously and skilfully in our urban fabric. If that is not forthcoming, the future of this country is grim indeed: a future of increasing social division and decline.
5.32 p.m.
Lord Best: My Lords, I hugely welcome this debate and am grateful to the noble Lord, Lord Woolmer of
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Leeds, for initiating it. This is one of the most pressing issues of our time. I am particularly proud to follow the noble Lord, Lord Rogers of Riverside, and to make my contribution. I declare my interest as director of the Joseph Rowntree Foundation which produces research in this field. It also joins regeneration partnerships and funds others to do so and has undertaken developments in Leeds and in Birmingham.
Are the Government's regeneration policies helping to turn the depressing, neglected, shunned parts of this country into vibrant places where people want to be? Will they save more of our "green and pleasant land" by ensuring that use is made of the tracts of land where currently no one wants to live? Will they, in the words of the Prime Minister, ensure that,
"no one is seriously disadvantaged by where they live"?
Well-intended government initiatives of the past have regrettably often failed. New policies have taken on board two key factors—I consider that they are the two key factors—which shine through in research reports on regeneration from my foundation. First, it is clear that it is no good smartening up existing areas if there are declining job opportunities for the people who live there. Research published by my foundation, by Professor Thurrock of Glasgow University, has demonstrated how, when the jobs go, the people will drift away too. So reviving the local economy has to be a prerequisite for sustaining any area regeneration.
Secondly, a large proportion of reports from the Joseph Rowntree Foundation have concluded with ringing phrases about "community empowerment"—the engagement of local people in decisions about their neighbourhood. We know that if professional people from the outside descend upon an area and impose changes upon it, however much is invested there is little likelihood that local residents will feel any new "ownership" of what has happened. By contrast, where there is investment in building up the capacity of those living in the locality—for example, involving people in environmental improvements, including forestry projects, or even through bringing people together through social or cultural events—improved good neighbourliness and mutual support will have far-reaching positive results. Government policies have taken on board that approach with a real commitment, as is illustrated by the Yorkshire examples mentioned by the noble Lord, Lord Woolmer. But although the revival of economic activity and the creation of real partnership with the local community are probably the two prerequisites to the success of regeneration projects, I contend that we now know that those changes alone can lead to a repetition of the disappointments and failures of previous policies.
In relation to jobs, it is now clear, with the considerable success of the Chancellor in sustaining economic growth across the country, that a fall in unemployment can lead not to the revival of a declining council estate or unpopular neighbourhood but to an acceleration in the flight from those places: the correlation between falls in male unemployment and increases in properties standing empty and

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abandoned in parts of cities such as Liverpool and Manchester shows that many people use their improved incomes to get out. Unless there are jobs regeneration will not work. But a more successful economy does not in itself lead to the revival of unpopular places.
Similarly, the powerful effects of local communities taking more control and the increasing trend for local councils to devolve decision-making in a participative way may not turn around the fortunes of the neighbourhood. Indeed, it seems unfair as well as unrealistic to expect the drivers of regeneration to be those people now in the area—the people who, almost by definition, suffer from poverty and exclusion from mainstream society. Relying on local communities to "pull themselves up by their bootstraps" is asking more than we would of any middle-class area. Empowering communities may be an essential component of regeneration but it will not be enough.
My contention is that sustainable regeneration will happen only if new and different people come back and move into the area: people with the income to choose where they go—the kind of people who have been consistently choosing to reject those neighbourhoods. If people with spending money can be attracted back, they will change the perceptions not only of those on the outside but also of those living there already. The stigma attached to living in depressed neighbourhoods begins to lift; there are new role models to raise the aspirations of younger people living there; the discrimination and disadvantage of having a particular address begins to go.
How can regeneration policies take on that approach? I suggest that they need to do the following. First, in considering the social problems to be addressed those who plan the area's regeneration—the local authority, the new local strategic partnerships, New Deal for Communities boards and local neighbourhood management bodies—should look specifically for the triggers that will stop the exodus and bring back and retain people with a mix of incomes. Is it about schools or street crime? The underlying causes of people staying out of the area should be tackled.
Secondly, I suggest that the building of any segregated social housing for the poor—housing "apartheid"—should be outlawed and that public money should never be available to housing associations or other bodies for the recreation of that failed concept. Affordable housing, including homes for those on the lowest incomes, should be in mixed estates among homes for sale and for shared ownership.
Thirdly, achieving comprehensive physical regeneration on the scale that will change the image of a whole area is not just about money. Civic leaders will need to be bolder and more assertive. They will need to engineer imaginative master plans to ensure mixed use and mixed tenure developments in partnership perhaps with the major housing associations which can organise such exercises. Since land ownership will be the key to turning a masterplan into reality, councils
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or regeneration agencies must not be squeamish about the use of compulsory purchase orders against those owners who hold society to ransom and block the progress of much-needed regeneration schemes.
Finally, the experience from developments built by my foundation suggests that the time is right for constructing hundreds of new blocks of privately rented apartments for single people in inner city areas. They bring back those with money in their pockets.
In conclusion, I congratulate the Government on their important and successful policy initiatives, not least their national strategy for neighbourhood renewal and the excellent partnerships that have followed with the engagement of local communities, against a backdrop of economic improvement and consequent falling unemployment. But I believe that the next chapter in this story requires a recognition that regeneration policy must target not just the well-being of those currently living in the area concerned but the return of those who are able to choose where they live. The pursuit of that goal offers the very real prospect of investment paying for itself as the reputation and image of the area turns around and degraded neighbourhoods are renewed on a permanent basis. I look forward to hearing the response of the noble Lord, Lord Filkin.
5.41 p.m.
Baroness Lockwood: My Lords, as we have already heard, regeneration is particularly important to northern towns. In the 19th century, they were at the forefront of the industrial revolution, creating the coal, steel, engineering, textile and railway industries. Great wealth was amassed by the new industrial and manufacturing class. Bradford millionaires were legendary at the time. Although they brought the dark satanic mills and all that that implied, communities were enriched by the fine buildings, libraries, museums, galleries, lecture and concert halls, houses, parks and, of course, the magnificent town halls that were a symbol of that new wealth.
Commercial centres flourished, too, as did technical colleges and, later, the provincial universities. That is why I found the report of my noble friend Lord Evans of Temple Guiting, entitled, Renaissance of the Regions, so opportune. Galleries and museums deserve investment in the same way as do other contributors.
Central to a vibrant economy—including the expanding tourist industry—is the need to attract and retain a highly skilled and professional workforce. In turn, that depends on a high quality of life with an adequate provision of cultural and leisure facilities.
Bradford, on which I shall now concentrate, recognises that. The key to its "capital of culture" bid is regeneration. Although it has all the same problems as Leeds, which was mentioned by my noble friend Lord Woolmer, it still has much going for it. A distinctive feature, its multicultural and multi-ethnic mix, was seen by many as a disadvantage, but it is now rightly seen as an advantage. That comes through

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strongly in its bid. Its logo, designed by Bradford-born international artist, David Hockney, includes the words "One landscape—many views".
Diversity is a central theme. Bradford straddles two valleys—Airedale and Wharfedale. It contains inner city wards, leafy suburbs and upland farms. Its ethnic mix goes back to Roman times, to post-war mid-European and Baltic refugees and to West Indians and Asians, who were welcomed at the time to take the jobs that we no longer wanted. They are now in the third generation of Bradfordians and Keighley-tikes and play an important part in our economic and cultural development.
Nowhere is that more evident than in the arts. Cartwright Hall, once the hall of a textile magnate, now houses a unique collection of work by British Asian artists and designers. Bradford acknowledges that its 8 million visitors a year come for its concerts, theatres and galleries. The National Photographic Film and Television Museum alone attracts more than 1.25 million visitors. I also refer to Haworth village, Bronte Parsonage, the world heritage village of Saltaire and its Mill Galleries—which feature Hockney—Ilkley's famous moor and many festivals.
However, we need to attract more people, to encourage them to stay longer and to spend more. For that, we badly need to redevelop the city centre, which is now on the cards, I am glad to say. I say to the noble Lord, Lord Best, that the redevelopment of Leeds city centre, for example, brought back a new generation of people.
The University of Bradford adds a further cultural dimension, and as its chancellor, I declare an interest. I want to mention three ways in which the university is contributing. First, I refer to technological transfer, which takes place through the university's close links with business and exploitation of its research base and patents. It recently launched two very successful plc companies. The school of management, too, is transferring its know-how to local small and medium-sized businesses, many of which are Asian in origin.
Secondly, I refer to the university's department of peace studies, which has a record for conflict resolution, reconciliation and development studies. It is providing leadership and is an invaluable resource, following last year's much-publicised disturbances, which completely distorted the image of the city.
Finally, I refer to education. Today's regeneration cannot depend, as did the 19th century regeneration, on training by sitting next to Nellie or "on the job" training. We need a much more sophisticated system. Standards need to rise, as do aspirations and expectations, particularly among those in the North.
As part of its widening participation scheme, the university is collaborating with the college in seeking further ways to provide wide paths of progression from schools to college and university—perhaps even through a merger of the two institutions. Bradford's "capital of culture" bid is Yorkshire's sole bid. The whole region will share the benefit of success and the whole region is now beginning to support that bid. All of that chimes well with the national objectives and the
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regeneration strategy of regional development agencies. We may live in a global world but local and regional regeneration are the ways to provide success.
5.48 p.m.
Lord Evans of Temple Guiting: My Lords, too, thank my noble friend Lord Woolmer of Leeds for initiating this important and fascinating debate. It is a great pleasure to take part in a debate to which my noble friend Lord Rogers has contributed. I suppose that I have to declare an interest as his publisher.
When the city of Manchester invests, over a 10-year period, £400 million in its arts, sports, and museum and library facilities, what we see is the arts as a powerful driver not only of economic regeneration hut of social regeneration as well. Manchester city region has the nation's largest regional concentration of employment in the cultural and tourist industries—nearly 25,000 people. The city attracts 17 million visitors a year. Tourism and visitor activity contribute around £530 million a year to the city's economy. The critical mass of arts facilities in Manchester is also being enhanced by neighbouring attractions such as the Lowry Art Centre and the forthcoming Imperial War Museum in Salford Quays.
The arts and culture as a driver for regeneration is not only a Manchester story. It is happening in all our major cities. The south side of the Tyne at Gateshead was previously an area of semi-dereliction. It has been regenerated through the arts with a wonderful linking bridge uniting Newcastle and Gateshead. The Baltic—an old flour mill—will be the largest gallery outside Tate Modern in the UK. The music centre will include a 1,600-seat concert hall and architecture that is striking and of world class. This is a 15-year, £300 million regeneration programme creating 7,500 new jobs. When the total scheme is finished, 4 million visitors will be expected each year. The whole development gives back the river to the people of Tyneside with a spectacular new cultural landscape. It will be the centre of a cultural and creative renaissance in the area.
Go to any major city in England—Birmingham, Leeds, Bradford or Sheffield—and you will hear the same story. As traditional industries decline, so the new economy driven by culture emerges. There is a great deal of work still to be done to evaluate and monitor the emerging creative industries. But one thing is sure: money spent on the arts plays to the Government's regional economic agenda as well as that of education, access and social inclusion.
Without a doubt, lottery funds have been the catalyst for this radical change and radical new direction. The 99 most deprived boroughs in England have, between them, received in excess of £900 million from the Arts Council of England's lottery projects. That represents 72 per cent of the total lottery money distributed by the Arts Council.
Before I sit down, I wish to mention a project, already referred to by my noble friend Lady Lockwood, in which I have been involved as chairman of a group that produced a document called

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Renaissance in the Regions: a new vision for England's museums. Many noble Lords will have read about it in the Guardian yesterday. Antony Gormley and Anish Kapoor delivered a letter, signed by 11 major British artists and illustrated by David Hockney, to the Chancellor of the Exchequer asking for funds to be made available in the next spending round to implement that report and save our great regional museums from decay.
The report suggests that a framework should be designed to empower all museums and galleries—the nationals, the regional museums, the university museums and small local and community museums—to work together in a creative way for the greater good of an audience which already generates more than 77 million visits per annum. The report argues that museums and galleries have an important part to play in education, learning, access, social inclusion and the development of the regions, as well as the modernisation of public services. The report plays precisely to the regional and regenerative agenda.
I do not expect my noble friend Lord Filkin to rise at the end of the debate to promise the £267 million that we need in order to implement our exciting proposals. But I hope that what I have said will register strongly on the radar screens of those responsible for making decisions during the next, imminent, spending review.
5.54 p.m.
The Lord Bishop of St Albans: My Lords, I, too, thank the noble Lord, Lord Woolmer, for having instigated this important debate. I want, if I may, to begin with three sets of statistics. At the end of the 15th century, the city of Norwich—one of the wealthiest cities in this country with close economic and cultural links to the Low Countries—had a population of approximately 10,000 people, but it also had 46 churches. York was not far behind. It had a population of 8,000 and 40 churches.
When historians look at those figures, they frequently, and rightly, draw a link between the economic well-being of those cities and the fashion in those days for church buildings. Many of the churches in Norwich and York have, of course, disappeared. But many remain, and millions of people visit them on an annual basis. However, they remain not simply as vestiges of a great medieval past; they are living and vibrant communities which remain devoted to the cities in which they are set. Meanwhile, when cities such as Leeds and Liverpool, which were mere hamlets in the 15th century, grew dramatically as a result of the Industrial Revolution, they found new churches being planted everywhere.
Perhaps I may move to some contemporary figures—this time taken from an independent study of 15 churches of all denominations spread throughout the East of England. In that study we discovered that in those churches the average number of volunteers per church giving service to their local communities was 47. That is not the number of worshippers—that is a
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much higher figure; it is the number of adults per church involved in voluntary activities which reach out into their community. One has only to multiply that figure by the number of churches in England alone to realise that, on average, approximately three-quarters of a million adults on a regular, probably weekly, basis are volunteering, out of their commitment to the church, their time to their local community.
I realise that I have extrapolated that figure from a very small sample base. But I venture to suggest that the number that I have given is an under-estimation, not least if one adds in volunteers from all the other Christian churches in England and all the other faith groups.
At this point I want to make two points. First, churches are absolutely and completely committed to serving in whatever communities they find themselves and whatever the ethnicity or faith stance of those communities might be—whether they are in the deep country or the inner city. Secondly, no other body in the country has, as it were, a representative and committed group of people which tries to exist not for itself but for the worship of God and the well-being of others.
In the inner cities, for example, long after the doctors, social workers or other professionals have commuted to their leafy suburbs, the Church remains. It remains rooted and deeply committed because of our fundamental beliefs and our commitment to the people. With the greatest respect to the noble Lord, I venture to suggest that the cultural commitment of Leeds Parish Church, the commitment of St George's Crypt to the homeless, and the work of the hospital chaplains in Jimmy's and the General Infirmary predate Yorkshire Forward by a little while.
I suppose that it is a matter of quiet pride that the impact of Faith in the City, published in 1985, and the impact of the Church in cities such as London, Liverpool, Bradford and Manchester continue to be felt. That impact may be seen, if only implicitly, in the language in which debate about regeneration in our cities is now couched. Words such as "regeneration", "renaissance", "rebirth" and "vision" are part of the Church's theological stock in trade.
We try in very practical ways, too, to express our commitment to our local people. I give another example from a project in South Oxhey—an area of significant deprivation on the edge of Watford. There, the local church has created a project which cares, and provides very practical help, for those seeking employment. It also provides crash pad projects for those who are homeless. That is done through links with the Three Rivers local authority.
It is out of our presence as a Church and our commitment to the cities, historically and in the present, that I want to raise a few concerns. First, now that the "R" of DTLR seems to have been moved with precipitate speed overnight, will regional governance—if it is to be part of the framework of government in this country—receive the coverage that it needs? We cannot talk with honesty about "letting the people decide" if, notwithstanding recent White Papers, they have never heard of regionalisation.

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Secondly, now that the development agencies have been quietly shifted from the DTLR to come under the umbrella of the DTI, will all the value-driven and exciting cross-cutting issues on social exclusion and sustainable development, for example, which were there at the beginning of the RDAs' lives, now be dropped in favour of a purely economic regeneration agenda? Does it mean that all the creative and partnership-based thinking that launched the RDAs is simply, and possibly cynically, being binned? I venture to suggest that good will is much more easily lost than gained.
Thirdly, the evidence thus far of genuine attempts to encourage faith communities to be part of regeneration schemes is patchy. If the Churches and the faith communities have such huge commitment to the well-being of the people in their areas, why is that not more formally and more generously recognised?
Fourthly, the evidence thus far of the work of the regional cultural consortiums and their awareness of the vital cultural and educational role played by the Churches and other faith groups is likewise very patchy—which is a euphemism for saying that we are being deliberately sidelined. I agree wholeheartedly with the noble Lord, Lord Evans, about the importance of the arts as drivers for regeneration. I venture to suggest that the cathedrals of our country have been involved in that kind of regeneration for centuries. They do not feature on regional cultural consortium maps. I also question whether some of the work in the arts, to which I am totally committed personally, touches the genuinely poor.
Fifthly and finally, the danger of simply concentrating on cities and their needs for regeneration, as though their suburban and rural hinterlands did not exist, is that we will fail to see how interconnected life on these islands now is. City and country need each other and need to understand each other. I was delighted by the speech of the noble Lord, Lord Clark. I grew up in the Forest of Dean and love trees like he does, so it gives me great joy to know of the Forestry Commission's commitment to urban regeneration.
It is magnificent that there are so many people in government and across all parties in Parliament, as well as in the voluntary sector and in the Churches, willing to tackle the challenge of regeneration in our cities. However, it would be even better if those constituencies could be brought into serious partnership with each other. It would be wonderful if the spiritual regeneration of our nation could be given as much weight in our strategic thinking as is our proper desire for wealth creation and economic wellbeing.
6.4 p.m.
Baroness Billingham: My Lords, I thank my noble friend Lord Woolmer for initiating the debate. It is clear from the large number of people wishing to speak this evening that it is timely.
When the Corby urban regeneration company was launched in 2001 by the Deputy Prime Minister, John Prescott, a number of firsts were achieved. Corby was
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the first project to be announced following the three pilot schemes in Liverpool, Manchester and Sheffield. It was the first to be located outside a major city and it was the first to encompass a whole town.
I became chair of the new URC—Catalyst Corby, as it became known—building on my local knowledge as the region's former MEP. I needed little persuasion. Corby is a town with spirit—a town that refused to die and which deserves better. I shall devote my speech to sharing my experience to date, showing in the most practical way how the Government's regeneration policies are having such a profound and positive effect on towns such as Corby.
Corby's history is chequered. The massive expansion of iron and steel making in the town drew in new workers, many of them from Scotland. Three generations later, the Scottish accent still abounds. Little Scotland lives on in Northamptonshire.
Massive unemployment followed the closure of the steelworks. With that came disinvestment in housing, health and education. The new town status that had been promised was never completed. European funding helped put the town back on its feet in the early 1980s, but the jobs tended to be low-waged and low-skilled. Long-term government help was withheld in the 1980s as Corby's deprivation was masked by Northamptonshire's prosperity. Blackspots were ignored.
Credit has to be given to the council for helping reduce unemployment from a high of 25 per cent to less than 3 per cent now. However, social and economic deprivation is there for all to see. Catalyst Corby gives a prospect at last of a step change in the town's fortunes. With the Government's focus on regeneration as a priority, Corby is being given a splendid chance. The Government are providing the framework and we in Catalyst Corby can redraw the overall picture.
Partnerships are the basis of the project—public and private partnerships on the board, pooling their experience and resources, as well as partnerships in government, with support coming across ministerial departments, cross-fertilisation from committed civil servants and innovative support from all Ministers involved in urban renewal.
The core of our URC has to be Corby Borough Council, which instigated the bid for URC status and has a huge investment in the success of the project. Alongside the council, the two other major pillars are English Partnerships and the East Midlands Development Agency, which are totally committed, professional, supportive and creative. Those three are the foundation of our company, providing funding, expertise and support for all our work. We then add to that our community representatives, including local business people, developers and, of course, our outstanding MP, Phil Hope. That gives a small snapshot of our board.
The obstacles are clear. They have been identified in the baseline study that forms the foundation of the board's work. On the down side, we have low-skilled, low-waged employment. We have very poor housing,

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which has been under-funded for years and is almost entirely local authority housing. We have dreadful transport infrastructure. Corby has the dubious distinction of being the largest town in Europe without a passenger railway. It also has only the most basic and meagre bus service, which is currently under threat. We have a very run-down retail centre. In fact 75 per cent of retail-spend occurs outside Corby. We have the highest incidence of heart disease in the UK and the health and education opportunities could at best be described as patchy.
In case I am painting too gloomy a picture, I must say that Corby has an upside. Corby has a proven record of attracting new industries to the town and we have low-priced land in large quantities—some brownfield and some olive sites. A town centre developer is determined to transform the town with splendid plans for fine architecture with the addition of leisure facilities, cinemas, libraries and so on. We also have Rockingham Motor Speedway, a product of one man's dream, which has huge economic potential for the town as a whole.
As the noble Lord knows, Corby is set in beautiful, leafy Northamptonshire. We have just appointed a superb chief executive officer in Bob Lane, who currently is the CEO in Liverpool—Speke and Garston—and probably the most respected person in urban regeneration in the UK. Our master plan is under way. We have achieved several good hits already, helping to improve the infrastructure, closing down some dangerous walkways in our older estates and providing facilities for voluntary community projects. But we have been cautious in raising expectations too soon. Corby people can rightly be cynical. They have seen it all before, so our approach of being community-advice led helps to retain reality.
That is not a quick fix but a long-term programme of systematic, sustainable and appropriate regeneration and development. Of course, we are dependent on government initiatives and funding. We have already benefited as a town from Sure Start and healthy living projects. We have drawn financial support from the urban renewal scheme and, of course, welcome the tax breaks that make regeneration more attractive to inward investors. And we hope for more.
The conversion of Corby from an isolated small town of 50,000 to one, we anticipate, of 100,000 brings with it the benefit of critical mass. Our schools will be better with higher pupil numbers as will our health provision. Our pledge to broaden the population from one that is largely working class to one that is more evenly spread in terms of socio-economic backgrounds, means building homes to buy and homes to rent, a bigger town with better shops, decent leisure facilities, a more stable community with less deprivation leading to less crime, and possibly a commuter town, just an hour from London if we had a fast railway service.
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Those are our visions of Corby for the future. With commitment, with public/private co-operation, with full government backing and the strength of the community of Corby, all that can be achieved. Together we are stronger and together we can succeed.
6.13 p.m.
Lord Clarke of Hampstead: My Lords, like the previous nine speakers, I add my thanks to my noble friend Lord Woolmer for providing this opportunity to debate the Government's regeneration policies. I understood the debate to be about the policies already put in place by the Government.
The initiatives taken by the Government so far are to be welcomed, as is, more importantly, the action already undertaken in a number of areas. The combined policies of regeneration, together with the equally welcome community cohesion initiatives that are being actively pursued at the present time, signal hope to so many communities that are suffering from decades of neglect. Such neglect has brought levels of deprivation of which we should all be ashamed. I know that people who live in certain parts of Burnley will welcome the start that has been made by their local authority, Burnley Borough Council, in implementing a number of the recommendations made by the task force that I had the privilege to head following the serious civil unrest that took place almost a year ago.
Burnley Borough Council faces serious difficulties. The start that has been made must be seen for what it is: a start. It recognises the need to press on as quickly as possible. Other local authorities like Burnley will succeed only if they receive positive support from regional and national levels of government. I am aware of the Government's announcement that financial resources are to be made available to local authorities, including Burnley, for what is called a "market renewal pathfinder".
That pathfinder will be started in nine designated areas. They will receive amounts of pump-priming money to tackle the problems caused by the low demand in housing and to provide lasting solutions through investment and innovation for communities blighted by derelict homes. It is essential that that work proceeds as quickly as possible. It is important that the people of Burnley, as in other areas, see that something is being done and that attention is being paid to their problems. Most of them will not know about the lovely titles given to schemes. They want to see what is happening with their own eyes.
When I listened to my noble friend Lord Rogers of Riverside give an eloquent description of Barcelona and other cities, I was moved because I could see the beaches and the sea. My thoughts went to Accrington Road in Burnley and the dear loves who sit in their houses too frightened to go out in case someone robs them while they are doing their shopping. My thoughts also went to the children whom I met in Burnley Wood. They said, "It is no good sending in job applications; we live in the wrong postcode area". How wonderful it would be if young people could have the vision, a vision so eloquently put by my noble friend Lord Rogers, that they may live in such a place.

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Once identified, further finance must be made available on a much larger scale to get on with the job of regenerating whole areas where, without exaggeration, boarded-up, derelict and abandoned properties and piles of rubbish are the norm. The locals do not even know who owns such properties. I wish the pathfinder idea success.
I want to ask the Minister whether he will do something about the pathfinder concept. The experience in Burnley shows that people did not know what was going on. If boundaries are to be drawn for the pathfinder areas, they must be communicated to those in the areas so that everyone knows for what the money is provided. Otherwise, there will be a repeat of the biased and prejudiced views expounded by the far Right people in that part of the world. I do not for one moment believe that local authorities can solve the problems on their own. That is why I am particularly pleased that a real effort is being made to bring together the authorities. One of our recommendations was to bring together regional development agencies, housing corporations, the local authorities and all who can contribute towards regeneration. There is much good among all those organisations, but the history is that too many people are travelling their own roads.
The task force report to which I have referred recommended that specific resources should be made available to assist the administration and management of the local strategic partnership. I am pleased to tell the House that the local strategic partnership in Burnley has already commenced its work. It has held three meetings and is receiving the assistance for which we asked. I ask the Minister to take note that Burnley would be helped even more if it were designated as an inner-city area because it has all the problems of an inner city and probably more than many other cities. The recently published White Paper on regional government provides Burnley with a chance to use the consultation period as a means of reinforcing the task force view that it should obtain such a change of status. As I say, Burnley has all the problems but it does not have the status.
This debate gives your Lordships the opportunity of welcoming the comments made by my honourable friend John Denham, the Home Office Minister, in his recent speech at the Local Government Association conference, where he was able to show what the Government are doing, although time does not allow me to mention the whole range of policies being pursued. I welcome his call for a drive for improved community cohesion. He is so right when he says,
"Community cohesion must be our commitment to tackle poverty and deprivation in all communities".
He is also right when he says that community cohesion must be done,
"in ways which make it clear and transparent that it is opposition to poverty—not a bias for or against different communities—that drives our policy".
It is very important that people and communities are not pitched against each another. I am sincerely pleased at the action already taken by the Government as it applies to Burnley.
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Perhaps I may be political for a moment. I inform the House that if the Government fail and are not able to drive forward this policy of regeneration as quickly as possible, making it visible and transparent, although we may not see a situation where far Right neo-fascists can get 12 per cent of the vote in local government elections against 9 per cent for the established Conservative Party in the same town, we shall see a growth in that if we do not address the problem. Such people are playing on the fears and worries of others.
I wish all success to those who are working to bring stability, progress and renewed hope for places such as Burnley. I ask my noble friend to pay particular attention to the need for local authorities and those who drive these policies forward to be able to explain them clearly in language that people understand.
6.21 p.m.
Lord Smith of Leigh: My Lords, I commend my noble friend Lord Woolmer on an excellent choice of topic. As he is well aware, I have an Unstarred Question on a similar topic that is yet to be reached. But, never mind.
This is a rare opportunity in your Lordships' House to discuss urban issues. In the three years that I have been a Member of the House we seem to have been dominated by matters rural. Today's debate has demonstrated the variety of experience that exists in your Lordships' House on urban issues.
Before I move on I should declare my interest as leader of the decidedly urban Wigan Council. As my noble friend is aware, we have recently been awarded beacon council status for our urban renewal projects. So I think that I have something to say on the topic.
I understood much of what the noble Lord, Lord Greaves, was saying, but I did not recognise his downbeat analysis of some of these issues and of some of the ways forward. I remind him that urban problems are hardly new. I am sure that he is well aware of Engels' book, The Condition of the Working Class in England, which described problems 150 years ago in inner Manchester. So nothing is new.
To my mind, the current problems are generated by the global changes in industry that took place in the last quarter of the 20th century. Most of our urban areas and cities were based on industrial activity. The great decline that took place in industry during that period created large levels of unemployment, swathes of industrial wasteland and dereliction and some other problems.
Using my experience I should like to analyse some of the issues I think are important in successful urban policies. Many of the Government's new neighbourhood renewal strategies meet those criteria. I shall then make some suggestions to my noble friend the Minister that the Government may wish to consider further.
First, everything said by noble Lords today suggests to me that we cannot discuss this matter on a single-issue basis. Every approach must be holistic. We must look at all-embracing strategies that understand the

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multi-dimensional nature of problems in urban areas. A related point is that we must understand that these are local problems. Although we have similar problems in urban areas across the country, each area has a unique combination of those problems. The problems in Wigan will be different from those in Manchester, Corby, Bradford or east Lancashire. So we need to understand how the strategies will work out in each area and we must give the local authorities the flexibility to meet those local needs.
Thirdly—and this is perhaps where I disagree most strongly with the noble Lord, Lord Greaves—I believe in the benefits of partnership working. Local authorities can contribute much to solving these problems but they cannot do that by themselves. They must engage with other public sector agencies—the police, the health service and so on. They must also engage with the business community, because if we are to solve these problems, we must look for economic solutions.
Most of all, local authorities must reach back into their local communities. They must ensure that they work with local people and design policies that work with them, rather than simply impose them from the top. We have had that problem in the past and it is one of the reasons why urban policies have not worked properly. The neighbourhood renewal strategy will assist in that regard.
There needs to be an additional ingredient. My noble friend Lord Rogers in a sense said that. We must inspire people. If one lives in these areas one develops a great cynicism—life is fairly awful and people do not seem to want to help. So we must try to make sure that we raise aspirations; things can be better. Physical regeneration is one way forward. It is not the only way forward. We must make sure that we give people an opportunity to participate.
In our area we find that with sport we can get many younger men involved in the community. Of all the great institutions in Bradford referred to by my noble friend Lady Lockwood, she did not mention the Bradford Bulls. Sport reaches out into the community. It allows people to participate, both as spectators and also in an active way. We can actually convince people that things can change and that we can change with them.
We must also make sure that things do change. Unfortunately, civil servants are very much into measuring outputs. What they should measure is outcomes. After renewal projects in my own ward, an eight year-old resident was interviewed. I am proud to say that he said:
"This area has never been so nice".
When one receives a compliment like that, that is the way forward.
I ask my noble friend to pass on three additional points for the Government to consider. First, again from his great experience, my noble friend Lord Clarke talked about Burnley and the problems of east Lancashire—other noble Lords mentioned Manchester and Liverpool—and housing
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abandonment and the excellent pathfinders scheme that the Government have brought forward. In addition to housing abandonment there is also much commercial abandonment.
The secondary shopping areas of our towns, often in small centres or spread along urban routes, have suffered badly. The changes in the way that people shop—we now go out to supermarkets to shop rather than walk to local shops—have really affected those areas. Empty shops blight neighbourhoods and bring further problems. Who would want to shop in an area where two out of three shops may well be boarded up? The local young people of Wigan—and I am sure everywhere else—have a great ability to get into those shops to cause further dereliction and further bring down the area. Unfortunately, the shops are not in a strategic area. They are scattered through shopping areas with some trading well and others boarded up.
Although we have a policy of compulsory purchase available to us, one of the problems of the commercial sector is the unrealistic values that many people put on those urban shops. It is difficult to get people to agree to sell up when they simply have this unrealistic view about how much the shops might be worth in the future. We need to shrink in size some of these secondary shopping areas; we need to provide a better environment; and we must look at the greening mentioned by the noble Lord, Lord Clarke. Therefore, the Government should bring forward a strategy to help—as they have done with housing abandonment—areas of commercial activity.
I refer next to European funding. Noble Lords will be aware that in 2006 the current round of regional strategy in Europe will end. Clearly, with the new members from the east, there will need to be a re-jigging of regional policy in Europe. We might look at helping to achieve the cohesion which is part of European strategy by bringing in an urban strand for European regional policy. That could help the urban areas of the UK and other countries in western Europe, particularly where these problems are paramount. I am going to a conference in Barcelona next week to talk about that matter. I shall be pleased to share with my noble friend the views I hear there.
Finally—here I must declare a further interest as vice-chair of the Special Interest Group for Municipal Authorities—I cannot help but mention local government funding, which is also being reviewed at present. Urban areas need adequate resources to run education, social services and so on, because if we let those basic services run down, there will be further depopulation of urban areas, which is part of the problem.
6.30 p.m.
Lord Corbett of Castle Vale: My Lords, I join the thanks to my noble friend Lord Woolmer of Leeds for enabling us to have this timely and important debate. I live slap in the middle of a city centre—the city of Birmingham—on the banks of a canal of which we have 42 miles, which has massively helped to

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regenerate that city centre. When your Lordships visit, you should also notice that we have more trees than the Bois de Bologne in the city centre.
I must first declare an interest as chairman of the Castle Vale Neighbourhood Management Board, the first in Birmingham and one of the Government's non-funded pilot schemes to help to develop their national strategy for neighbourhood renewal. The Castle Vale Housing Action Trust was voted into being by 93 per cent of tenants about 10 years ago. The estate was a despairing, neglected, out-of-city-centre estate with all the hallmarks of an inner city. It was an area that declared when one walked into it for the first time that nobody loved it and nobody cared about it. The tenants and residents there were given the opportunity to have a hands-on regeneration scheme. Of course, they jumped at it.
The housing action trust is an acknowledged successful pathfinder in pioneering ways to develop partnerships with tenants, residents and service providers such as the primary care trust, West Midlands Police, Birmingham City Council, the Learning and Skills Council, the Churches and other faith groups. It is that patient work, especially during the past six months, that has prepared the ground for the neighbourhood management board. I am grateful to my honourable friend in another place, Sally Keeble, who was last week kind enough to attend the launch of the neighbourhood management board last week, and to my noble and learned friend Lord Falconer, who is not in his place, for his encouragement during the whole process.
There are some valuable lessons to be learned from the work of the six housing action trusts as they complete or near the end of their work. Your Lordships will understand if I concentrate on Castle Vale HAT to provide some examples.
The first point, to which other noble Lords have referred, is that successful regeneration means doing things with, rather than for, people in the area. There are examples from all over the country of well-intentioned regeneration schemes under a variety of names where people simply turn up, spend money and go away. The HATs have succeeded because each in its different way had a holistic approach. Yes, of course they provided bricks and mortar but also training, education, health promotion and crime prevention, among other things, that focused on a defined area for a known period and set out to involve people living there from day one, so that the solutions were community-grown rather than made in Whitehall and pressed down on people.
In Castle Vale, about 60 community groups and organisations have been involved in regeneration. The Government must find ways to ensure that the best practice from the experience of the HATs does not get lost and is made widely known to those concerned with the 3,000 other estates across the country in need of regeneration. We are so clever at reinventing the bicycle every time when there is one in the shed that other people can learn to ride.
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The newly-published Corporate Social Responsibility Report 2002 from the Department of Trade and Industry details the partnership built by Castle Vale housing action trust with business, which has won an estimated £86 million of business investment for the local community. I shall give two brief examples.
First, against the background of a 25 per cent unemployment rate in 1993, the HAT worked with Jaguar Cars, which is housed in a factory across the road from the estate that built more than half of the Spitfires which flew in World War II, to offer training and chances of jobs when the S-type Jaguar was being planned. A customised training programme, part-funded by the HAT and partly by the European Social Fund, led to 81 per cent of those who went through training getting jobs at Jaguar Cars. I can tell your Lordships that if five or six years earlier people from the Castle Vale estate had crossed that road, gone to the security hut to ask if there were jobs available, been asked where they lived and said that they lived on the Vale, they would have been told to go back across the road.
Secondly, the HAT worked with Sainsbury to bring a £35 million shopping centre to Castle Vale, creating 500 jobs, a third of which are held by local residents and are truly walk-to-work jobs. Overall, almost 1.300 jobs and more than 2,300 assisted training places have been created, and unemployment is now 5.2 percent—astonishing in that estate—against 7.6 per cent for Birmingham as a whole.
I stress that the active involvement of local authorities is vital to the regeneration process. A self-assessment toolkit to help communities and local authorities is being developed to bench-mark progress in neighbourhood management. In all regeneration schemes, succession and sustainability are crucial elements. When the lead agencies, such as HATs, have gone, a mix of bodies needs to be in place to enable residents to continue to build on success. Nothing stands still; if development does not go forward, it will go backward.
That is why Castle Vale HAT has set up a community regeneration partnership to work with Birmingham University and the Balsall Heath Forum to share best practice in the city and around England to support less experienced communities and partnerships. The cost of HATs—I aim this point at the Treasury—and other regeneration programmes needs to take account of all the gains: improved health, better employment, reduction of crime and increased investment in land and property. They must all be on the balance sheet.
Perhaps what the housing action trusts have demonstrated most of all is that small is beautiful that a focus on a small but cohesive geographic area and community gives the best chance of success. I have one plea for my noble friend the Minister: please, thin out the legion of bodies used to help regeneration and the bureaucracy that sits upon them. Much has been done, but we now need to find better, more effective ways to share the success with those communities not yet given the chance to succeed.
6.38 p.m.
Lord Hardy of Wath: My Lords, I join in the words of appreciation offered to my noble friend Lord Woolmer.
Last Sunday, I walked up the hill that overlooks my home. I was admiring the view from the top when I met two youths. I chatted to them and one said to me, "I am leaving school this summer". I asked him, "What are you going to do?", and he said, "I am getting a job". He said it with confidence—a confidence I had not heard from a young person for a long time. A few years ago, when I examined the figures for school leavers from a good school not far away in my constituency, only four of the summer leavers had obtained jobs by the autumn. So the confidence in that young man's voice was pleasing.
We have faced devastating problems of unemployment and the destruction of our economy. What worried me as I watched that devastation was that the biggest and most serious consequence would be social corrosion. Those fears came at a time when the Prime Minister of the day said that there was no such thing as a community. The hill that I mentioned was the spoil heap of Cortonwood colliery. Looking down from there, I can see where the colliery used to be. There was a community there, all right. There was a community there when I was told that that colliery would have five years' life. Five weeks later, they said that it would close in five weeks. The strike showed that we had a community. However, it was a community in anguish, so there was a chance of lasting bitterness, as well as economic deprivation.
On top of all that, the Government changed the rules governing derelict land grant and said that it was available only where derelict land would be subject to immediate hard after-use by the private sector. In the Dearne Valley, we had hundreds and hundreds of acres of derelict land. We needed only a small part of it to be covered with hard after-use. I did not care whether it was public or private sector, but it had to be private sector before a penny piece would be made available.
Fortunately, the then Prime Minister told me during Prime Minister's Questions in the House of Commons that my constituency was getting vast sums under derelict land grant. The Minister in charge, Mr Trippier, who, I think, is no longer involved in politics, took a swift and sensible approach. The rule changed shortly afterwards, and that hill now has trees and grass. There is a lake beside it. I looked at our cygnets before I left on Monday morning. Down on the low ground are the new jobs. On the higher ground to the east are the new houses. However, we still face the social consequences that I feared in the 1980s.
In 1970, when I entered the House of Commons, I was put on the Standing Committee that dealt with the misuse of drugs. None of the police forces in my area had any experience of the problem, and I had to talk to someone in Sheffield to find out about the impact of the problem. It is a serious problem in my area now.
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Crime did not exist then. The children of today are the grandchildren of people who lived in my ward when I was a young councillor. They did not know where the front-door key was; they could leave the milkman's money on the window-sill. I did not have to bother locking my car until the late 1970s. In the 1960s, when I was chairman of my local council, there were three local criminals in Wath-on-Dearne urban district and Brampton Bierlow, where I now live. I hesitate to guess how many there are now.
The work of the voluntary organisations and the churches—I was delighted that the right reverend Prelate the Bishop of St Albans spoke about it—is vital. We need more sporting opportunities. Idle hands make mischief, and, if kids do not have the opportunity to burn up their energy, crime will flourish.
I am delighted that, in the past 12 months, there has been a 25 per cent reduction in unemployment in our ward, the worst in Rotherham metropolitan borough. Last year, the reduction was 20 per cent, and we shall soon be down to the national average. I look forward to the time when not only will there be jobs, opportunities and leisure activities, but crime will have reverted to the level that we experienced not that long ago. We still have a long way to go.
My remarks may not have related entirely to urban areas, for the coalfield areas of Britain cannot always be described as urban. When the Boundary Commission considered my constituency in the early 1980s, it divided it in two and suggested that both should he metropolitan borough—not county—constituencies. If it was a county constituency, we could spend another farthing per thousand electors or something; we never got anywhere near the maximum permitted levels of expenditure, as the noble Baroness, Lady Lockwood, knows. I said to the lawyer conducting the hearing, "When you get into your car, turn right out of the car-park, drive a mile, turn half a mile, drive another half a mile, stop, and get out of the car. If you can see a house, I will accept that it should be called an urban constituency. If you can't, it should be classed as a county constituency". We won.
We have a lot of trees already. I can see superb woodland from the top of the hill. I look forward to the visit of my noble friend Lord Clark of Windermere because we want more. Many of the hundreds of acres of the Dearne Valley that we do not need for industry or housing could usefully accommodate trees. I firmly believe that we will not build up the wealth and spirit of the communities in our area unless the environment is such as to justify the comments made by Walter Scott at the beginning of Ivanhoe describing the pleasant part of Merrie England watered by the River Don. When I entered Parliament, the Don and its chief tributary, the Dearne, were foul, open sewers. There are fish in them now; I want to see the rest of the area green as well.
6.45 p.m.
Baroness Maddock: My Lords, we are all grateful to the noble Lord, Lord Woolmer of Leeds, for introducing a wide-ranging debate on the important subject of regeneration.

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Regeneration stems from the need to manage and develop sustainable solutions for our towns and cities against a background of changing ways of life. Perhaps it is because I am getting older, but it seems to me that life changes even more rapidly now than I ever remember. Many of us talked about regeneration in the early days, when areas declined as their major industries—their economic mainstay—disappeared. That upset the whole framework. We heard from various speakers about what has been done in such areas. The noble Baroness, Lady Billingham, spoke eloquently about Corby, and the noble Lord. Lord Clark of Windermere, spoke specifically about forests and the role that they can play. That was followed by the speech of the noble Lord, Lord Hardy of Wath.
The nature of neighbourhoods in Britain has changed. They remain important social units, but they are less central to many people's life than they once were. For many, the neighbourhood in which they live is less significant than their family, their work or their school. Communities of interest have developed, rather than communities of place. However, that does not happen equally across all groups. Some groups miss out on it, particularly women, smaller settlements, where communities are more self-contained, poorer neighbourhoods and areas with a high concentration of often marginalised people from ethnic minorities.
For many people, family, work and school are at greater distance from home than was once the case. Access to the Internet, television and other media is made privately, in one's home. Other leisure pursuits, particularly sport, often take place at a greater distance from people's homes. Research has shown that recently formed young, childless households do not know their neighbours. More worryingly, many do not want to know them. Often, incoming middle-class settlers socialise and take their children to school outside the area in which they live. All that has been accelerated by the wider use of cars for personal mobility.
Despite all that, the efficiency and effectiveness of communities remain important to people, not least in dealing with anti-social behaviour or when crime restricts freedom and quality of life. I specialise in housing and know that homes are of key importance to individuals, but I think that, as today's debate has shown, neighbourhoods are not just about individual homes, and regeneration is concerned not just with providing new homes but with much more.
In tackling the problem of failing neighbourhoods, we must identify the key factors that have contributed to decline and seek solutions that produce key building blocks for the future and are based on robust forecasting and research. I shall say more about that later. I think that the noble Lord, Lord Corbett of Castle Vale, touched on that.
In his speech, the noble Lord, Lord Woolmer of Leeds, demonstrated the wide range of the debate. It was interesting that noble Lords mostly brought to the debate their own areas of interest. I have known the noble Lord, Lord Brooke of Sutton Mandeville, for
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many years. His background is as .a representative of Westminster, an inner-city area. He touched on the problem of VAT on refurbishment and repair, but I am sure that we will not get an answer from the noble Lord, Lord Filkin. That issue comes up in every discussion that I have on these matters and we need to tackle it.
My noble friend Lord Greaves was slightly controversial as usual, but he showed how important it is to have good national strategies if local communities are to be successful. The noble Lord, Lord Rogers of Riverside, brought his knowledge on the work that he has done on urban renaissance and architecture. The noble Lord, Lord Best, emphasised something with which I totally agree. I have heard him say several times before that, when it comes to regeneration, one must regenerate the economy in a much wider way than in only one set of particular jobs. When one looks at how an area is developing, one must look at what is happening to the people. If people are fleeing an area and it starts to go downhill, one must examine how to attract a cross-section of people into the area to make it successful.
Various speakers referred to the importance of the arts and their bid for various cities to be cultural capitals. I strongly support them in their view that the health of neighbourhood arts and culture is very much part of people feeling comfortable in their communities. Such activities also do a tremendous amount for the economy.
Lest we should be carried away with material things, the right reverend Prelate the Bishop of St. Albans, reminded us of the church. He was emphasising not so much the spiritual side but how the development of the church went hand in hand with the development of the community. He reminded me of my early days in local government and inner city problems when he spoke about Faith in the City, which was a very important document. Many of the ideas and practices, especially about working in partnership, started in those days.
There are certain areas that we need to consider in regeneration. Various people have touched on what I would describe as urban democracy and the need for people locally to take hold of what is going on. We have different views on how to enhance innovation in local government to ensure that it has the power and freedom to do that. There were certain disagreements about partnerships and how to involve local people. My experience, and what I have heard this evening, suggests that we must involve a wide range of local people to ensure that not only is there finance to carry out their aspirations but that we help with skills and training.
I have seen, as I am sure have others, how people have developed their own skills tremendously when becoming involved in regeneration projects. We have heard about the importance of education and training in expanding local businesses. The noble Baroness, Lady Lockwood, talked about the importance of the university in Bradford. She will have heard some weeks ago at a meeting here in the House about how the university in Teesside had done a lot of work to try

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to ensure that its graduates with all their skills and abilities do not run away to the hotspots of England in the South East and the M4 Corridor. Areas have been set up where entrepreneurs can start up businesses.
The urban environment is also important and many noble Lords have talked about it. The level of public services is vital. In areas of deprivation the level of spending on a breadth of public services needs to be higher. Our system does not enable that to happen and the Government should be looking at that. Often extra money for an area has to be gained through a beauty contest and one must understand all the different ways of bidding for bits of money.
One of the issues about which I feel strongly and which the noble Lord, Lord Corbett of Castle Vale, touched on, is that we must be rigorous in how we account for what is done in an area. The noble Lord mentioned housing action trusts. I remember being shocked at how much money individual housing action trusts received. If we gave that to all areas they would be doing very well. We need to be rigorous in our research before going ahead with projects. I recently read a report of the Urban Affairs Committee in another place. The noble and learned Lord, Lord Falconer, was asked about the role of regional development agencies and whether there was best practice in the tasks that they were asked to carry out. He said no, and that they just had to follow Government policy. When he was pressed further, he said that they were given £200 million last year but he did not know exactly what it was spent on.
That is one of the areas about which I am most concerned as we consider regeneration. It is clear that we need to emphasise sustainability, which is about regenerating the way in which we adapt to change so that we can avoid some of the worst disasters that we have seen and for which we are still trying to pick up the pieces.
6.56 p.m.
Baroness Hanham: My Lords, I declare my usual interest as a recently re-elected member of a local authority.
The noble Lord, Lord Woolmer, has indeed generated an interesting and informed discussion. All those who have contributed to the debate have demonstrated immense experience of the problems associated with the challenge of improving the quality of life and the environment in our inner-city areas. These problems have been with us for far too long and, as has been said, they encompass many facets, including poor and run-down property, crime, inadequate schools, the environment and unneighbourly communities.
Contrary to what has been suggested, the recognition of these problems has been well understood for many years, and they were the subject of intensive efforts long before this Government came to power. It may be contrary to the understanding of some people, but the world did not start in May 1997. Regeneration initiatives which involved the private and public sectors, voluntary organisations and local
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people were promoted and carried out by the previous government. I am bound to say that, as I remember it, such initiatives were greeted with rather less than enthusiastic support from the then opposition, largely because they involved bringing in the private sector. That is an issue that is now being embraced widely and carefully, and is probably being welcomed by those on the Government Benches.
I recall the work that was undertaken by the previous government to regenerate Liverpool and to bring in the city challenge programme—the sort of comprehensive policy extolled by the noble Lord, Lord Woolmer. Where it was implemented, it was by and large extremely successful. It brought together representatives of the community, including private companies, local authorities, voluntary organisations and, indeed, the churches. It levered in many millions of pounds from non-governmental sources over a seven-year period. Certainly, in the London borough that I represent, the standard of the whole city challenge area was raised and the local community felt part of what was done. That partnership continues, despite the fact that the seven-year programme has been completed, and it continues to generate further regeneration programmes and a strong community.
My noble friend Lord Brooke, to whom I am indebted for providing 50 per cent of the Opposition Benches' contribution to the debate, spoke of the initiative of flats over shops. He also gave us a real reason why he should have been an architect but was much better as a Member of Parliament. Part of the city challenge programme was to try bring back into use flats situated above shops. In addition, small-scale regeneration projects have been raised from the Single Regeneration Budget.
But the sad story of initiatives is that they seem to start and stop, as has been mentioned by a number of noble Lords. That lack of continuity is one of the reasons why there seems to be a perpetual need to invent new ways of trying to do the same thing. Indeed, that point was made by the Cabinet Office in its report, Reaching Out, in February 2000. It drew attention to the fact that there were altogether too many government initiatives, not enough co-ordination and too much time spent on setting up systems rather than delivering them. Just a few of the initiatives have been mentioned today.
I am constantly reminded by the noble Lord, Lord Best, with his knowledge and experience, about the practicalities of redevelopment and I welcome listening to him on many occasions. I was fascinated by the contribution of the noble Lord, Lord Clark, about the need for greenery, for trees, in urban areas. There is not the slightest doubt that planting trees in streets raises the quality of the environment and the tone of the area in addition to contributing to a general feeling of well-being and a reduction in pollution. I welcome the speech of the noble Lord, Lord Rogers, who I remember well from our days on "London First" and his influential report. So much expertise and knowledge is going into the problem.

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I have counted at least 18 initiatives—I am sure that there are many more—which are running across ministries. That is why my colleagues in the other place have said that they would like to see a position of "Minister for Regeneration" to bring coherence and co-ordination to the whole policy across all arms of government. We consistently hear about cross-cutting in other areas, so let us have a bit of cross-cutting on regeneration.
The confusion has been worse confounded by the Single Regeneration Budget money having been transferred to the regional development agencies. All experience is that as a result the budget has been considerably underspent. The Institute for Fiscal Studies showed that for the years 1999–2000 and 2000–01 the underspend was considerable. Such an outcome for something which is so important demonstrates either a lack of purpose or a lack of initiative.
So how does one put together a programme which brings about regeneration and builds the confidence of the community in its area? First, one must ensure that members of the local community—whether it is tenants of social housing, local homeowners, those who rent, and representatives of commerce, the Churches and the voluntary organizations—are involved in any proposals which affect them. But do not ask them to be the leaders delivering the policies. That is without doubt the responsibility of the local council, which is the democratically elected leader of the community. The local community should be involved in any proposals that affect them and the area in which they live, and investment and development companies should he encouraged to build on brownfield sites. We do not want temporary prefab housing for key workers, but permanent homes for all those who are required to support and sustain the community.
It seems odd that in all the verbiage about this, the Government, while making concessions for refurbishment of property, have still not lowered the VAT on such developments. A number of noble Lords have spoken about that. Why is it that the cost of stamp duty for first-time buyers, rather than being removed as promised in development areas, remains in place? The intention to remove it was predicated in the Finance Act 2001. Will the Minister say what steps are being taken to encourage investment by equity funds, and what venture capital trusts are to develop deprived areas by being given tax credits?
If young people, whatever their economic status, are not encouraged to remain or move to inner-city areas, those communities have no future. Far from the population staying in the cities, the pressure for housing in areas outside cities is increasing dramatically, particularly in the South East where the estimate of the number of new houses required has increased by nearly 30 per cent. There is the likelihood that those will have to be built on greenfield sites as opposed to being provided by the kind of imaginative scheme referred to by the noble Lord, Lord Best.
For the young to remain, they need an assurance of good education for their children—something which is not evident in all those places—and improving failing
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schools is essential. It is one thing to send the mother of truanting children to prison—I do not necessarily disagree with that—but why, having given that discretion to the courts, have the Government only recently lifted the limit on the number of disruptive children who can be excluded from any one school, thus undermining the control by head teachers of their schools? The schools themselves need to be in charge of the management of their pupils.
Returning to housing, many estates have, in the past, been developed in a way which encourages crime. We now need to ensure that practical measures, such as good lighting, CCTV, secure doors and windows and the eradication of dead zones are implemented. Perhaps there is no one better than the noble Lord, Lord Rogers, to describe how to do that. It is essential that communities have more power over their areas. Voluntary projects should be encouraged with funding being directed straight to the front line.
Local partnerships and, as was said by the noble Lord, Lord Greaves, quangos, are one way of dealing with the matter, but local authorities are still the best placed organisations to lead any local initiatives. They have too often been side-lined under this Government, who prefer centrally driven and, as I believe I have demonstrated, unfocused schemes.
Urban degeneration has been part of the canker of society for a hundred years. It needs co-ordinated policies to achieve results, which is what I believe that we do not yet have, as this debate has demonstrated.
7.8 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Filkin): My Lords, I, too, want to begin by congratulating my noble friend Lord Woolmer of Leeds. It is regrettable that it has been a long time since we discussed such issues in this House, yet they are crucial to the society and economy of so much of Britain.
I want to make two apologies. First, my noble and learned friend Lord Falconer was delighted when he saw the Motion on the Order Paper because he has put considerable energy into his role as regeneration Minister. Unfortunately, it has been one of those days, as noble Lords may have noticed, and he has been detained elsewhere. Similarly, I apologise for missing the first few minutes of the speech of my noble friend Lord Smith. I was detained with the Home Secretary stressing to me how crucial it was that the Home Office and the DTLR should work together on regeneration to tackle some of the problems of ethnic diversity in Britain. It is not a sufficient excuse, but at least it is in part plausible!
The noble Baroness, Lady Hariham, is right in saying that urban policy did not start in 1997. Nor would I claim that everything the previous government did before 1997 was wrong and that everything done subsequently was right. However, there is an analogy between how governments have learnt to control inflation and how they are becoming progressively better in considering the handling of regeneration. In that respect, the debate has highlighted the lessons which are coming into good currency.

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In the past, there was a strong emphasis on economic renewal and on central mechanisms, such as urban development corporations, that bypassed local authorities in some inner-city areas. A shift took place towards tackling social as well as economic issues. That occurred through City Challenge and, later, most importantly through the Single Regeneration Budget.
However, the emphasis was also as much on competition for limited resources as on creating a lasting partnership between agencies in the public, private and voluntary sectors to address causes rather than just the symptoms of problems. Despite all the money and effort on the part of a sequence of governments, we did not always find that regeneration worked or succeeded in ways that had been envisaged. The most deprived places of 30 years ago, tend still to remain the most deprived places of today.
The publication of the Urban White Paper and the National Strategy for the Neighbourhood Renewal Action Plan has, we suggest, signalled a fundamental shift of direction. There are three main differences in the new approach that have been mentioned by a number of speakers in this debate.
First, the Urban White Paper built on the quite remarkably influential work of my noble friend Lord Rogers, and the task force. It is so good to have my noble friend with us today, and to have the benefit of his experience and wisdom. The White Paper was a recognition that the future of towns and cities and the concept of urban renaissance were vital to regeneration, but also to creating sustainable patterns of development. It marked a new emphasis on the use of broader policy instruments, such as planning and neighbourhood renewal.
Secondly, the National Strategy for Neighbourhood Renewal recognised that agreed concerted action across the board was necessary to reduce the gap between the most deprived neighbourhoods in urban areas, and the rest. I do not have time to illustrate the latter, but noble Lords will know how wide those gaps are and what that says in terms of the poverty and the quality of life for people who inhabit some of our most deprived neighbourhoods.
Thirdly, the problems should be tackled not just by initiatives but by bending main programmes, both at central and at local government level, as well as through other agencies. The emphasis is now on using indicators and setting targets to reduce gaps in performance, rather than through programmes aimed at tackling individual problems. A sequence of central government departments have very clear baseline targets to improve the quality and performance of public services, and of opportunity, in the most deprived neighbourhoods in Britain—as well they should.
As has been said by many speakers, there are good reasons for being optimistic about current urban policies. First, they now involve the local community in better ways than was the case with previous initiatives. The emphasis is on recognising that they have to be bottom up, not top down. Economic and
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social regeneration needs to be self-sustaining, but this will happen only if it is based on local strengths and weaknesses, local needs and aspirations—not in response to some central directive.
Secondly, our emphasis is on a comprehensive strategic approach. The best of local agencies and of local authorities fully endorse that approach. Regeneration is not just about bricks and mortar, though, as my noble friend Lord Rogers said, the physical environment is crucially important. It is also about having coherent and joined-up strategies at different levels of government and agencies that provide a basis for practical action from the regional down to the neighbourhood level. It means linking economic, social and environmental policies, which is easy to say.
Thirdly, our policies are based on the bending of mainstream programmes so that there is a reduced risk that funding will cease after initiatives have proven their success. Fourthly, we are focusing on improving the connections between areas of prosperity and deprived areas, as was mentioned by one or two noble Lords; in other words, not to see the inner-city in isolation but to see how the different parts of a city may be able to contribute to each other's needs and thereby foster improvement.
In spatial terms, regeneration policies and programmes operate at three levels: regional, urban and neighbourhood. At the regional level, the Government approach is based on the principles of strengthening the economies of all our regions, and supporting the regeneration of towns, cities and neighbourhoods. The regional development agencies (RDAs) are charged with being,
"strategic leaders of economic development and regeneration in their regions".
It is still relatively early days. I note the point made about not spending all of the SRB funding, but the Government are optimistic that the RDAs will make a significant contribution at regional level. That is why the Government and the Treasury have been minded significantly to increase the budget for such agencies over the coming years. RDAs have been set clear regeneration targets to tackle poverty and social exclusion in the bottom 20 per cent most deprived wards in the region. It is not just letting the successful areas get rich; there is a focus towards addressing the most deprived wards.
I turn to the urban level. The White Paper sets out the Government's vision for making our towns and cities into places where people want to live, work and invest, not places that people seek to leave as soon as they have the opportunity to do so. The noble Lord, Lord Best, and other speakers made mention of that point. The emphasis is on each town and city setting its own strategy that responds to local needs and aspirations. Although central government must, with the help of agencies, look to where they can set the right framework of policies and funding in order to address regeneration, the lead must ultimately come from the localities. I agree with the noble Baroness, Lady Hanham, and other speakers, as regards the

1423
crucial importance of local authorities working with others to provide some of that cohesion and leadership.
At the neighbourhood level, which is where one sees some of the worst concentrations of social, economic and physical deprivation in our society, the National Strategy Action Plan for Neighbourhood Renewal is central to the Government's plans for closing performance gaps between the most deprived communities and the more advantaged ones. The new approach to urban policy is place-based. It also depends on developing links between policies and programmes in a horizontal as well as a vertical way.
Local strategic partnerships, within which local authorities are clearly one of the fundamental players, are bringing together local authorities, local residents, the private sector, and other stakeholders to agree overall community strategies for their areas. Again, it is early days. However, I believe that they will be crucial for the success of local regeneration strategies in many areas in Britain.
We are also working closely with 24 partner towns and cities around the country to understand better how different urban initiatives work together. That is one of the Government's responses to the challenge laid down by my noble friend Lord Rogers and the Urban Task Force. It is not simply looking at the worst areas; it is looking at a range of towns and cities and considering what can and should be done to improve the physical environment—the quality of the built environment, the quality of open spaces, and, as my noble friend Lord Clark reminded us, the quality of the green environment.
My noble and learned friend Lord Falconer and my honourable friend Sally Keeble visited all 24 of these partner towns and cities over the past few months to gain a better understanding of the main opportunities. I shall return later to those visits in terms of some of the learning derived from that experience.
Much good sense emerged from the debate. In the limited time left to me, I shall try to respond to many of the questions and challenges that were raised. The opening speech of my noble friend Lord Woolmer was profoundly thoughtful as regards stressing that "partnership" is not a mealy-mouthed vague word but a concept at the heart of successful regeneration. There was also the recognition of the fact that problems, whether they be found in the physical environment, in the economy, in society, or in service delivery, differ most significantly throughout the country. That is why we have local government. It is why a top-down approach is not appropriate by itself. It is why we must try to foster local creativity and leadership. My noble friend also said that solutions must not be piecemeal; they should be comprehensive, and hang on in there for the long term. This not quick start, and it is not a matter of quick fixes. The Government endorse all of those points.
It was very good to hear the noble Lord, Lord Brooke, speaking from his considerable experience; and, indeed, as regards what might have been his career in terms of being an architect. I have a similar
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confession to make: for about two years I was a planner, but then I strayed away and ended up in sin afterwards. Indeed, one can only wonder at what might have happened to me had I stayed. The noble Lord raised several issues, but spoke particularly about flats over shops. I recollect discussing with the noble Lord, Lord Best, about 20 or 30 years ago the importance of how one addressed that as regards housing units and trying to improve the built environment in urban areas.
The White Paper introduced a package of fiscal measures to aid regeneration, with costs estimated at around £1 billion over the next 10 years, including 100 per cent capital allowances for creating flats to let over shops. We are committed to monitoring the take-up of these and other fiscal measures to ensure that they achieve their objective of increasing investment in urban areas. I am not sure whether that is a complete response to the point raised by the noble Lord. I shall take it away and reflect on it.
The noble Lord also mentioned brownfield sites and referred to the identification of contaminated sites. Clearly, not all brownfield land is contaminated, although much is. Following a government review, in April English Partnerships announced its intent ion to put a new focus on identifying and remedying brownfield sites which we hope will help to secure more joined-up working on the issue.
There is and has been some uncertainty, as the noble Lord also remarked, on the position of the European Union. The Government are pressing for a new regeneration framework which would allow the payment of state aid for regeneration. We think that it is fundamentally important that that is cleared. Furthermore, we believe that the Commission is willing to consider the possibility of change which will help to aid the regeneration of brownfield sites.
The noble Lord, Lord Greaves, spoke of the importance of considering this problem in a national context. Although this has not been raised widely in the debate, ensuring that the national economy is sound and growing well, that national unemployment levels are low and that we do not suffer periods of boom and bust, is vital to progressive regeneration. At the national level we must provide the fundamental underpinning of a sound economy. That is one of the contributions that central government can make towards local regeneration.
The noble Lord mentioned the plethora of quangos. Both he and the noble Baroness, Lady Hanham, mentioned the excellent report, Reaching Out, published in 2000, which was highly critical of the multiplicity of initiatives. The Government take that point seriously and are considering what can be done through the Regional Co-ordination Unit to limit—as I think we must—new initiatives and rationalise some of those already in place.
The noble Lord, Lord Greaves, also spoke of the importance of addressing poverty as a part of regeneration. Again, at the national level, it is not irrelevant to mention our commitment to halving child poverty by 2010, addressing pensioner poverty and

1425
seeking to ensure that, by the end of the decade, there will be the highest ever proportion of people in work. I shall not go into the mechanisms which will seek to achieve that aim.
The noble Lord also spoke—slightly too sceptically, I thought—of how local people are not trusted. They would simply pinch the money and run away with it. Perhaps I do him an injustice with that comment, although a hint of that sentiment came across in his words. Many noble Lords have spoken of the importance of engaging local people, doing things with them rather than for them. One has to find ways of resourcing and skilling people to enable them to participate rather than assuming that they cannot do so. We do not support the argument that says, when referring to baths, "Well, they'll only put coal in it".
Lord Greaves: My Lords, I am grateful to the Minister for allowing me to intervene. The point I tried to make was that, while I agree entirely with what the Minister has said, the problem is that many of the existing quangos do not do that. In their operations they actually exclude local people.
Lord Filkin: My Lords, I thank the noble Lord for his comment.
Reverting to how we support local people to become effective participants in the process, we have established the Community Empowerment Fund aimed at equipping local people to join in with local strategic partnerships. That will make some contribution towards greater local participation.
Along with other noble Lords, I thoroughly enjoyed the contribution of my noble friend Lord Clark of Windermere. He sought to reposition the importance of landscaping, afforestation and trees. Until I spoke to my noble friend, I had not realised that the Forestry Commission is not active only in Scotland, but focuses on urban areas. I wish more strength both to his arm and to that of the commission for that involvement.
It is clear that trees enhance the quality of life. One has only to look at the success of some of the new towns and the emphasis they place on addressing the question of landscape architecture in order to improve the feel of those towns. Let us hope that the noble Lord and his agency are able to transform the quality of many of our urban environments. We wish him the best of luck also with regard to the 100,000 hectares of land unsuitable for anything other than cultivating trees that he mentioned in his remarks.
My noble friend Lord Rogers of Riverside reminded us that, while rural areas and issues are important, some 90 per cent of the people of Britain live in towns and cities. The quality of the physical environment and our public spaces, in terms of their visual appearance, the sense of security, cleanliness and enjoyment is extremely important to the success of Britain. We all know that when we visit Florence, Siena or Barcelona, it is a joy to walk around those urban spaces. We have to catch up with those cities and demonstrate that we can provide the same.
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In that respect, the Government and my noble and learned friend Lord Falconer are studying an initiative addressing the issue of open spaces. We are considering what more needs to be done in order to address the care of public spaces. We shall wait to see the outcome of those deliberations as a part of the Comprehensive Spending Review. However, that issue is certainly on the Government's agenda, as well it should be.
My noble friend also mentioned the importance of the quality of architectural and other skills leadership to urban regeneration. Again, I agree with his comments. I would mention in this context the creation of regional centres of excellence in each of the nine English regions to promote architectural design skills, working with the Commission for Architecture and the Built Environment. If I recall correctly, Sir Stuart Lipton is producing a report of the Urban Design Skills Working Group which will set out a plan of action to make progress in this area. We shall monitor its progress.
The noble Lord, Lord Best, spoke from one of the greatest depths of experience of any noble Lord in terms of the work on regeneration of the Joseph Rowntree Foundation carried out over the past 20 years or so. The House acknowledges the consistency of that work. From that experience, the noble Lord pointed out that it is essential to have a vibrant local economy; that is vital to provide local employment; and that one must have local ownership. All these are crucial and the Government endorse that thinking.
I thought he encapsulated very well the aim of turning areas from which people want to flee into ones where people want to stay. He was right symbolically, but it is more complicated than that. I was struck when I heard Sir Robin Wales, the leader and now the mayor of Newham, describe how he and his officials had stopped boasting that Newham was the poorest place in Britain. They want to turn Newham into a place where people want to come and to stay in rather than to flee as quickly as possible. If we are to avoid ghettoisation, then that will be necessary. Furthermore, it will be necessary if we are to avoid undue pressure being put on land in the green belts, a point mentioned by my noble friend Lord Rogers and other noble Lords.
The noble Lord, Lord Best, opened his remarks by discussing the issue of abandonment, which is absolutely critical on the Government's agenda, both for reasons of housing and regeneration. The Special Housing Market Renewal Fund is under consideration to tackle problems of low demand. It is recognised that regional housing markets will require interventions. Appropriate mechanisms are currently under discussion. I cite also compulsory purchase powers, but I acknowledge that those powers are in need of reform. Proposals will be taken forward as a part of the planning Green Paper.
My noble friend Lady Lockwood spoke interestingly about regarding multiculturalism as a strength, about the location of a university as a potential strength, and recognising that regeneration strategies have to try to identify what is unique in an area in terms of potential assets—canals and so forth—rather than simply to list the problems.

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With the leave of the House, I shall take a few more minutes in order to address all the issues that have been raised in our debate.
My noble friend Lord Evans of Temple Guiting spoke of the importance of regional and local museums and art galleries. The commission for museums and art galleries was tasked by the then Secretary of State at the Department for Culture, Media and Sport to study these issues. I am sure that consideration will be given, whether favourably or not, to the noble Lord's innovative bid for further funding, as was well publicised yesterday in the Guardian.
The right reverend Prelate the Bishop of St Albans reminded noble Lords that this is not an issue only for the Government or for local government; it is an issue for civic society. In other words, regeneration involves us all. He stressed the importance of volunteering and mentioned a whole range of volunteer groups, of which clearly the Church is one of the most influential. That, too, forms part of successful local regeneration.
The Local Government Association, in conjunction with the Department for Transport, Local Government and the Regions and the Home Office, produced in February 2002 the report, Faith in the Community, a guidance for partnership between local authorities and faith communities. It contains many wise words on these issues. He was worried about what was happening to the DTLR. The "T" is being lost from "DTLR" but "the Regions" remains with the rest of it and therefore the Government's commitment to regeneration remains as strong. It is, of course, a cross-government and a cross-departmental commitment.
The noble Baroness, Lady Billingham, illustrated how Corby—which most saw as a failed steel town, to put it too crudely—had a vision for transforming itself into a completely different place. That sense of vision of what can be done is an important part of successful regeneration. One has to identify where the opportunities are and provide skilled local leadership.
The noble Lord, Lord Clarke of Hampstead, referred to the market renewal pathfinder. I have spoken about that already and I shall not repeat what I said. I agree with his point about communication to local people and their involvement in the strategies, rather than something being done by agencies separate from them.
The noble Lord, Lord Smith of Leigh, spoke powerfully and with great experience about what has been happening in Wigan and about the importance of looking not only at residential but at retail and commercial areas of risk as well. We need to reflect on that point. There is no promise that SIGOMA will necessarily get all that it wants in any funding review, as the noble Lord will not be surprised to hear.
The noble Lord, Lord Corbett of Castle Vale, spoke from a lot of local knowledge. I agree with his point about not losing the experience of best practice in housing action trusts. If the skill and experience is in local communities and local projects, one of the roles of central government is to ensure that that experience
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is retailed to each other, is not lost and is reflected on. Ultimately, local communities have to learn how best to do it themselves.
As to the multiplicity of funding bodies, I have already spoken about the work of the regional coordination unit. The noble Lord, Lord Hardy, gave an eloquent description of his successful efforts to remove old slag heaps and to change some of our former mining areas into better places following the collapse of their industry.
Given the time, I shall not go into any further detail. I hope that I have commented on most points. I conclude with a sense of humility. The Government think that they have better strategies than they had for addressing regeneration. The fit between what has been said in the debate and what I have said from the Dispatch Box gives some hope that a consensus is developing. Nevertheless, we have to keep learning and we have to keep developing. It is therefore important that we use mechanisms such as the urban summit in October, when all areas will get together to discuss what has been learnt, and continue to reflect on how policy and practice, both at national and local level, need to change and improve to increase our success at regeneration.
Lord Woolmer of Leeds: My Lords, it has been a wide-ranging debate, as I thought it would be. It has been good humoured and has drawn upon the experience of many noble Lords. I am grateful to them for participating in the debate and for making it, I hope, a considerable success. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Small and Medium-sized Enterprises
7.34 p.m.
Baroness Farrington of Ribbleton: My Lords, before we commence the debate standing in the name of my noble friend Lord Harrison on small and medium-sized enterprises, it may be for the convenience of the House to know that the Speakers List was reissued earlier today and that the time limit for Back-Bench speakers has decreased to six minutes. I apologise for any inconvenience this may cause.
Lord Harrisonrose to call attention to the economic and social conditions necessary for the success of small and medium-sized enterprises; and to move for Papers.
The noble Lord said: My Lords,
"Businessmen are corrupt, cunning and cynical … dishonest, dumb and duplicitous … unethical, unprincipled and villainous to boot".
Not my words but a quotation from a book of literary criticism published in 2000 entitled The Representation of Business in English Literature. This fascinating essay analyses why business gets such a bad press in English literature, a cultural view which is itself replicated in all walks of British life and stifles our better appreciation of business. According to the book's authors, only in

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soaps like "Coronation Street" and "EastEnders" is an alternative vision of business people offered, where many of the soaps' main characters are depicted as utterly respectable smaller business people making wonderful contributions to all the lives around them.
I want to highlight the wonderful world of the smallest businesses, populated by sole traders, family and micro-businesses; to suggest that we must tackle the prejudices which give the negative view of business that I have mentioned; and to point to how we might all work together to disperse that cultural fog which disguises the true potential of small businesses in Britain today.
Perhaps I may give an example of how the contribution of small businesses is sometimes overlooked in our cultural life and in our policy making. The subject of corporate social responsibility in big business has rightly and recently become a fashionable study, highlighting the need for businesses to work sustainably and ethically within the local communities in which they find themselves. But small business people have been doing this for years. They give of their own free time to help local charities, to sit on local councils and to befriend both their customers and workforce. They are already in and of their local communities. We should acknowledge their pivotal role in local Britain today and their potential for fostering beneficial change.
I am proud that the Labour Party has itself undergone profound change in its attitude to business and to small firms in particular. Such change was needed and has manifested itself in the outstanding record of the Government since they came to office. They have promoted not only a fair society but a society with flair—1·3 million small business start-ups since 1997; SME survival rates the strongest for a decade; UK small firms enjoying the highest pre-tax profit margins in the European Union as a whole; and, according to the World Economic Forum, the UK is the eleventh best place in the world to start up a new business. The Government have also set up the pioneering Better Regulation Task Force to shred red tape under the former chairmanship of the noble Lord, Lord Haskins.
Chancellor Brown's handling of the macroeconomic environment, in which small businesses prosper, has been unparalleled. It was pre-figured by his bold stroke of handing interest rate decisions to an independent Bank of England. His recent budget combined macro-economic stability with specific measures targeted to help small firms as part of the Government's sensible strategy of developing public services of health, education and transport to strengthen the business environment. That in turn provides the profits to re-invest in those very same, life-enhancing public services—a virtuous circle that improves all our lives.
However, there is a caveat. I ask my noble friend the Minister whether the Budget decision to increase national insurance contributions was the wisest way to generate new finance for this much needed public investment? Raising income tax was less likely to affect
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labour intensive small businesses taking on new employees. In like vein, the very welcome cuts in corporation tax reward growing small and medium-size enterprises, but we should not forget the micro or sole trader who typically reports profits less frequently than larger SMEs. They also serve who stand and wait on local communities.
Splendid as the Budget was, we need to deepen further our understanding of the smallest businesses and of the enormously important role that they play in advancing other government objectives. For instance, the Government rightly laud the pivotal role of local shopping centres in keeping alive and vibrant local communities across Britain today. The painter, the plumber and the pizza-maker are all instrumental in holding together our local communities at greatest risk; and the local corner shop takes a place of pride in Britain—that happy island of Napoleonic shopkeepers. We must do everything that we can to help such SMEs to assist us in building vibrant villages in the countryside, successful suburbs and active inner cities.
Another tangible success of the Labour Government has been the setting up of the Small Business Service, ably led in its first years by David Irwin. With his departure, will the Government take the opportunity to see whether the SBS's culture is appropriate for future successes and challenges? For instance, the Small Business Service's promotion of small high-tech firms helpfully highlights their great potential for growth and development. But the SBS should also be zealous in defending the family business and the sole trader. Can my noble friend reveal the Government's thinking on the right balance that needs 'to be struck?
Welcome, too, is the strengthening of the powers of the Office of Fair Trading under the Enterprise Bill. The promotion of fair competition is vital for all good businesses. But will my noble friend accept that there has been a perception among the small business community that the OFT supports big business, sometimes at the expense of small firms, which also need guardian angels of fair competition. Similarly, it has been put to me that the Official Receiver has exercised his role with an over-legalistic approach, which sometimes neglects to understand the human frailty of small firms.
The Government rightly exhort Whitehall, in respect of the development of cross-cutting policies which might adversely affect SMEs, to "think small first". Will the Government ensure that that useful nostrum is spread, say, to the heads and governors of our schools, colleges and universities? Perhaps I may give an example. I have had occasion over many years to regret the absence in the classroom and lecture theatre of the role models of small firms and business people. When business is represented, the representatives are normally drawn from the larger business community—good in itself, but not the whole story. Some enlightened schools now invite in the local butcher, baker or candlestick-maker to tell their Miller's Tale of running small businesses. The object is to tutor and inspire the next generation in the noble art of small business.

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Will the Government give further encouragement to mobilising this vast army of visual aids for the young—Britain's small businesspeople? Recently, my 16 year-old daughter, participating in the Young Enterprise Scheme, selling goods on the evening of the school play, was confronted with a customer who wanted to buy her remaining stock on display. No problem—except that he had only euros on him with which to make any purchase. My daughter—suffering a father who is a euro-anorak—quickly closed the deal, knowing exactly the exchange value of the euro for the pound.
I tell this story not only to show that the euro is entering Britain slowly but surely, but also to suggest that the small business community itself must undergo cultural change. Hitherto, SMEs have been the most sceptical group in society concerning the advent of the single currency. This must stop—and so, too, must their scepticism about Europe and its blossoming single market; otherwise, fleeting opportunities to open up new markets for British goods and services will be squandered and lost. Happily, there is evidence that the SME community is now engaged in hand-to-hand trading with our European rivals and partners. The May 2002 survey of small business by the Federation of Small Businesses testifies not only to the good, rude health of Britain's small firms —essential at a time of some economic slow-down—but also to the fact that 22 per cent of them export into the EU, an encouraging increase on the previous survey.
The Government must foster this renewed spirit of enterprise, and must build upon Prime Minister Blair's pioneering work at the Lisbon Council in establishing the European Charter for small businesses. In particular, the Government must ensure that the development of the single European market—the direct through-ball for British jobs and prosperity—is a fair and level playing pitch for small, as well as big businesses. I give as an example the proposed prospectus directive, which rightly wants to improve the access to cheap money for business. As currently formulated, however, it may destroy its own desirable objectives. Making listing on the aim market prohibitively expensive is not a way to help small businesses gain access to new sources of finance.
Will the Government also listen to the thoughts of the CBI's small firms service on effecting tax changes whose purport will be to enhance the raising of equity capital as an alternative to traditional bank loans?
Perhaps I may also ask my noble friend, apropos of the single market, how successfully the Government believe their legislation regarding late payment on commercial debt is operating. To what extent will British legislation need to be re-fashioned to make it compatible with the relevant EU directive? As my noble friend will know, the Forum of Private Business, among others, canvassed assiduously for the implementation of this Act and of the directive.
Finally, I congratulate the Government, in the form of Patricia Hewitt and Nigel Griffiths, who are doughty advocates of changing the culture of our high street banks to make them more SME friendly. Would
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they, and my noble friend the Minister, turn their attention to the problems of finance for small businesses in deprived communities, as highlighted by the excellent Bank of England ninth report, published in April, on the financing of small firms? Here we learn that lending to small firms and deprived communities in 2001 grew at a slower rate than in the general population of Britain's small and medium enterprises; that the average lending margin was higher; and that the total amount lent was smaller than the average amount lent in the country as a whole. These problems are compounded by the fact that proportionately more businesses in deprived areas lie in sectors such as retail, transport, and some service sectors, which, regrettably, do not attract eligibility for the small firms loan guarantee scheme. Can the Government respond to this problem? If they can, it would mark a genuine partnership of purpose. Helping these particular small firms will help the Government's general regeneration policies—in this instance providing the wattle and daub for building a weatherproof economic strength.
The Government are a friend of small business. But they need to deepen that friendship even more, and to understand the sometimes mercurial culture that informs Britain's large army of small business entrepreneurs. Novel and innovative policies, combined with sound financial management, have long put paid to the fiction that this Government are inimical to business, and to small business in particular. We are now well past the opening chapters and into the heart of the text that the Government are writing for Britain's small firms. Fortunately for us, SMEs are now literally at the heart of a page-turning Britain, and are leading in an epoch-making Europe. My Lords, I beg to move for Papers.
7.49 p.m.
Lord Brooke of Sutton Mandeville: My Lords, it is my privilege for the second time today to be the first noble Lord participating in a debate to congratulate the initiator of the debate, in this case the noble Lord, Lord Harrison. I shall in a moment query the Labour Party's logic and motivation in holding this debate. However, I salute the noble Lord for the enchanting way in which he started it.
My sole qualification to speak in this debate is that for 18 years, between 1961 and 1979—when I joined my noble friend Lady Thatcher's first government as its most junior member—I worked in a small business. It employed 10 people in three countries when I joined it in order to create the fourth country office, but it employed 200 people in 12 countries when I left on what turned out to be indefinite leave of absence. Throughout that period, I met a monthly and ascending payroll and was monitored by profit budgeting. For the first 13 years, I was in a business dominated by its founder, who held 65 per cent of the stock. For the final five years. I led the outcome of a management buy-out in which 50 colleagues refinanced the business in order to buy out the founder. He will be 80 this year. The firm still bears his name and it now employs 700 people. So it is still a

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medium-sized enterprise, and it is one of the four largest firms of its kind in the world. We must have done something right.
I cannot help feeling that the Government Benches are leading with their chin in this debate. Perhaps they believe their own rhetoric about their relationship with business. Perhaps they do not realise that business is gradually turning against them. They are of course great ones for deadlines, as Dr Johnson once said of a convicted man. Just as Mr Campbell was saying that spin was out and just as some of us were beginning to forget the Treasury verdict on Hugh Dalton's Budget leak and consequent resignation in the 1940s which the Treasury regarded as a sign of the divine providence which watches over the affairs of this country, the wires were loud with serial Budget leaks about all the goodies business were going to enjoy from this year's Budget. Perhaps I may use this debate to give a First Reading to "Brooke's Law" that serial leaks of small concessions to business are harbingers of a much larger but still undisclosed whammy yet to come. The Treasury overdid itself this year with forecasts of miniaturised largesse, and of course I acknowledge that some of it was welcome. Perhaps the miniaturised largesse before the whammy is the cause of this debate today. Perhaps it is the low interest rates and the low inflation.
Last month, on 22nd April, the Financial Times—for which, more than 40 years ago, I used to work as Swiss correspondent—said:
"Ms Hewitt will on Monday tell employers Labour has delivered low inflation, low interest rates and 1·5 million new jobs".
In the government of my noble friend Lady Thatcher, it was of course recognised that stable and helpful economic conditions were necessary for economic success. However, credit for the jobs was given to the businessmen and the employers. When long ago in London I went from one other employee besides myself to three, and then to five, and then to seven, it seemed to me that it was I who was taking the risk and not the Lords of the Treasury. However, as 1·5 million new jobs is a round number, I cannot help noticing the red tape bill in Labour's first term as calculated from the Government's own regulatory impact assessments and by the British Chambers of Commerce. That figure is £15 billion, also a round number, which does not even include the financial cost of the national minimum wage.
The casualty in my speech, from suddenly being slimmed down during the last debate from eight minutes to six, was the passage devoted to the NIC consequences for the self-employed of the recent Budget. Happily, however, the noble Lord, Lord Harrison, has dealt with that for me.
I turn briefly to the competition White Paper which underlay the provisions in the Enterprise Bill now before Parliament. The CBI has pointed out that the White Paper proposals will lead to divergence from the EU system. Speaking as one who laboured on the Committee stage in another place on the Competition Act 1998, where Ministers emphasised that that
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legislation would bring us into line with Europe, I am bound to wonder why we bothered. Less politely, the CBI said the divergence was "particularly confusing and unwelcome".
While on the subject of the 1998 Act, I recall with rich irony an evening when the All-Party Parliamentary Paper Industry group was dining with the industry and one of the Labour MPs present said generously that he would happily lead an all-party delegation to see Ministers on some aspect of competition policy as it affected the paper industry. I did remark quietly as a representative of another party that before I joined such a delegation. I would like to hear Labour Members explain why, at all stages of the Competition Bill in the Commons, they had voted for penal fines for some offences amounting to 10 per cent of the sales of the offending company. Answer came there none.
Finally, at the heart of any small business is the single mindedness an entrepreneur has to display if his business is to thrive. I close with a quotation from David Arculus, the successor to the noble Lord, Lord Haskins, as chairman of the Better Regulation Task Force in April this year. He wrote in the Financial Times:
"When researching our report we asked a Government department that already gives advice to employers whether it could also cover employment regulations. It replied it could not possibly know everything there was to know about employment regulations. Yet that is exactly what government expects of employers. That is the crux of the problem: too few Government policymakers know what it is like to run a business".
In more senses than one, I rest my case.
7.56 p.m.
Lord Graham of Edmonton: My Lords, I thank my noble friend Lord Harrison for giving us this opportunity. It is also a pleasure to follow the noble Lord, Lord Brooke. I think that he and I hold a record in the other place. In 1981, we served in Committee for eight months continuously, taking both the Education Act 1981 and the Local Government and Planning (Amendment) Act 1981 through the House. It was a pleasure. He takes great pride in the support that the Conservative Party has given to small business. The trouble is that many of them were large businesses that were reduced to small ones by the previous government's policies. However, I cannot generalise or plead that small businesses are wholly content with the Government's policies. Small businesses are never wholly content, and never will be.
Before I was the Chief Whip, I was the parliamentary consultant to the Federation of Master Builders and to the National Market Traders Federation. I should therefore like to quote to the House, and ask the Minister to take note of, some of the matters concerning those organisations. The Federation of Master Builders is very concerned about the effect of the black economy—cowboy traders—on its business. Master builders are very proud, independent and successful people; they are survivors; and they will survive. However, they believe it grossly unfair that cowboy traders are able to quote prices

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exclusive of VAT to people wishing to build a new extension or new house. They have therefore asked me to call attention to the fact that they would very much like the VAT rate on repair, maintenance and improvement—known as RMI—to be reduced to 5 per cent. They believe that that would eliminate the commercial advantage enjoyed by traders who do not pay VAT.
I ask the Minister to comment, if not today then later, on the comparable situation in France. Following the labour-intensive industries route, the French Government have reduced VAT on RMI to 5·5 per cent. The increase in the total RMI output of bona fide firms since August 1999 has created 54,000 new jobs. I think that noble Lords can appreciate the difficulty facing legitimate, honest and reliable builders having to compete with others who, although perhaps equally good builders, do not pay VAT. Builders in the federation are not asking to be let off scot-free; they are asking to pay a sensible amount. I ask the Minister to tell us whether that is possible. The federation also tells me that the UK Government brokered the Isle of Man's wish to reduce VAT for RMI work, as in France. If they can do that in the Isle of Man, I think that they can do it elsewhere. The federation has asked me to draw attention to the Construction Industry Scheme and to employment status. The Government should have a single view of the employment status of individuals within the construction industry rather than the Inland Revenue and Employment Services taking different views as at present. I should like the Minister to comment on that matter if possible.
About two weeks ago, the noble Lord, Lord Skelmersdale, helpfully drew attention to the lack of consultation procedures for the building industry. I am sure that the Minister will have noted that that is an aggravating factor. Builders have drawn my attention to the enormous increase in legislation over the past 10 years, especially as regards health and safety, employment and social issues. Many of the objectives are laudable but they have not necessarily led to improvements, just to more red tape.
Members of the National Market Traders Federation are depressed due to the 24 hours a day, seven days a week trading which occurs in large, out-of-town outlets and which damages town centre trading. The federation would like to see the Government encourage local authorities to spend a little more effort on keeping alive a declining markets industry. I attended the market traders' annual conference two or three weeks ago. They will survive. Everyone here delights in walking round a town market, but the conditions under which they operate are deteriorating. Market traders want local authorities to invest more money in markets to smarten them up. I hope that the Government will take on board in their interdepartmental discussions the fact that the market industry needs if not to be loved, at least to be respected and encouraged. I believe that that would go a long way to encourage many small businessmen and businesswomen to realise that the Government are on their side.
8.2 p.m.
Baroness Byford: My Lords, in the simplest terms the economics of any business consist of income and expenditure. In a business large enough to have waged or salaried staff the expenditure will include wages, salaries and associated on-costs. Some of those will be direct: employers' contribution to pensions and employers' national insurance bills. Others will be indirect: the cost of administering PAYE; sickness benefit, maternity benefit and so on. We must not forget the indirect costs of keeping up to date with new Acts, statutory instruments, European directives and government regulations, all of which have to be studied lest they affect the businesses concerned.
Last year alone some 4,642 new regulations were introduced. I remind the Minister that when he responded to a debate in May 1999 the average figure was around 3,300. Even if 80 per cent of them replace old regulations, they still have to be read, the subtle nuances of government-speak appreciated and their message implemented. Those which are completely new require specialist—for which I read "expensive" — clarification and costly implementation. I refer, for example, to the physical agents directive or the forthcoming regulations on battery cage construction.
In May 2002, the report of the Better Regulation Task Force—my noble friend Lord Brooke has already referred to that body—found it necessary to recommend that civil servants dealing with employment law should spend time finding out how regulations impact on small businesses. I refer also to very small businesses in that regard. I hope that the Minister will clarify the Government's definition of a small business. Presumably the members of the task force feel that civil servants do not understand what they are doing.
The Country Land and Business Association has been warning for years of the counterproductive effects, both direct and indirect, of the proliferation of regulation. Moreover, rural small businesses miss out on some of the benefits open to their urban cousins. Mark Pendlington, writing in that association's Agenda magazine put it very well. He wrote that,
"by definition the rural business can be isolated and miss cut on support because of a real or perceived lack of access to the assistance that urban based businesses may take for granted".
I wish to discuss particularly food and agriculture. British farmers have to rear their animals in accordance with animal welfare laws which do not apply in many other countries. British farmers have had to absorb the cost of removing and scrapping specified risk material and of cattle passports and animal traceability schemes. They have to comply with the rules on pesticide use, slurry disposal and sheep dipping which are not enforced throughout the world.
I wonder whether noble Lords are aware that just recently the Women's Institute has been caught up in this maelstrom. The Financial Services Authority has increased the registration fee from £25 for each market to £240. The reason is that hitherto it was a nominal charge as the Government subsidised market regulation. Now the Financial Services Authority is

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entirely self-financing and the WI is in effect paying to maintain its limited liability status. What are we coming to when we penalise not-for-profit organisations? Does the Minister accept that a rise from £25 to £240 is unreasonable?
Most British farmers qualify as small businesses both in terms of numbers of employees and issued share capital. Most of their output, however, goes to processors and retailers, many of whom are quite large and are definitely not small businesses. Yet they do not have to source their purchases according to the rules under which British farmers have to operate. For example, there is no rule which restricts all imported pork to that produced under similar welfare restrictions here, nor any specification that imported chickens must be reared in congenial conditions. Imagine my disbelief when I read that the Food Standards Agency is planning a survey of salmonella contamination of eggs but has specifically excluded imported eggs.
All our farmers' output is subject to inspection and testing at every stage of the process. They do not mind that but we know that such rigour does not apply in foreign countries. I refer your Lordships to parliamentary Question 8099 answered on 21st May in which the Minister admitted that the European Commission's Food and Veterinary Office did not carry out a further inspection on poultry meat production in 2001 in France despite having found irregularities in the procedures in 2000.
I should like to add my thanks to the noble Lord, Lord Harrison, for giving us the opportunity to air our concerns and to express our support for small and medium-sized enterprises both rural and urban. I believe that we all acknowledge their importance within their local communities.
8.8 p.m.
Lord Mitchell: My Lords, I, too, thank my noble friend Lord Harrison for introducing this timely debate. I stand before your Lordships as an unreconstructed serial entrepreneur. I have the right background for the job—second generation immigrant, chucked out of school at 16 plus an unquenchable desire to be my own boss.
Many believe that entrepreneurs are driven solely by the desire to make millions. That is why taxes should be low and incentives high. However, I can tell noble Lords that as regards my own experience independence has been my constant motivator. That leads me to my main point. Entrepreneurs are the very antithesis of corporate man. Where the corporate man wants structure, logic and well produced business plans, the entrepreneur thrives on risk and expects commensurate rewards. Few entrepreneurs start off writing business plans—what they know in their guts does not need to be committed to a paper. That is why I feel just a little sceptical when I hear politicians, journalists and civil servants pontificating about an entrepreneurial society when they are the last ones who would ever consider putting their own necks on the block.
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I must confess that I was surprised to read the announcement this weekend about the newly appointed independent board members of the DTI. Their supposed job is to introduce innovation and creative thinking into the department. One might have thought that our outstanding entrepreneurs would have been much more suitable to do the job. Not a chance. With a couple of notable exceptions, it is the same old corporate placemen—the non-risk-taking establishment and the professional committee men and women. How many of them have risked their own capital starting their own businesses?
Being an entrepreneur means taking an extra mortgage on your house. It means borrowing from friends. It means putting your very future at stake. It means sleepless nights and panic attacks. It means being passionate about your company. And nothing can describe that gut-wrenching feeling that all entrepreneurs will recognise, when meeting the current month's payroll looks shaky, when a major customer is late in paying or when the bank manager gives you that disbelieving look and asks for even more security. And, my Lords, if you have not been there, you cannot imagine it.
I have run many businesses. Some have failed; one of them—a restaurant in Soho—failed spectacularly. But three have been successful in the IT services sector and one of them became a fully quoted company on the London Stock Exchange. In each case I was there at the beginning—buying stamps, brewing coffee and making hundreds of phone calls a day. The best moments come from watching something small and vulnerable turning into a market leader, or watching young people seizing responsibility and growing by the day. For those with the nerve it is a wonderful experience.
This debate involves the social issues surrounding small to medium-sized enterprises; I would like to address a couple of them. In the corporate world and in the public sector, I see fear of failure as a prime inhibitor. Today, if you are a senior manager on a good package, with a fully provided pension and a large Jaguar in the garage, why take chances? Keep your head down and your nose clean and do not get into trouble.
Entrepreneurs think differently. Even when they are successful they are still prepared to take risks. You have only to look at Sir Richard Branson to recognise that he thrives on new opportunities and eschews the corporate world. Perhaps that is the reason why immigrants are such enthusiastic creators of new businesses. They do not understand the established world and have no interest in the status quo; plus the fact that many corporate avenues are barred to them because they are newly arrived, lack the contacts or the proper education or are even discriminated against. So they do it themselves.
There is also another social attribute that helps to make many entrepreneurs successful—I suspect that it may come as a bit of a surprise to noble Lords. It is the lack of a university education. Just look at some of our famous entrepreneurs: Sir Alan Sugar and Sir Richard

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Branson and, in America, Bill Gates, Michael Dell and Larry Ellison of Oracle. Not a university degree between them. Indeed, it was Larry Ellison who, addressing the graduating class at Yale University last year, called the class a group of losers. He stated:
"a cap and gown will keep you down",
and said that they will never get really rich. Of course, he slightly had his tongue in his cheek. However, the thrusting dynamic entrepreneur—the man or woman who dreams of making billions—cannot adjust to sitting in a university lecture room when they could be out there moving and shaking.
On a micro-level, the Government have done much to promote entrepreneurial business. Corporation tax has been reduced and tax thresholds have been raised. And from my own selfish point of view, the introduction of capital gains tax taper relief has certainly been fantastic.
Hold shares in a qualifying company for two years and under a Labour government you will pay 10 per cent CGT. Now that is something that any entrepreneur can relate to. We should just remember where CCT was in April 1997: 40 per cent, and that from the so-called party of enterprise.
Equally, on a macro-level, the SME businessman has much to thank the Government for. Nothing can encourage risk-taking and investment more than the confidence that has emanated from the low inflation, low interest rate and consistent growth economy that has prevailed in this country.
I read a lot about the so-called negative effects of regulation but I am not sure how valid that is. Of course, regulation is a pain but every country is regulated—even America—and we are much less bureaucratised than many of our European competitors. My view is that dealing with red tape is like dealing with London traffic—you factor it into the equation.
One of the greatest entrepreneurs in this country is James Dyson, who has built up an amazing business in the domestic appliances sector. Using lateral thinking technology, he has taken on the global leaders and has emerged as an international winner. His biggest plea to the Government is to make tax allowances on research and development even more beneficial.
Another entrepreneur who I know well is Edward Atkin. The grandson of an immigrant, Mr Atkin has created the Avent baby products range, which has been highly successful.
The Government have been a good friend to the entrepreneur. Business taxes are low, the gains from taking risks are rewarded and appreciated and the economy is as predictable and encouraging as at any time in my lifetime.
8.15 p.m.
Lord MacGregor of Pulham Market: My Lords, I, too, warmly congratulate the noble Lord, Lord Harrison, on introducing this debate. I warmly support and endorse the sentiments—and many of the policies—that he expressed. However, I must tell him that none of that is new.
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About 20 years ago, I was Minister for Small Businesses—or, as some people described me, the small Minister for businesses. At that time, the atmosphere and culture was wholly hostile to enterprise, businesses and the self-employed. The history of this country has been somewhat hostile. I remember going round the country talking to loads of people, all of whom said, "Why are you putting the emphasis on small businesses? It will not create any new employment. New employment is created by the public sector, big companies or nationalised industries". I remember going to schools and finding that no career officers would encourage anyone to become self-employed or to go into small businesses. We had to change the culture, adopt a new tone and take many policy decisions that would change the whole atmosphere.
I am pleased to say—I am sure that the noble Lord, Lord Harrison, will acknowledge this—that, in contrast with that time, most new jobs are currently created by the self-employed or small businesses. Much of our economic competitiveness has been brought about by very small businesses, by growing businesses, by venture capital and so on. The policies that we adopted were the type of policies that the noble Lord discussed. We started the small firms service, adopted many of the relevant tax policies and started the necessary work in schools. I am delighted that in time that has changed the culture.
I acknowledge that the Government have accepted that the culture has changed. But—my goodness—I do not think that 20 years ago we would have heard speeches from the Labour Party along the lines of those delivered by the noble Lords, Lord Harrison and Lord Mitchell. I am delighted that that culture has changed and that we brought it about.
Sometimes the tone is not that which we have heard this evening. I fear that rather too often Ministers make comments ranging from a lack of sympathy and understanding of small businesses to aggressive attitudes, attacks and outright hostility. That tone is important, as we have seen in other areas in which the Government have gone wrong.
I want to concentrate on the policies and to discuss examples in which the position has become cumulatively worse during the past five years. The first example is that of tax. Some tax increases—stealth taxes—slowly have an effect on businesses. The best example that I can think of is that of the removal of ACT and the effect on pension funds—there was a withdrawal of £5 billion a year from those funds. I know that other factors are involved but we are now seeing the cumulative impact of that £5 billion a year on pensions. There are increasing costs on employers, who are changing their pension policies, which makes it more difficult to provide pensions for employees in future. That is an example of a tax whose immediate effect was not noticed but—my goodness—it is having a big effect now.
Another example is that of successive increases in fuel duty. It was not until the outburst from road hauliers last September—most road hauliers are still

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small businesses—that we became aware of that. The impact of those increases on hauliers over a period became so heavy that there was that enormous campaign, which caused the Government to change their mind. It was only when that happened that tax policies changed.
There was also a good example in this year's Budget, which was briefly referred to earlier. I recognise and applaud some of the many new measures that will help small businesses, including the reduction in corporation tax and the enterprise and innovative measures. Next year, they add up to tax relief of about £800 million. The impact of national insurance contributions on employers and the self-employed amounts to £4·5 billion. The increase in employees' national insurance is a cost to employers because it will encourage employees to ask for higher wages. Therefore, there is an increase of £8 billion and a reduction of £800 million. No wonder many businesses are now complaining that this was an anti-enterprise Budget.
The other area to which I want to refer is regulation. It has already been mentioned. Recently the Institute of Directors, of which I am a council member, carried out a survey of its members. It asked:
"How do you assess the changes in the burden of red tape relating to PAYE and other payroll matters over the past five years?"
Fifty-three per cent thought that it was much heavier; 31 per cent, a little heavier; and 2 per cent thought that it was lighter. With regard to employment law other than payroll, 75 per cent believed that it was much heavier; 18 per cent, heavier; and only 2 per cent lighter.
We have already heard quoted the estimates of the British Chambers of Commerce. The Institute of Directors said that the total burden on employers of some recent regulations is, at the minimum, £6 billion, and that is based on the Government's own estimates. These are huge figures. We have already heard about the 4,642 extra regulations brought in last year. Some of them are massive. For example, one that I have just come across—the TSE (England) Regulations for farmers—has 89 pages of detailed legislation. No farmer will ever be able to cope with all that. And a cumulative burden will be coming. Therefore, I believe that the Government's heart is in the right place but that too many of the measures that they are introducing will bring about the reverse of what they intend to achieve.
I finish with the following point. When I was Secretary of State for Education, there was great concern among head teachers and teachers in schools about the amount of material that came from the Department of Education in connection with the introduction of the national curriculum. My officials always said to me, "No, Secretary of State, they are wrong. There isn't very much". I decided to put every document that was sent to schools from my department and others on my window shelf. The pile grew and grew by the week. It was a very good illustration of what my noble friend Lord Brooke was
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saying; that is, far too often governments and civil servants do not understand the difficulties that they create for small businesses. That is why I believe that, although great progress has been made with regard to the culture, there is still much to be done in relation to the policies.
8.22 p.m.
Lord Borrie: My Lords, I look forward, in a few weeks' time, to welcoming the Second Reading in this House of the Government's Enterprise Bill. I believe that it provides valuable strengthened powers for the competition authorities. Like my noble friend Lord Harrison, who so helpfully initiated the debate tonight, I believe that that will be beneficial for both consumers and business and, in particular, for small and medium-sized enterprises.
Having watched or read the proceedings in the other place, I was sorry to notice that in the briefings for the Bill the CBI adopted a very negative attitude towards a number of the Bill's proposals. Even in 2002, the CBI seems to find it very difficult to get away from the old image of representing the interests of big business rather than business in general. It seems to me that SMEs need a truly competitive environment. If small and medium-sized businesses are to make headway in an industry where one or two major firms are dominant and intent, through exclusionary practices, to keep out as far as possible new rivals, a positive competition policy, enforced by strong competition authorities, is essential.
In Part 4 of the Bill, greater powers are given to the Office of Fair Trading to scrutinise markets throughout the economy to see whether or not competition is working well and, if it is not, to take appropriate action, such as making references to the Competition Commission. What does the CBI say? Does it welcome that? No; it expresses anxiety that,
"an enlarged and empowered OFT will cast its net far and wide looking for any possible behaviour or structure that could be construed as anti-competitive".
The CBI wants, and wants its spokesmen in the Conservative Party in the other place—I hope that it will not happen here—to put shackles on the Office of Fair Trading. In doing so, I do not believe that it is speaking for small and medium-sized enterprises, which are obviously those which suffer most from anticompetitive practices.
I now turn to a matter with which, I know from experience, small and medium-sized enterprises were most concerned during the 1980s and 1990s; that is, the attitude towards them—unhelpful, as they would often describe it—of the banks and, in particular, the clearing banks. I am so glad that within a year of the Labour Government being elected in 1997, my right honourable friend Gordon Brown initiated the Cruickshank inquiry. Cruickshank reported in March 2000. He said that, while the market for personal banking services was getting better from the customer's point of view, the market for small business banking services was much more problematic, with

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very little prospect of effective competition. He advocated a full-blown inquiry by the Competition Commission. Significantly, he added,
"with the possibility of structural remedies".
By "structural remedies", he meant "divestment".
My right honourable friend Gordon Brown made the recommended reference more or less immediately after Cruickshank reported in 2000. As your Lordships know, the large, if not huge, report of the Competition Commission was published in March this year. I believe I can say that the Government accepted the commission's recommendations in full. We are fortunate that the Minister who is to answer the debate tonight himself repeated the Chancellor's Statement in this House on 14th March.
I believe that over time small and medium-sized enterprises will benefit from the commission's detailed recommendations: for example, that charges should be more transparent; that switching accounts from one bank to another should be facilitated; and that banks should provide a portable credit history which the customer can carry from one bank to another. The most controversial proposal was the transitional requirement that banks must pay small businesses a minimum interest on current accounts which at present would be a modest minimum interest rate of 1·5 per cent.
There were, of course, squeals of horror from the banking community. But I also noticed that their share prices went up. It reminded me of the old saying that if you see a banker jump out of a window, jump after him—there is bound to be a profit in it. However, I have some sympathy with the banker who was reported as saying that the minimum interest rate on current accounts that banks had to pay amounted to price regulation and had nothing to do with promoting competition.
The big question is whether the other changes—some of which I have mentioned—will somehow be enough to entice into the market new providers of banking services so that small businesses have some choice and do not need to put up with the bad treatment that they received for several decades. I know that very few of the old building societies which have converted into banks over the past 10 years have wanted to enter the small business market. I know that the Woolwich, of which I was a non-executive director throughout most of the 1990s, certainly did not want to do so.
What will entice alternative providers into the market? Governments, government agencies and competition authorities can create improved conditions for new entrants and can make competition more feasible in practice; but they cannot produce new competitors out of thin air. They cannot ensure that new, effective competitors will emerge. As a question principally to my noble friend the Minister, I wonder whether at least one of the proposals mooted before the Competition Commission and rejected by it and by the Government would make for more competition and more choice for SMEs—that is, some compulsory divestment of small and medium-sized enterprise banking business to others, just as, I believe, Cruickshank wanted in 2000.
8.29 p.m.
Baroness Platt of Writtle: My Lords, I declare my interest—already registered, of course—as a non-executive director of our small family firm, which has been serving its customers to the best of its ability for more than 75 years. I believe that that is the key to the success of any business. Governments cannot run business, as has been said several times tonight. Their experience does not lie in that direction. The less that politicians and civil servants interfere and regulate the better. As Charles Dunstone of Carphone Warehouse has said, fewer than 5 per cent of people are dishonest. It is much better to rely on the principle that 95 per cent are honest. There is too much regulation, which results in senior management—who are a bit thin on the ground in SMEs—having to spend large amounts of their time swotting it up instead of concentrating on serving their customers thoughtfully and efficiently. All strength to the arm of the noble Lord, Lord Haskins. Over-regulation can also result in a litigious society, which can stultify innovation and risk-taking in improving customer service.
In serving their customers, firms always need to keep their eyes on the applications of new technology to increase their efficiency and productivity and keep their prices competitive in a global economy. That means the need to recruit innovative engineers to introduce new ideas. I am a chartered engineer, so of course I am in favour of more graduates entering our profession and joining small firms. However, their greatest need is often at the incorporated and technician level. From all sides, we hear of skill shortages in engineering. Most firms rely on engineering skills somewhere, whether they produce pure engineering products, such as household equipment, or food, drink, pharmaceuticals, textiles or sporting kit. In all those areas, automation is king. If businesses are to be competitive, they need innovative engineers behind them. As Sir Peter Williams, chairman of the new Engineering and Technology Board, quoted recently from Disraeli:
"Upon the education of the people of this country the fate of this country depends".
That is just as true today. As Sir Peter says,
"not enough young people are choosing careers in science and engineering".
He also points out that:
"Industry needs bright young people, well trained in one of any number of relevant disciplines, with good communication skills, numerate and prepared to act in teams".
Careers advisers—now perhaps called Connexions, I understand—need experience in those areas if they are to advise young people in a practical way. However, as the National Institute for Careers Education and Counselling reports in its survey, Choosing Science at 16:
"The majority of careers advisers were graduates with humanities or social science backgrounds. One in 10 had science degrees, all in biological subjects, and there were two engineers; there were no graduates in maths or physical science".
That is not good enough. The balance is wrong. Something needs to be done quickly, or it will become a recipe for industrial disaster in the UK. I am all for

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the initiatives that the noble Lord, Lord Harrison, referred to earlier, with young entrepreneurs going into schools. That is good.
Reading the Government's paper on 14 to 19 year-olds, I am horrified by the suggestion that design and technology may become an optional subject. The subject is of value to children of all abilities, but especially to middle-ability children who go on to colleges of further education for technical qualifications and are of considerable importance to the success of small and medium-sized enterprises, who can continue their training to serve the firm and its customers well and efficiently. I hope that proposal is not adopted.
I declare a second unpaid interest as patron of the WISE campaign—Women Into Science and Engineering. The time available for this speech is running out, but I must emphasise the importance of encouraging girls into these fields of work. Only 2 per cent of those taking modern apprenticeships are girls, yet women are 52 per cent of the population. WISE urgently needs government support in its work on outlook courses to encourage 13 to 14 year-old girls to see that these apprenticeships will lead to well paid and interesting careers and to go for them.
I am grateful to the noble Lord, Lord Harrison, for raising this important subject and look forward to the Government's response. I hope that I can stay to the end of the debate, but it started late and I have to catch a train, so I apologise to the House if I am not able to stay.
8.35 p.m.
Lord Hodgson of Astley Abbotts: My Lords, I join others in thanking the noble Lord, Lord Harrison, for giving us the chance to discuss this important topic. In particular I thank him for drawing attention to the prospectus directive. I hope that the Minister was listening carefully to what he said about the dangers of that one-size-fits-all idea. I also thank him for dealing with the question of the national insurance increase, which the Government put over as a 1 per cent increase, whereas of course it is a 10 per cent increase—from 10 per cent to 11 per cent.
Despite the persuasive effort of Labour Members to put a positive spin on the Labour Party's attitude towards small and medium-sized business, out in the country a large proportion of small and medium-sized firms are highly disillusioned with what the Government have served up for them. I am not entirely surprised about that, because large sections of the Labour Party still regard business as a zero-sum activity in which for every winner there must be a loser. Nowhere is that suspicion stronger than with small business. For many in the Labour Party, the more that these fundamentally untrustworthy businesses can be
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enmeshed in red tape, the better. Even at the higher levels of the Government, there is a continued obsession with command and control. As the noble Lord, Lord Mitchell, pointed out, smaller businesses are harder to command and control than larger ones, so there, too, there is a readiness to allow the tide of regulation to flow on unchecked.
What I find most surprising is how careless—and I use that word advisedly—this Labour Government have been about the preservation of our manufacturing base. I had assumed that with its historic links in the industrial towns of the Midlands and the North, the Labour Party would be more sensitive to the damage done to the manufacturing sector by the burden of regulation and by the Government's general economic policies, in particular the exchange rate that they have pursued, the result of which is that in March 2002 manufacturing output in this country was lower than for any month since 1994. I should have remembered that new Labour is not an industrially rooted party; it is an Islington-based, guacamole-eating, M25-centric party.
I shall deal with the burden of regulation as it is faced by small businesses, which is still increasing. Many of the regulations may be unobjectionable of themselves—they may even be welcome—but taken as a whole they represent a significant diversion of economic activity and effort. As my noble friend Lord MacGregor has pointed out, different Ministers and their civil servants produce regulations for matters affecting their sphere of responsibility. No one ever appears to stand back and look at the overall accumulating burden and consider the overall cost benefit to the country as a whole. An aeon ago, the Prime Minister promised us joined-up government. This is an area that would greatly benefit from such an approach.
I shall give the Minister a few quick examples in which the moves from good practice to statute law have increased the burden of red tape with no commensurate benefit to employer or employee. The first is the Employment Relations Act 1999, with its provisions on time off for dependants. Secondly, the privacy at work regulations, under the ECHR, are a gold-plated UK statute not matched anywhere else in the EU. The third example is the Data Protection Act and the provisions for unregulated employment records. Fourthly, on the mileage to emissions basis for car tax, contradictions still exist between VAT regulations and Inland Revenue rules. Consultants have made a fortune out of firms with only a minimal impact on the environment.
Those are historic examples. I hope that the Minister will be able to give us some views on the upcoming directives, including the physical agents directive, noise and vibration at work—another large red tape opportunity—and the directors' liability for corporate manslaughter.

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I shall quote a letter that I have received, which perfectly summarises the position of many small businessmen:
"My overall point is that this Government has increasingly shifted tasks and responsibilities onto the shoulders of business and I do not know how much more it can take before losing its competitive edge and being seriously damaged.…
I am a trustee director of a café and a book and gift shop and the amount of regulatory bumph that comes through would sink the QE II in a month.
Tax is not a particular problem as we are a charity but there is an overall problem of constantly having to watch that we ate not infringing Safety at Work, Health and Hygiene, Training requirements, Minimum Wages, Junior Helpers, VAT, Public Liability, Environmental Issues … Staff Advertising and Recruitment, Staff Dismissal, Employment Contracts and a host of other regulations. All these may be laudable in themselves but take up so much time and effort as well as costing money in obtaining legal advice that one wonders sometimes if it is all worth it"
What is the answer? One way may be to use the legal concept of the actions of a reasonable man. Start-up businesses or small businesses below a certain size would have the shelter of a legal umbrella of what a "reasonable man would do in the circumstances". That would enable cowboy employers to be stopped and permit the overwhelming proportion of sensible, serious, small businessmen to get on with their wealth-creation roles without a huge and increasing burden of red tape.
8.41 p.m.
Lord Randall of St Budeaux: My Lords, I join the list of Peers who have thanked the noble Lord, Lord Harrison, for establishing this debate. I shall stick to the title of the debate which refers to the conditions necessary for the success of SMEs. The target for SMEs arose during the Portuguese presidency about two-and-a-half years ago, when in Lisbon it was declared that targets would be set for SMEs in terms of performance and in terms of meeting difficult time-scales.
When one considers the needs of SMEs one focuses on reform to the banking sector and access to bigger markets so that SM Es' income increases. There is also the matter of regulation to which the noble Lord, Lord Hodgson of Astley Abbotts, has referred. I do not believe that dealing with the many regulatory concerns on their own will meet the problems of SMEs, nor will it serve as a complete response.
When one considers the progress that has been made over a number of years one sees that there is still much fragmentation in the SME sector. The results from Barcelona, and a comparison with some of the statistics in relation to American progress during its 1990s reform programme, show that our progress should have been better. The solution in this country is to institute agendas as to the requirements of SMEs, but there tends to be no follow-up. Reports from inquiries are given to Ministers in the hope that something will happen.
There are 3·7 million SMEs in this country, and about 3·4 million survive on their own. They feel quite isolated. I believe that we should pursue the UK
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model. That puts Britain in an advanced position, which is good news, and it provides performance and competitiveness in a way that is good for this country. That initiative comes from a company called the Genesis Initiative. It is a non-political organisation which is strong in advocacy. I should declare that I am chairman of that company. The progressive people with which it is associated are good. They are well-known people such as Nicholas Goulding of the Forum of Private Business, Stephen Alambritis or the Federation of Small Businesses, David Doyle of the ACCA, on the accountancy side, John May, the policy director of the Small Business Bureau, and many others who undertake progressive thinking for SM Es.
The Genesis Initiative, through its UK model, has come up with a policy of empowerment that helps the 3·4 million isolated small businesses to help themselves. I believe that there will be greater engagement between those 3·4 million companies and the Government. Individually, the Genesis Initiative is establishing SME communities that are matched with MPs in such a way as to help empowerment. That means that SMEs, through their local communities, can access the facilities of MPs or Peers in order to gain access to Ministers. Ministers are involved and pilot schemes are running. Kerry Pollard is the chairman of the APPSBG, the parliamentary SME organisation.
All that is bringing SMEs towards Ministers and putting them in a position where they can ask questions of Ministers, just as we do as parliamentarians. There is also the collective approach. We are holding a spring conference in which delegates of SME organisations advise Ministers of their requirements and Ministers respond. Also website enhancement has helped.
In addition, there is the single market, a market that is relatively untapped by SMEs. It is roughly twice the size of the United States. That must be opened up. In the past we have used harmonisation, but it has done only part of the job. We need to use the UK model and encourage all the other member states to adopt that. We must also encourage our Prime Minister and other senior Ministers to develop a force for SME reform that will enable the Prime Minister of the day to talk to other Prime Ministers in other member states in order to get trade going.
There are huge opportunities. I believe that there is a good story here. There is an opportunity for huge developments in SME economic contributions to get the British approach to the economy going throughout the whole of the European Union. The concept can be pushed towards the WTO countries and Africa with bilateral agreements. I am also proud to say that Prince Michael has made great contributions on behalf of SMEs in this country.
8.48 p.m.
Baroness Sharp of Guildford: My Lords, I join other noble Lords in thanking the noble Lord, Lord Harrison, for promoting an extremely interesting short debate on small and medium-sized businesses. Like the noble Lord, Lord Randall, I did some

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research and also discovered that there are 3·7 million small and medium-sized businesses in this country. It is a good story. As the noble Lord, Lord MacGregor, said, in 1980 there were only 2 million and in the course of the past 20 years their number has almost doubled; 99 per cent of businesses in Britain are small and medium-sized businesses. Only 25,000 businesses employ over 50 people and only 7,000 businesses employ over 250.
We have a large population of small firms and a small population of large firms. Sixty-eight per cent of small firms comprise self-employed people with no employees—one-man businesses: and 22 per cent employ between one and four employees. So only 10 per cent have more than five employees. That is an interesting statistic.
The largest sector populated by small and medium-sized businesses is the wholesale and retail trade at just over 19 per cent. Manufacturing industry comes slightly below that at 18 per cent. Businesses services are now up to 17 per cent. The construction industry is at about 12 per cent. Over the past 20 years, the fastest growth has been in business services and in hotel and catering. These businesses play, as we have indicated, a significant role within the economy. Over the past 20 years they have contributed in the region of 1·5 million new jobs.
One needs to distinguish between the traditional small and medium-sized business—the master builder, the small construction firm or small building firm on the one hand, with the retail trade on the other—and the considerable growth in new small businesses, indicated by the business services area, which have come partly as a result of globalisation. The noble Baroness, Lady Platt, mentioned that matter.
We have seen new growth for small businesses. Many large businesses are now outsourcing their services. Many of those large businesses are multinationals. Companies such as Toyota or Honda, which have come to the UK, outsource from small companies. It is vitally important that those small companies have the engineering skills and so forth which they need to keep competitive; otherwise—and we have seen this—the Japanese companies will import the components needed, or these large companies—we have also seen this—will set up their own subsidiaries. Of course, that creates good jobs in Britain. Many have also provided excellent training for UK staff. Many new jobs have come from this outsourcing. It is vitally important that such firms have the competitiveness and the skills to enable those new jobs to be developed.
One interesting happening with this unbundling of large firms has been a transfer of risk. Whereas before one's computer expert was employed within the firm, he is now self-employed. The risks of unemployment and the problems of down-turn and the recession are met by the self-employed individual.
Traditionally, one has seen this concept of large firms exploiting small firms. There have always been complaints about the failure of large firms to pay their
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bills on time. Because they are so much bigger and often a small firm's sole purchaser, they have much power over them. It is vitally important therefore—I very much endorse what the noble Lord, Lord Borrie, has said—that the OFT and our competition policy ensure that there is no room for exploitation of small firms by large firms. On many occasions, banks have exploited small businesses. Certainly from these Benches, we feel that a strong competition policy is an important part of small firms policy.
We have heard an enormous amount about the burden of regulation. I echo to some extent the feelings of the noble Lord. Lord Mitchell. I was amazed at how officious, how bureaucratic. America is. Sometimes perhaps one hears a little too much about the burden of regulation. Equally, compliance costs, which can be spread across large numbers of employees in large firms, also have to be met by small firms. I confess that I have never run a small firm, but I have had an employee and one has had to fill up the PAYE certificate and so forth. It is a substantial burden. I take on board the point made by the noble Baroness, Lady Byford, in terms of the on-costs. Some noble Lords may know that we are taking the Education Bill through the House. That Bill is putting more regulatory burdens on schools—and that degree of regulation is echoed in a great many current Bills. I very much echo what the noble Lord, Lord MacGregor, said about the amount of bumf that comes around. My desk is chock-a-block full of it. I do not understand why we go on in this way.
One of the problems that has always struck me with this country is that we learn to play cricket. Therefore, when we pass rules, we abide by them. Our civil servants, if I may say so, are usually very efficient. When we have laws, they see that they are enforced. Many noble Lords will know of the problems with the food and hygiene rules, the health and safety rules and so forth. When one travels on the Continent and sees the kitchens in restaurants and so forth, one sometimes wonders whether their people are as efficient as ours, or whether perhaps we are gold-plating our regulations too much. I think that there are occasions when we do that.
Regulation is a big issue. The CBI reckons that since the Labour Party has come to power the cost of regulation is …19 billion. I certainly am surprised that Labour continue regulating as much as it does. We need to look at the situation seriously. We need to think about whether we can get rid of some of this regulation.
What then can government do? We have heard a great deal about taxation—for example, corporation tax and lower capital gains tax. I am delighted that the R & D tax credit has been introduced for small and medium-sized businesses. That echoes again my concern about the competitiveness of small and medium-sized businesses.
From these Benches, one of the issues that we should like to see much more of is a devolving of responsibilities, including financial responsibilities, to local and regional authorities. If one looks at the

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Continent and at what is happening, for example, in Germany or in the United States, one realises that it is at the Lander or state level that one sees a great deal of the dynamism in relation to small and medium-sized businesses. They can go out and borrow money on the market in their own right. They can therefore promote infrastructure developments. In this country, however, the Government do not provide quality public services. Businesses abroad can promote infrastructure developments, and team up—and they often do often—in terms of providing a venture capital fund linked to the banks. There is far more enterprise there. I should like to see much more of that dynamism in this country.
The training issue mentioned by the noble Lord, Lord Graham, is absolutely essential. I echo what he said about the problem of cowboy traders. Perhaps we need to think about using our trading standards officers to highlight those with the requisite qualifications. People ask me, "Where do I get a good plumber? Where do I find a good electrician?". It would he good to be able to ring up one's local authority and ask, "Who are the qualified people to whom we can go?" and not have to resort to the cowboys.
Finally, we need as a country—I return to the social and economic conditions that underlie this—to think a little more about the community aspects of small and medium-sized businesses. Are we right to dispense with our village post offices and pubs? Should we not try a little harder to keep these central cores or the community going? Perhaps there is business sense to such decisions—Consignia tells us that it cannot afford to run the post offices any more—but there are two sides to the issue. In France and Italy small shops still exist in the middle of Rome and Paris. Why is that? It is because they pay lower rates. The council tax that they have to pay is considerably lower than that paid here. Can we not be more imaginative about what we do in order to preserve these small firms which play such an important part in our community, and help to keep them as community stalwarts?
9 p.m.
Baroness Miller of Hendon: My Lords, I thank the noble Lord, Lord Harrison, for introducing this interesting and important debate on small and medium-sized enterprises. It is a matter close to my own heart, having started my own small business in 1972. I empathise with the noble Lord, Lord Mitchell. I understand exactly what he said about sleepless nights, panic attacks and remortgaging one's own home but having the courage to keep going. Eventually, I found that my business had grown in to a medium-sized enterprise from which I retired in 1988, when I sold it to spend more time with my politics.
It is interesting that the Federation of Small Businesses commented in its recent report on what it called the relatively low levels of business wholly owned by women—9 per cent. That compares with the low number of girls who go into engineering. It also
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compares with the proportion of businesses wholly owned by men, which is 44 per cent, and the 42 per cent owned by a mix of men and women.
My own business fell into that latter category. Perhaps that was just as well, considering the difficulty that I had in persuading suppliers to treat me seriously until I had established a track record—which, of course, I quickly did. In fact, one manufacturer refused to sign a contract with my company unless my husband counter-signed, so that he could be sure that I knew what I was doing. I must say that it was some satisfaction to me that my business far outlasted the manufacturer's.
On the same subject of the involvement of women, I notice from the same report that 46 per cent of respondents to the Federation of Small Businesses survey were satisfied "to some degree" with their bank's support. I note what the noble Lord, Lord Borrie, said on that subject. Unfortunately, the report does not state what proportion of the 54 per cent of owners who were not at all satisfied with their bank's support were women. That is important because, as the federation says, most new businesses depend on their bank overdrafts to sustain and grow their businesses. Perhaps that is something that the federation may want to investigate.
The fact is that the vast majority or small businesses have started from scratch compared with the few that begin by buying a going concern, by inheritance or by a management buy-out. Morris Motors, later part of the British Motor Corporation, was founded by a 16 year-old William Morris who started his business with £4 capital making bicycles in his shed. In modern times, the mighty, world-dominant Microsoft Corporation began its life in young Bill Gates' garage.
I do not know if that proves that there is something to be said for starting young and working from a shed, but clearly finding a whole new, hitherto undiscovered market is often the path to success. The Federation of Small Businesses reports that almost 10 per cent of respondents to the survey were under 34 and that the majority under that age came from the North East. A high proportion of the more mature small businesses, which have existed for more than 21 years, are sited in London. That may prove that as job opportunities decreased with the closure of big industries in the North East, the more enterprising residents, especially the younger ones, who saw no prospect of local jobs, decided that they had better start their own businesses.
Referring again to that excellent report from the Federation of Small Businesses, almost half of their respondents reported that sales volume had increased in 2001 and 9 per cent of them said that it had gone up considerably. It is almost a cliché, but I do not mind repeating that small businesses are the engine of industrial and commercial growth. They are most important, as are the entrepreneurs who go with them. The figures that I have just cited prove that.
In fact, the prospect of starting from scratch a new giant industry such as Morris Motors is absolutely remote. It is on small businesses that new employment

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opportunities will depend in future. It is unsurprising that it is among newer small businesses that employment increases are most likely.
The Government often boast of the number of new jobs that they have created, but the jobs and business that have been created in the world of commerce have come into existence in spite of the extra taxes, levies and regulation that have become a burden on small business, not because of them. As my honourable friend the member for Runnymede and Weybridge recently pointed out, the fact that they have come into existence at all is a tribute to the resilience of British entrepreneurs, and not a tribute to the Government. My noble friend Lord Brooke made a similar point.
Only last week, the CBI yet again begged the Government to stop strangling business with red tape. It said:
"It is quite inconsistent to claim to promote an enterprise society on the one hand, and to trammel it with regulations on the other".
During Labour's first term, the cost of complying with red tape increased by £15 billion, according to the British Chambers of Commerce․I noted the different figure given by the CBI, but I shall stick with £15 billion. No fewer than 4,642 new regulations were introduced last year. As if that were not enough, the Government have piled new taxes onto business. This year's Budget will result in an increase of yet another £2–5 billion on the cost of doing business in Britain. That is important and a detriment to business. In fact, the Government have increased taxes on business every year since 1997.
The noble Lord, Lord Graham, mentioned the Federation of Master Builders. Something else that it said in the important brief that it sent to me was that when the EC announced in 1999 that renovation of private dwellings, which is a line of work in which many small and medium-sized enterprises are engaged, could be exempt from VAT for an experimental five years, the Government refused to take advantage of that concession. It was taken advantage of in France, where the workload in the industry rose by 7 per cent in that year. We seem to gold plate our directives and do not take exemptions when we ought to. If we were really interested in small business, we would do so. It is no wonder that the CBI, previously most․or let us say quite․sympathetic to the Labour Government referred to its "deep dismay" at the fact that,
"the Chancellor has given with one hand but taken with the other".
The Prime Minister has said that we remain a relatively low-taxed economy. But the truth is that of our top five trade partners, only France has a larger taxation burden than ours. In the past five years, business taxation has risen by £29 billion.
Much of the new and existing employment in this country is generated in what is euphemistically called the service industries, as the noble Baroness, Lady Sharp, mentioned. But we cannot make livings simply
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from buying each other's hamburgers or taking in each other's washing. We must look after our manufacturing industry.
The Office for National Statistics reported that there had been zero growth in the economy in the first three months of this year․zero, nil, no growth whatsoever. Manufacturing, exports and investments all fell during that period. As if that were not bad enough, the ONS reports that the economy has failed to grow for the past six months. That is the worst performance in more than a decade and we are right at the bottom of the G7 growth league. We must take note of those facts, consider regulation and taxation and see what has happened.
All of that, of course, impinges heavily on the small corner shop. It is true that the combined weight of all of those burdens affects all businesses․large, medium and small. However, it affects small businesses far more. The effect is proportionally higher. Small niche businesses or businesses providing services in competition with giant supermarkets face the difficulty of deciding whether to pass on the costs to their customers. The noble Baroness, Lady Sharp of Guildford, made that point too.
That is not the end of the story. Only today, I received a copy of a trade journal called Asian Trader, which goes to what we often call the corner shops. It reports the problems experienced as a result of the current system for the wholesale distribution of newspapers, including the case of one newsagent who has been driven out of business by soaring carriage charges. There are two Early-Day Motions about that in the other place, and I am glad to note that the Office of Fair Trading is investigating the problem. I understand that the Select Committee on Trade and Industry will carry out an investigation in November. However, we hope that the DTI will take note. Small businesses are being affected, which is a dangerous thing.
I do not have time to go into all the directives, which also cause difficulties, but I would say that Mr Arculus, the chairman of the task force, reported that he had asked a government department that already gives advice to employers whether it could cover employment regulations. He was surprised when the unnamed department said that it could not possibly know everything that there was to know about employment regulations. Nonetheless, the Government expect small businesses to know all those things. The burden on such businesses is great.
In its report, Employment Regulation: striking a balance, the task force made several recommendations to the Government for alternatives to state regulation. My time is up, so I shall not read them all. One recommendation was that there should be an understanding of how compliance costs were heavier for small businesses. Another was that people who deal with employment law should understand employment. Many noble Lords made that point this evening, as will I. There are too many officials and people pontificating on employment matters. I know that, like me, the noble Lords, Lord McIntosh of

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Haringey and Lord Mitchell, have run small businesses. We know what it is about, and we wish that more notice were taken of the people on the ground floor.
9.10 pm.
Lord McIntosh of Haringey: My Lords, I hope that, when he reflects on the debate, my noble friend Lord Harrison will congratulate himself on having secured the debate and on the unanimity achieved in support of small businesses. There has, of course, been disagreement about government policies․I shall come to that in due course․but there can be no serious doubt that, as the noble Lord, Lord MacGregor of Pulham Market, said, there is now a common view held in all political parties. I dispute what he said about the situation 20 years ago. When I first came to the House 19 years ago, I talked constantly and incessantly about small businesses. As the noble Baroness, Lady Miller of Hendon, said, I spent my life running small businesses; it was what I knew about and what I was able to contribute. I have no doubt that I bored my colleagues then as I sometimes do now.
There has been a degree of unanimity, and that is healthy Mind you, some of the memories that the debate brought back․particularly those referred to by my noble friend. Lord Mitchell․are not too good. The VAT return was the thing that I hated most about running my own business. I used to spend a Saturday every month․I tried not to do it every quarter․in my office. As my office was above a shop, I used to get locked in at about lunchtime. I used to have to climb out, leap across a well and find my way out of a fire exit late on Saturday evening․always a scary activity. So, I have memories as well.
I also have memories of the difficulties that the firm faced because of the economic instability that characterised the time when I ran a business․from 1965 to 1995. That was the situation under Labour governments in that period too; I am not making a party point. We had constant boom and bust. There were constant panic reductions of expenditure by clients, followed by stocking-up. Interest rates varied enormously․much more than now. Sometimes, one found oneself paying 15 per cent interest, and, sometimes, one had to go abroad to borrow money at a reasonable rate of interest. None of that could be predicted. In my experience, the sense of insecurity about markets and finance was the most serious concern of small businesses. If it is claimed that the regulatory burden has increased, we can argue about it, but I can assure the House that that was a lesser concern for me than having a second mortgage on the house or not knowing where the next payroll would come from.
The objective evidence is that this country is a good place in which to do business․especially for small businesses. The Economist Intelligence Unit has ranked us the fourth best place in the world in which to do business. In 2000 it said that the UK labour market was less heavily regulated than the labour markets in other EU countries. The OECD outlook in
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December 1999 said that the UK had the lowest level of product market regulation of any OECD country. It also said that the UK had fewer harriers to entrepreneurial enterprise than any other OECD country.
Those are outside testimonies from international organisations and from well-respected economies. I take them seriously. I understand the concerns of the organisations representing employers who have been briefing your Lordships for this debate, but they are not party free; they have a view to express. Considering the evidence of the external views and the facts, we have a lot to be proud of.
We still, as has been the case for some years, have the largest share of foreign direct investment of any country in the EU. We are still buoyant in terms of our labour market. We have low interest rates and low inflation, which the noble Lord, Lord Brooke, acknowledged, but he seemed to think that somehow that was less important than some of the other issues on which he chose to concentrate. I do not know whether I am supposed to be ashamed of 1·5 million more people being in work. That is of course to the benefit of small and micro businesses. If we can continue to reduce, if not eliminate, income tax barriers to people in work, who have much to contribute to the economy and business, and we can make it worthwhile so that people can earn a decent living, it is worth applying that to our analysis of the position of small businesses.
Let us consider the facts of small businesses. For the benefit of the noble Baroness, Lady Byford, the definitions that I use are I to 49 employees for small businesses and 50 to 249 for medium-sized businesses, with micro businesses having fewer than 10 employees. For the purposes of the small firms loan guarantee, we do it on turnover. For manufacturing it is less than £5 million and for services it is less than £1·5 million.
Small businesses are flourishing. Since 11 th September the growth in world trade, which was 12 per cent the year before, has gone down to zero, but small businesses have excellent survival and start-up rates. They are understandably down from a year or two ago, but there are far fewer business closures than in the past. Small businesses contribute to new technology, introducing technologically new or improved products to markets. Those are largely SMEs.
I cannot say in detail how much I agree with the noble Baroness, Lady Platt, about the importance of dealing with skill shortages, but that is exactly what we are doing. We can only do more if there is an increase in unemployment in total. Before leaving that point, I must say how much I agree with the noble Baroness, Lady Sharp, about the importance of research and development tax credits and 100 per cent capital allowances for particular purposes.
All the facts on the small and medium-sized business economy show that we are successful in this country and we must ask why. First, we have set a fiscal context in which small and medium-sized businesses can flourish. All that we have done on corporation tax is

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particularly advantageous for small businesses. There is a nil rate for company profits up to £10,000—that is a rather high level for many of the small businesses that I know. The rate is reduced for those with profits of between £50,000 and £300,000. The nil rate benefits 150,000 small companies and the 1 per cent cut benefits nearly 350,000. The smallest businesses benefit from those rates.
The noble Lord, Lord MacGregor, quoted figures relating to the cost of National insurance contributions. To the average small firm within our definition, the cost of the increase is £835 but the saving on corporation tax alone is £700 without any of the other measures which I have been and will be describing.
I was interested to note that after the noble Lord, Lord Harrison, no one referred to the importance of small businesses in disadvantaged communities. I did not therefore have a chance to refer to the community investment tax credit designed to encourage investment in under-invested communities or the approval we are seeking for state-aid purposes to abolish stamp duty on non-residential properties in deprived areas. Those are worthwhile initiatives.
I was also interested to note that no one referred to the availability of finance for small businesses. It is accepted that much of the finance for small businesses is bank overdrafts. And in that regard this Government, after all, pushed the Competition Commission into making its recommendations, published in March, which were referred to by my noble friends Lord Borrie and Lord Mitchell. For a small business such as mine, it would have been enormously valuable that my bank should have been forced to offer me either interest on my current account, an account free of money transmission charges, or a choice between the two. I believe that the push which the Government have made in that area is important.
Although the matter has not been referred to in the debate, I believe in the activities of our Small Business Service and in our many programmes to encourage the availability of finance for small businesses. I refer, for example, to the programme for early growth funding and our attempt to deal with the equity gap with regional venture capital funds and with the Small Firms Loan Guarantee Scheme. That has been running for approximately 20 years and has made available no less than £3 billion in that period. The noble Lord, Lord MacGregor, as the first Minister for Small Businesses, must take his share of the credit for many of those initiatives.
I turn to the issue of simplification and cutting regulation. Some of the contributions from the Conservative Party confused regulation-making for the sake of government and regulation-making which seeks decent living conditions for workers in small and large businesses. I listened carefully to the noble Lord, Lord Hodgson, but in all his examples the meaning and purpose of the regulation was to achieve decent living conditions. Yes, the minimum wage costs some employers more—and so it should. We should be
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proud of having a minimum wage which ensures that in-work poverty, particularly for women, should be illegal. But if that is included in the cost of regulation, it is a false calculation. That is true of all of the noble Lord's examples, including that relating to time off for dependants. All those are hallmarks of a civilised society and I am not ashamed of any of them.
Evidence is available on the cost of labour market regulation. The cost to employers of labour market regulations introduced by the DTI is about £5 billion a year; about £4 for each employee per week. However, most of that gives workers benefits; for instance, paying the minimum wage rather than a lower wage, paying during holiday periods and so forth. The administration costs to business for all of those measures are estimated at just one pence for each worker per week. That is a much more realistic figure.
We should also consider the help that is being given. One has only to look at the Carter review of payroll. Surely it is important for us to encourage all businesses, especially small businesses, to file their end-of-year returns electronically; indeed, it is in their interests to do so. If we have been able to assist them in so doing, we have done so.
There is also the flat-rate scheme for VAT, which I refer to as my biggest bugbear—it is for the smallest firms. There will be an optional flat rate VAT avoiding all the calculation for those with a taxable turnover of up to £100,000. That will affect half a million companies, each of which will be able to cut their compliance costs by up to £1,000. The registration threshold for VAT has also been increased to £50,000. I like the idea of a lower VAT rate for refurbishments or maintenance, as requested by my noble friend Lord Graham. But, realistically, we have to face the restrictions on state aid, as will the French. We shall see what comes out of it at the end of the process.
There have been advances; for example, the construction industry scheme has provided greater flexibility in the way that scheme deductions are set off against tax liabilities. Twenty thousand small and medium-sized enterprises have benefited from that advance.
Again, curiously, there was no talk during the debate of a matter that is enormously important for small business; namely, the treatment of business assets for capital gains tax purposes. That was most important to me because I had to sell my business before I was 60 and I could not take advantage of the business assets regulation. The latter is constantly attacked for being a great complication in our tax system, but small businesses are up in arms—quite rightly—when anyone tries to remove it, because it is through the business assets concept that it is possible for those who control small businesses to take their money out at the end of their working lives. That is to the benefit of all of those in small businesses and, I believe, to the benefit of society. That was a curious gap in today's debate.
My noble friend Lord Harrison referred to late payments. I can assure him that we are adopting European Directive 20035/EC; indeed, Nigel Griffiths,

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the Minister with responsibility for small business, made an announcement today about measures to help combat late payment of hills. Such measures, which will come into effect on 7th August of this year, involve simplifying the calculation of interest rates, allowing easier challenges in court, and legislation to extend the late payment legislation.
My noble friend Lord Borrie said that he was looking forward to the proceedings on the Enterprise Bill and to greater strength being given to the competition authorities. That is clearly to the advantage of small and medium-sized enterprises, as is the introduction of a new criminal offence for those engaged in cartels, the attack on those who use bankruptcy and insolvency laws in an irresponsible and dishonest way and the level playing field among public and private creditors.
I believe that I have already said a great deal about regulation and red tape. We need to maintain a sense of proportion in this respect. Some of the speeches that we heard this evening did not seem to maintain that sense of proportion.
Some of the measures that we introduce to help small businesses come under headings that the noble Lord, Lord Brooke, would consider as being "trivial" or "minor" compared with what he believes to be more important. But the work of the Small Business Service and that of the Business Link Operators, while it does not reach everyone, still has an effect. I fear to say that most small businesses go to their banks, accountants or their own advisers when they have problems. However, I can tell noble Lords that those which do use government services for small businesses tend to use them more than once and to be satisfied with them.
It is important that we should try to encourage greater take-up of the services. My noble friend Lord Harrison pointed out that it can be difficult to encourage the very smallest businesses to use the facilities provided by the Government, which are becoming even more widely available. It is still true to say that we have a lower penetration of services to the very smallest firms than is the case with the larger businesses.
I have come to the end of my time. As I am sure is my noble friend Lord Harrison, I am most grateful to all noble Lords who have taken part in the debate. A great deal of personal experience has been in evidence in the contributions. Our debate has been wide-ranging and it has provided an opportunity for me to explain on behalf of the Government the many ways in which not only do we believe in small business but we are active in giving it our support.
9.31 p.m.
Lord Harrison: My Lords, I wish to thank the noble Baroness, Lady Miller of Hendon, for reminding us of William Morris, a small business person who went on to create Morris Motors. In my home town of Oxford, we celebrate another William Morris. He managed to combine being a poet, a socialist and a small business person.
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The noble Lord, Lord Brooke of Sutton Mandeville, suggested that I was putting out my chin in initiating this debate. I believe that we have had a good chin-wag about small businesses and that our debate has been very profitable. Before I say "chin-chin" tonight, I should like to thank all noble Lords for their contributions, in particular my noble friend on the Front Bench.
And so, with my head held high and my chin out, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Dignity at Work Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Industrial and Provident Societies Bill
9.32 p.m.
Lord Graham of Edmonton: My Lords, I beg to move that this Bill be now read a second time.
The noble Lord said: My Lords, I start by declaring the assistance that I have received from the Co-operative Party, from Cobbetts, a law firm with a sound track record of advising the mutual sphere, and from Mr Ian Snaith, Mr Peter Hunt and Mr John Tilley of the Co-operative Union.
Having joined my first Co-operative Society, the Newcastle Society, more than 60 years ago, I have had an attachment to co-operative enterprises all my life: to this day, when I am proud to declare that I am chairman of the United Kingdom Co-operative Council, a body in whose membership lies the Cooperative Group, the Co-operative Bank, co-operative insurance, the Co-operative Union, co-operative housing, credit unions, workers' co-ops and others.
I pay full tribute to the interest and experience on display when this Bill went through all its stages in another place. The record shows that it was subject to a vigorous scrutiny. From all Benches it was evident that they knew what they were talking about. My honourable friend Gareth Thomas did not have an easy ride, but that is how it should be. He has performed a Herculean task, holding scores of meetings both inside and outside Parliament. He has proved to be an operator of high skill and I congratulate him warmly.
In your Lordships' House we bring experience of a different level, but no less relevant. The noble Lord, Lord Fyfe, is a co-operator of great distinction. A life-long co-operative official and chief officer of the successful Midlands Co-operative Society, he recently retired as chairman of the Co-operative Group, formerly known as the CWS. He and I share a common heritage and a common path, both of us being graduates from the Co-operative College and recipients of the highest honour the Co-operative movement can bestow on an individual: we were elected to preside over the Co-operative Congress. I was before he was.

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Another congress president is my very good friend the noble Lord, Lord Morris—again post my year of 1987—an honour given to him as an acknowledgement of his outstanding service to cooperation. It is fitting that he carries the title of "Manchester", which, after Rochdale, is synonymous with co-operation.
The noble Lord, Lord Newby, is no stranger to the mutual and social enterprise world, while the noble Earl, Lord Northesk, has demonstrated his grasp of these issues in previous debates. The noble Baroness, Lady Thornton, brings to the debate, at such a young age, a life-time of work and achievement, especially her work in the Royal Arsenal Co-operative Society, the Co-operative Bank and her contribution to the world of social enterprise. All this gives great credibility to her contribution.
The former Minister and Government Chief Whip, my noble friend Lord Carter, has the best of pedigrees. As the chair of the United Kingdom Co-operative Council he helped to fashion co-operative ideas and a co-operative Bill of 135 clauses presented to the Government in 1997. He was and is a well respected practitioner of co-operative solutions to economic and social problems. On behalf of his co-operative friends, here and elsewhere, I place on the record our deep gratitude for all that he has done for us in getting the Bill this far. Thank you, Denis.
The response and interest shown in the progress of the Bill in another place impressed me greatly. From all Benches, without exception, it was clearly seen that the value of the Bill was appreciated and supported. A reading of the official record of all stages demonstrated a knowledge and grasp of the issues involved, as well as the fact that the benefits flowing from the Bill can have effect in every constituency and in thousands of clubs and groups.
Make no mistake, while it is true to say that the Co-operative movement lays great store by putting the Bill on the statute book, its benefits will be felt much further and much deeper in British society. Working men's clubs, Conservative clubs, Liberal clubs, Labour clubs, football, cricket and rugby clubs, agricultural clubs or societies, housing and health groups and more than 500 Women's Institute markets, they and many more have this in common: they are all industrial and provident societies which will benefit from the Bill.
Historically, industrial and provident societies have their roots in the self-help tradition of the Victorian era. Their origin dates in part from when the incorporation of legal bodies first became possible with joint stock companies in 1844, the beginning of company law in this country. Incorporation allows an organisation its own legal personality. It can sue and be sued, own property and enter into contracts, and it enjoys the privilege of limited liability.
As we know, the company is the commonest form of incorporated body. The number of registered companies runs to many millions, more than 1 million of which are currently trading. The company
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continues to be a highly effective means of attracting investment and of generating rewards for entrepreneurs and those who are prepared to take risk with their capital. It will rightly continue to play an important role.
According to the Financial Services Authority, at the end of 2000 there were more than 9,000 industrial and provident societies, with some 10.5 million members between them, funds of more than £14.5 billion and assets worth almost £61.5 billion.
There are two kinds of industrial and provident societies, the first of which is the co-operative society. A co-operative conducts its business in the interests of members, who gain from it on the basis of how much they use its services or its trade rather than purely on the basis of their investment in it. If people want to register a new co-operative society today, they must satisfy the Financial Services Authority that the proposed organisation is a bona fide co-operative. Many retail and agricultural organisations and many social clubs are designed as co-operatives.
The second category of industrial and provident societies are those that carry on a trade for the benefit of the community rather than just their own members. Such societies are known as community benefit societies—abbreviated to "bencoms". They include the many housing associations that exist, some social clubs and the new football supporters' trusts. Industrial and provident societies give legal form, and thus structure and clarity, to a range of community organisations and activities, for which charitable structures, public sector structures and the company model are not entirely appropriate.
I turn to what the Bill is designed to achieve. It contains two key clauses to try to change the current situation. The first clause would ensure that industrial and provident societies could not be dissolved by the vote of a small and unrepresentative group of members. The second clause would enable industrial and provident society rules to be updated by secondary legislation.
Clause 1 deals with the power to convert an industrial and provident society into, or to transfer the entire business to, a company. Such a step can be taken if 75 per cent of those at a general meeting vote in favour of conversion. No requirement exists for a minimum number of members to be in favour of the resolution, and any attempt to include such a provision in a society's rules would contravene the 1965 Act and would be rejected by the FSA. Conversion to a company is a fundamental change in the nature of an industrial and provident society.
The ability to convert has existed under the legislation since the 19th century, and the provisions that require a 75 per cent majority of those voting at a meeting of members also have a long history. If a majority of members of a society want to convert, neither I nor anyone else should stand in their way, but the membership's view must be fundamentally clear. A 75 per cent vote in favour of a conversion resolution by those who turn up at a meeting might involve a mere handful of people turning up to a badly advertised

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meeting and agreeing a change that might irreversibly alter the nature of a corporation with hundreds of thousands of members.
The building society movement has wrestled with that issue for a number of years, and a significant number of societies have demutualised and paid a windfall gain to their members. There has been only one failed attempt at a hostile dissolution of a cooperative society. In 1997, Andrew Regan, through Lanica, attempted to demutualise the Co-operative Wholesale Society. Notwithstanding the fact that the attempt failed, the threat of demutualisation remains real to many co-operatives societies.
Since the Lanica affair, a number of societies have adopted rules to introduce a high quorum for resolutions to convert a society into a company. There has not been a legal challenge to such rules yet, but there is concern that it could be made by a predator with a deep pocket, and there is a danger that it might succeed. Doubts about that should not be left to the courts and the lawyers to determine. Surely it is a matter for Parliament to address, and the Bill offers the House the opportunity to do just that.
Such a provision has already been introduced for building societies. The Building Societies Act 1986, and the 1997 statutory instrument that updates it, require 50 per cent of the membership to participate in any such vote for it to be effective. Another parallel is the takeover code, which sets a 50 per cent threshold as the key to resolving the success or otherwise of a vote in a public takeover of one company by another. The Bill proposes a similar provision for industrial and provident societies. It does not change the requirement that 75 per cent of the vote of members attending a meeting is necessary; it simply adds the requirement that 50 per cent of eligible members would need to vote for that conversion to occur.
Clause 2 attempts to provide a mechanism to allow Parliament to consider sensible reforms to the corporate governance of industrial and provident societies when those same reforms have been introduced by companies after parliamentary debate. The reality is that there have been very limited opportunities under both the Conservative government and the Labour Government to update the rules and regulations by which industrial and provident societies operate.
Company legislation prohibits provision in the constitution of companies that prevents claims against directors for breaches of statutory or common law. Societies still have such provision in their constitution. Clause 2 holds out the possibility that such changes to industrial and provident societies' rules could occur if Parliament were so minded.
The Bill emerged from Report significantly improved, and achieves two things. First, it places cooperatives registered under the industrial and provident societies legislation in the same position as building societies by ensuring that there is substantial democratic participation on that most crucial decision—whether or not to convert to a company. Members can still change the structure of their
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organisation, but only on a 50 per cent turnout and the 75 per cent vote in favour which was already provided for in law, mirroring the existing provision in building society law.
Secondly, the Bill will permit the use of statutory instruments when company law is changed in future to assimilate industrial and provident society law into company law, to deal with the discrepancies in, for example, insolvency procedure, capacity rules, accounts and audit, and other aspects of corporate governance which meant that industrial and provident society legal form lagged considerably behind that of the company model and the friendly society and the building society model.
The Bill, although modest, allows both issues to be resolved and should play a small but important role in encouraging the use of industrial and provident societies, so facilitating the development of cooperatives and of businesses with community benefit aims. That can only benefit our economy and the development of communities that are both enterprising and caring. I beg to move.
Moved, That the Bill be now read a second time—(Lord Graham of Edmonton).
9.46 p.m.
Lord Morris of Manchester: My Lords, I have an interest to declare and do so with pride. It is my abiding commitment to co-operative principles and values and lifelong membership of the Co-operative movement in which, like my good and noble friends Lord Graham and Lord Fyfe, I have been president of the Co-operative Congress, the movement's highest elective office.
It was in 1951—over 50 years ago—that I first stood for Parliament in the Co-operative interest, and I represented my birthplace in that interest for 33 years as the first Co-operatively sponsored Member of Parliament for Manchester from 1964 to 1997. Thus I most warmly welcome my co-operative colleague Gareth Thomas's Bill and congratulate my noble friend Lord Graham on both the content and manner of his speech in commending it to your Lordships' House this evening.
One of the deep sadnesses of my parliamentary life was that the service in another place of my noble friend Lord Graham was cut so cruelly short after only nine years there; and one of its joys is his achievement this evening in bringing together—I understand for the first time ever in a debate in this House-three former presidents of the Co-operative Congress.
Of course, interest in this Bill is not confined to the Co-operative movement. It benefits, as my noble friend Lord Graham said, a very wide range of other interests. Indeed I am informed that over 9,000 organisations—many of them household names—are backing this Bill.
My noble friend addressed many aspects of the Bill's provisions; but I shall focus only on Clause 2(1), which empowers the Treasury to update industrial and provident society law,

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"on any modification of the statutory provisions in force in Great Britain in relation to companies".
This allows for changes likely to be introduced as a result of the DTI's Company Law Review to be applied to societies where appropriate and for existing discrepancies to be dealt with at that time.
As my noble friend said, the Building Societies Act 1986 and the Friendly Societies Act 1992 have already achieved that for the organisations they affect. Only industrial and provident societies have been left out. Gareth Thomas's Bill allows Ministers to remedy this without using legislative time after changes to company law have already been debated and passed by both Houses in the future.
Among policy areas in which updating is currently needed are: first, the availability of insolvency rescue procedures such as the administration procedure and the company voluntary arrangement in the Insolvency Acts of 1986 and 2000 to societies which are currently excluded from them; secondly, the possibility of disqualifying society directors under the Company Directors Disqualification Act 1986; and, thirdly, the application to societies of the provisions of the Companies Act 1985 that protect people dealing with companies from the effects of contracts being outside the objects clause of the company or outside the powers of its agents (ultra vires).
Again, rules about accounts need updating to reduce the burden of requiring audits on societies with a turnover of under £1 million and generally to bring accounting requirements into line between the two areas of law; as do the rules on transactions between directors and their society such as those found in Part X of the Companies Act 1985 which prohibit many loans to directors and require member approval of certain large-scale property transactions.
Legislative time is always at a premium and it is most unlikely to be found to deal with these and other anomalies by primary legislation. For that reason the Bill proposes to do so by statutory instrument. This alone justifies support for the Bill from both sides of this House and I hope to see it enacted as it now stands with all possible speed.
For as I have learned from piloting so many other Bills to the statute book—I speak as a serial legislator—time for Private Members' Bills is at the highest premium of all. To delay is to kill and this Bill eminently deserves to live and thrive. Let it do so and pass quickly into law with our unqualified support this evening.
9.52 p.m.
Baroness Thornton: My Lords, it is with great pleasure that I rise to support the Bill. I start by thanking my noble friend Lord Graham for his kind opening remarks. I feel privileged to have belonged to two great institutions in this country: the Co-operative movement and the House of Lords, both of which have regarded me as a youngster for a lot longer than my age warrants.
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I also wish to place on record my congratulations to my honourable friend Gareth Thomas on the progress he has made in another place which allows us to debate the Bill here this evening. Tonight is also a special debate as I believe that it may be the last occasion for the time being on which my noble friend Lord Carter will speak from the Front Bench. I place on record the fact that he was the Chief Whip when I entered the House. I have been grateful—as I know have many other noble Lords—for his support,' succour and advice throughout that time.
I need to declare an interest as someone who works as an adviser to the Co-operative Group and as the voluntary chair of a newly formed organisation, the Coalition for Social Enterprise. As my noble friend has already said, I have worked for and in the Co-operative Movement for most of my adult life. I have been involved in helping to establish a number of organisations—a community recycling workshop in Hackney and a co-operative development agency in London—to promote workers' co-operatives. I am at present a director of an umbrella organisation for cooperative and social enterprises in London, Social Enterprise London, Our job in SEL is to encourage the growth and development of many new kinds of enterprise which are trading for a social purpose.
I want to address my remarks to the matter of why the Bill is so important to the future of an exciting and growing sector of the economy—the social enterprise sector. The Bill is important for a number of reasons. It is important because it clarifies and because it updates. It makes it easier for more institutions and enterprises to come into being. It updates legislation that has its history in Victorian times, as do much of the Co-operative movement and the mutual sector. Just as those organisations and businesses have updated themselves and are making themselves ever more relevant to the 21st century, so it is important that the regulations and legislative framework in which they have to operate is also updated and made modern. That is the purpose of this Bill, particularly of Clause 2. That clause will allow the Treasury to update certain parts of the industrial and provident society legislation by order to bring it more into line with company law, allowing modification of company law where that is deemed appropriate.
The new enterprises that are being established today are many and varied. Some are like the Furniture Resource Centre in Liverpool. It is a wonderful business which provides work for the homeless. They make furniture for homes which will house the homeless. The centre does that with minimal support from the state.
Other enterprises are nurseries which are set up in deprived areas to enable parents to go back to work. They are owned and run by the parents and staff. Some enterprises are businesses, such as Poptel, the IT and computer company, which trades extremely successfully in a very competitive marketplace and is owned by all of those who work in it. Some enterprises, such as Greenwich Leisure, provide public services. Greenwich Leisure provides all of the leisure services in the London Borough of Greenwich. It is owned and

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controlled by its stakeholders—the workers and local community. That model has been replicated in many cities as local authorities have sought to improve the delivery of their local services.
Some enterprises are similar to the Bromley-by-Bow Health Centre. Bromley-by-Bow is one of the most deprived areas in the UK, with multiple social problems. The centre boasts a community café, a health centre where GPs and other health professionals are integrated with community projects, a nursery for local children, opportunities for learning and skills development for more than 150 people at one time, community care and opportunities in arts and sports for young people. It is run by the local community.
The Government have not only allowed but encouraged the growth and development of the sector. The DTI has established the Social Enterprise Unit, which is at this moment working hard to deliver an overall policy. Everyone in the co-operative and social enterprise sector is keen to encourage it in its work. There is a clear recognition by the Government that the legal and regulatory framework in which those enterprises are attempting to flourish needs to be reviewed and reformed.
In speaking in support of the Bill, I do so from the co-operative roots of my background and the modern movement of social enterprise. I hope and trust that the Bill will succeed in your Lordships' House.
9.57 p.m.
Lord Fyfe of Fairfield: My Lords, my noble friends Lord Graham of Edmonton and Lord Morris of Manchester have already referred in detail—in necessary detail—to the need for mutual organisations to have a similar legal framework in relation to Cooperative societies as that enjoyed by building societies. There is therefore no need for me to labour that point.
I care about the Co-operative movement. Indeed, I can say that I am passionate about co-operation and mutuality. I spent all of my working life in the Co-operative movement, starting as a part-time errand boy in a fish shop at the age of 13. Believe me, there is no particular joy in sweeping snow from Scottish pavements at six o'clock on a very cold and dark January morning. I determined that I should try to make my career in the movement, albeit not by sweeping snow. I declare an interest.
Among the offices that I have held, I have served as chief executive of the Midlands Co-operative Society, as a director of the Co-operative Insurance Society, as deputy chairman of the Co-operative Bank and, finally, I ascended the Co-operative greasy pole to become chairman of the CWS in 1989, from which I retired in 2000—almost exactly two years ago.
In that last capacity, I had the privilege—in retrospect, it was also a pleasure—of leading the C'WS hoard's successful defence against the notorious Lanica bid for the Co-operative Group in 1996. Frankly, that was an attempt to dismember the Cooperative movement and all that it stood for. It
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intended to sell off its assets, built up over many generations, to the highest bidders, some of whom had already been identified. One can imagine: thousands of shops; farmland; the Co-operative Bank—the "ethical" bank; the Co-operative Insurance Society—a major financial institution; hundreds of funeral parlours; many, many travel operations; a significant property portfolio; and many other Co-operative enterprises. All those would have been lost but for the determination of co-operators to resist ruthless predators plundering long-held, mutually owned assets.
It was said by some of the predators at that time that to take the Co-operative movement would be like throttling a little chicken. In the words of a famous statesman more than 60 years ago:some chicken; some neck! It would also have affected employment, and I shall tell your Lordships why. Many services provided by the Co-operative movement are not conducted only for profit; we maintain uneconomic services, in some instances, in lonely outposts in the Highlands and Islands of Scotland. That very valuable social function would have been sacrificed if the predators had had their way.
Together with my noble friends Lord Graham and Lord Morris, I spent last weekend in Belfast at the annual Co-operative Congress—the movement's Parliament. I was impressed by the way in which the Co-operative Group and all its associates are performing. The Co-operative movement is widening its scope: it is all-embracing. It embraces all manner of different co-operatives: workers' co-operatives, productive co-operatives and many other cooperative organisations.
We do not seek favours. But action is necessary to protect, in particular, new co-operative endeavour, which is spreading all over the UK and beyond. I believe that it is absolutely vital that people have a sympathetic regime—not a fawning regime but a sympathetic one—which will foster the creation of new co-operatives and encourage them to prosper in the years ahead. The Co-operative movement has a noble history. Like all organisations, it has had its ups and downs, but it has a noble history and it intends to have a prosperous and relevant future.
From humble beginnings in Rochdale almost 160 years ago, co-operative values and ideas have been embraced by more than 700 million people in over 100 countries across the world. Kofi Annan, the United Nations Secretary-General, recently reinforced the movement's importance at a meeting of the International Co-operative Alliance. He said:
"Co-operatives have been able to help millions of people around the world to improve their lives. They are an effective operating mechanism".
I believe that the Bill will assist that process.
10.3 p.m.
Lord Newby: My Lords, I, too, congratulate the noble Lord, Lord Graham of Edmonton, on bringing forward this Bill, which we firmly support from these Benches. For 150 years, industrial and provident

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societies played an extremely important part in the economic and social life of the UK. For generations, the Co-op was the cornerstone of local life. I know that from my own experience. My great uncle delivered coal at walking pace even after his horse and cart were replaced by a motorised lorry. As a young woman, my mother worked in the cheque department at the Co-op in Albion Street in Leeds. As a boy, the Co-op dominated Rothwell to an even greater extent than the modern supermarket does today.
But, of course, as has already been said, it is not only co-operative societies that are covered by the provisions of the industrial and provident societies legislation. It is a measure of the robustness of that framework that it has been possible for it to find new uses with the passage of time. Noble Lords have already referred to a number of examples. In the week of the World Cup, perhaps it is appropriate to mention football supporters' trusts. It is extraordinary that within a year, 40 football supporters' trusts have come from nowhere to become vibrant organisations in their local communities and in a couple of cases—Lincoln and Chesterfield—they have already taken control of their football club. It is possible to argue that in many cases a football club is as important an institution as any for the cohesion of the local community. Looking forward, and sticking to football, the collapse of ITV Digital will undoubtedly mean that in many cases football supporters' trusts will be the only bodies able to secure the continued longevity of many venerable football clubs. They will do that within the framework of the Bill.
As the noble Baroness, Lady Thornton, has said, the future for mutuals is extremely exciting. That future does not lie largely in looking to the kind of organisations that mutuals have been in the past, although no doubt retail co-operative societies will continue to evolve and fill niches in the market that the commercial co-ops cannot fill. I hope that they will increasingly offer a framework for a new generation of service delivery in key public services, including health and education. We have heard this evening of nurseries, doctors' practices and care homes that are administered under this framework. As the state increasingly looks to diversity in the provision of public services, I am sure that this sector will grow. My party wishes the Social Enterprise Coalition well.
If the sector is to thrive, it needs a sympathetic legal framework. We regret that this is not a government Bill and a rather more comprehensive updating of industrial and provident societies legislation. Although I agree with the noble Lord, Lord Morris, about the importance of Clause 2(1), it appears from an initial reading to relate to future companies legislation rather than the implementation or reading across of existing companies legislation into industrial and provident societies provisions. When we have a new Companies Act it will be very convenient to be able to read that across, but we are not starting from an ideal situation. It would have been highly desirable if we had been able to ensure that we could bring some
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of the more flexible provisions of the Companies Acts into force in industrial and provident societies legislation.
The Bill makes two provisions, both of which are welcome. The raising of the threshold in Clause I will make it much more difficult for carpetbaggers to take over co-ops or other bodies covered by the legislation. I suspect that the number of cases in which that is likely to happen is relatively small, but none the less this is a useful additional strengthening of the existing threshold requirements. Clause 2 allows the legislation to be updated without requiring primary legislation. That is clearly highly desirable.
I assure the noble Lord, Lord Graham, that I am not seeking to cause trouble in Committee, but if I had to make a single amendment to the Bill I would like to change its title. Industrial and provident societies sound so boring and antiquated that it is enough to put anyone off before they read any further. I would love them to be called mutual societies or social enterprise societies—a 21st century definition of a 21st century institution—rather than a wonderful, portentous, Victorian statement that is now completely meaningless. However, I do not intend to press such an amendment in Committee.
Finally, like many other noble Lords, I want to take this opportunity to congratulate the noble Lord, Lord Carter, whose swansong I believe this may he, on the way in which he has played a major part in the institution and the running of the House of Lords since I became a Member. I wish him well for the future.
10.10 p.m.
The Earl of Northesk: My Lords, I thank and congratulate the noble Lord, Lord Graham of Edmonton, for his introduction of the Bill. I shall not allow the moment to pass without paying tribute to him. His lifelong—on his own admission 60 odd years—and passionate support for the Co-operative movement is greatly admired and respected on all sides of the House. That, taken together with his former incarnation as Chief Whip in this House for the party on the Benches opposite, demonstrates that the Bill could not have a more effective promoter in this House.
We are doubly blessed in that the noble Lord, Lord Carter, will respond for the Government. Like other noble Lords I can do no other than to pay wholehearted tribute to him for the kind and congenial manner in which he has managed our business over the past five years. He knows the huge respect and affection that the whole House has for him. I am uncertain what the collective noun is for Chief Whips, be they current or former.
Lord Carter: My Lords, a lashing!
The Earl of Northesk: My Lords, I was going to say a lashing. Without in any way debasing the contribution of other noble Lords, I cannot help feeling that perhaps we are all a mildly indigestible filling to a distinguished sandwich.

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I turn to the Bill. In the circumstances, it is with delight, perhaps even a little relief, that I say that we on these Benches are entirely happy to support its purpose of allowing the industrial and provident societies' sector to flourish and to develop. One of the most striking things about this form of organisation is how deeply entrenched in the fabric of our society it is, especially at local level. As the noble Lord, Lord Graham, has told the House, the range and diversity represented is spectacular: consumer co-operatives, worker co-operatives, credit unions, housing associations, social clubs (not least Conservative, Labour and Liberal clubs), football supporters' trusts, allotment societies and so on. It is little wonder, therefore, that the Bill has attracted cross-party support.
The noble Lord, Lord Graham, has of course explained its provisions with his customary verve and good humour. None the less, I have a few observations about its clauses. Manifestly, where ventures are organised for the benefit of their membership, it is appropriate that a decision to convert to an entirely different business model should be based on a definitive and clear-cut opinion from that membership. Clause 1 deals with that problem admirably. Indeed, as other noble Lords have observed, the drafting here is consistent with the current position in respect of building societies. As the noble Lord, Lord Fyfe, suggested, greater protection against predators will have the desirable effect of creating improved opportunities for existing industrial and provident societies as well as facilitating the establishment of even more.
I turn to Clause 2. First, I echo the comments of the noble Lord, Lord Graham. Thanks to thoughtful and effective scrutiny, this part of the Bill has emerged from another place in much better shape than when it began its passage through Parliament. Colleagues in another place and on all sides of the political divide are to be warmly congratulated on their work in this regard. That said, I should flag up those few areas where we have slight residual concerns.
We do not doubt the utility of Clause 2 as the means to allow the sector, as it were, to catch up with company and building society law. After all, despite numerous Acts in those sectors, this is the first legislation on industrial and provident societies for some 30 years. Yet, as the Economic Secretary, referring to the Government's review of company law, observed in another place:
"We expect the review to be far reaching—the most important reform of company law in a generation and, perhaps, the most important in 150 years or so".— [Official Report, Commons; Standing Cttee G, 13/2/02; col. 23.]
Echoing the words of the noble Lord, Lord Newby, this prompts the question as to whether it may be appropriate for the changes sought in Clause 2 to be delivered by primary rather than secondary legislation. Lest it be felt that my point is a little churlish, of course I concede that we do not know when the Government propose to bring their review forward in a legislative form. Nor would I expect the noble Lord, Lord Carter, to enlighten us on the point.
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None the less, picking up the suggestion made by the Select Committee on Delegated Powers and Regulatory Reform, I invite the noble Lord to offer the House assurances that any secondary legislation that emanates from the Bill will be suitably constrained on its face.
As to the substance of Clause 2, we continue to have slight reservations about subsection (3)(b), which is the inclusion of a power to create new criminal offences. Can either of the noble Lords, Lord Graham or Lord Carter, assist me on this point: what precedents are there for the use of secondary legislation to achieve this purpose?
On a separate point, your Lordships will he aware that the fee structure that is being developed for industrial and provident societies by the Financial Services Authority is a source of anxiety for many. Indeed, that was a recurrent theme of debates in another place. For illustrative purposes, I cite the example of the Women's Institute country markets. In the past these worthy organisation—of which there are some 500 operating throughout the country—were required to pay a £15 fee per annum to the Registry of Friendly Societies for filing their accounts. As I understand it, under the FSA's proposals, this will rise to about £240 a year with a further £80 backdated for last year.
I readily accept that the diversity of the sector creates difficulties for the FSA. None the less, for many societies, especially those that are most in tune with their local area, the rise in fees is a particularly heavy financial burden that may even drive some out of business. I also recognise the obligation of the FSA that it should be self-financing. But, surely, an increase of 960 per cent or so, plus the additional burden of a retrospective charge, is, in any circumstances, unreasonable.
Can the noble Lord, Lord Graham, tell us how the meeting last month between the FSA and the promoter of the Bill in another place, Mr Gareth Thomas, went? Was any progress made in terms of resolving the problem? Certainly, any comfort that may have emanated from that meeting would be welcome. After all, there is a fundamental point of principle at work here. If the situation in relation to these fees persists, it will put very severe obstacles in the way of mutuality. Such an outcome would be inconsistent with the admirable and worthy purposes of the Bill explained so eloquently by the noble Baroness, Lady Thornton.
I conclude with this thought. As befits a Private Member's Bill, its provisions are essentially modest, but that should not in any way detract from the significance and merit of their purpose. As I say, we on these Benches support the Bill; and, in so doing, we wish the noble Lord, Lord Graham, every success as he steers it through its remaining stages.
Lord Carter: My Lords, I start by thanking my noble friend Lord Graham of Edmonton for bringing the Bill before the House today. It is an important Bill that will bring welcome changes to industrial and provident society law.

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I also thank noble Lords for their many kind words about my role as Chief Whip. I am afraid that the business today, including the Motion for the House of Lords Reform, is rather like a memorial service with the subject present and alive and well. I am extremely grateful for the much over-stated and much exaggerated kind words that have been said.
Before outlining the Government's support for the Bill, perhaps I may say how pleased I am that my swansong from the Dispatch Box, after 10 years on the Official Opposition Front Bench and five years on the Government Front Bench, is a Bill introduced by my good and noble friend Lord Graham of Edmonton on a subject which has been dear to my heart for nearly 40 years; for some 30 years as director of an agricultural co-operative; and for four and-a-half years as chairman of the United Kingdom Cooperative Council before entering government. That post was most ably filled by my noble friend Lord Graham of Edmonton when I resigned on becoming Government Chief Whip.
I turn to the Bill. The Government believe that it is important that industrial and provident societies are not unnecessarily disadvantaged relative to companies or other mutual organisations and are able to operate on a level playing field—that familiar phrase—where appropriate. The Bill provides an important stepping stone to achieve that level playing field. That mixes two metaphors.
We believe that mutuality has a great deal to contribute now and in the future, offering potential benefits to individual members and to the communities on which they are based; for example, greater consumer choice and innovative services at a fair price. As a chairman of the United Kingdom Co-operative Council. I was pleased to organise research, for example, into co-operatives for community care and healthy living centres—new forms of co-operation of which I am sure that there will be many more in years to come.
It is because the Government have recognised the value and potential of mutual societies that we have recently been involved in initiatives to help to maximise the benefits that such societies can offer their members. For example, the Performance and Innovation Unit is currently undertaking a broad-ranging review of the legal and regulatory framework for charities and the voluntary sector. It deals with what are known as the "bencoms"—societies for community benefit.
The aim is to enable existing and new not-for-profit organisations to thrive and grow in all sorts of sectors. The report will examine the specific role of industrial and provident societies—I must agree with the noble Lord, Lord Newby, that that is a rather outdated term, but if he does not mind, we shall not have an amendment to change the Long Title—and changes that could be made to help that part of the mutual sector.
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The DTI has set up the Social Enterprise Unit, which is examining the barriers to growth of social enterprises. The unit aims to identify how the Government can help to improve the credibility of social enterprises and help them to become more effective businesses. We are also taking action in the wider mutual sector. For example, we have brought forward proposals to reduce the number of restrictions on credit unions' operational powers to allow them to offer a wider and more competitive range of services to their members.
The measures that we are taking will have an impact across a wide range of mutual societies including credit unions and building societies and industrial and provident societies. That is why we have been keen to lend our support in other areas, including this Private Member's Bill. The Government have made it clear from the outset that we support the Bill in principle and we are now able to lend our full support for it as currently drafted.
My noble friend Lord Graham and other noble Lords have examined the Bill's two main clauses, so there is no need for me to go into great detail. To summarise, the first clause relates to voting procedures for all industrial and provident societies in the event of a demutualisation bid. That is a useful modernisation measure that would bring the rules for such votes in industrial and provident societies into line with those for building societies. We fully support the clause.
The Government have already strengthened members' rights in building societies and ensured that decisions to change their nature are not taken lighly—and are certainly not to be reversed. The issue is getting the right balance by protecting mutuality without diminishing democracy or accountability in any way. The measures proposed in the Bill would ensure that a vote on conversion to a company, if successful, was the result of an active decision of its members to opt for company status and not of the actions of a small minority—who are otherwise known as carpetbaggers.
The other main clause of the Bill would enable the Treasury to update industrial and provident society law by assimilating it to company law. The scope of the power as drafted is similar to powers in the Building Societies Act 1986 and the Friendly Societies Act 1992. I welcome the opportunity to improve consistency amongst those different types of mutual organisation in this area.
The Bill will produce an important mechanism whereby industrial and provident societies will not fall behind changes that may he made to the legal framework of companies. We will, of course, need to consider how we use the power as and when company law changes. We will need to take into account the views of Parliament, the sector and the wider contribution that changes may make to the efficiency with which societies are able to provide goods and services.
To turn to the points that have been addressed to me, the noble Lord, Lord Newby, suggested that the Bill will not bring into force any existing flexibilities in

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company law. When further changes to company law are made, IMP law can be updated under Clause 2 to incorporate existing as well as new advantages. That is important. The first question asked by the noble Earl, Lord Northesk, who was kind enough to send his questions to me beforehand so that I could be fully briefed, could more appropriately dealt with in a company law reform Bill—when that appears, which may take a little time. I am not putting a timetable on it. Yes, as a retired Chief Whip, I am pleased to say that I am not putting a timetable on it.
Although the clause allows for the assimilation of industrial and provident society law to company law, it is not about the simple extension of company law to societies. The power will allow for the adaptation or substitution of provisions in industrial and provident society law so that they more closely resemble company law. The real subject matter of Clause 2 is industrial and provident society law, not company law as such. It is more appropriately included in this Bill than in a Bill amending company law, for which we might have to wait some time. Similar provisions in building society and friendly society law appear in Acts that specifically govern such societies. That is why the Bill is a more appropriate place for the introduction of the power.
The noble Earl also asked what assurances could be given that any secondary legislation to flow from the Bill had the appropriate checks and balances. There are already several safeguards in place that, we believe, will ensure that the powers available under Clause 2 are exercised appropriately. The affirmative procedure must be used in making an order under Clause 2, meaning that any order made under the clause must be debated and approved by both Houses. The opportunity for parliamentary scrutiny is guaranteed. The power is limited and can be used only when existing company law is modified and only when the change to industrial and provident society law brings it more closely into line with company law provisions already approved by Parliament.
The safeguards in the clause, in which the statutory provisions are set out, cannot be amended by an order made under the Bill. That will ensure that no fundamental change to the nature or character of societies can be effected by the use of the power. The powers in the clause closely resemble existing powers in the Building Societies Act 1986 and the Friendly Societies Act 1992, both of which have been approved by Parliament. The Treasury will, of course, consult on any new proposals that are made under the power.
The noble Earl also referred to new subsection (3B) and asked about precedents for introducing criminal offences via secondary legislation. There are similar provisions in building society and friendly society legislation that expressly allow for the creation of criminal offences. Another example of the power can be found in the European Communities Act 1972. If there exists a criminal offence for a certain act under company law, we do not see why that should not be considered for the equivalent area of industrial and provident society law. That does not mean that we will
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always be obliged to create a criminal offence; the clause allows for some discretion as to how company law is assimilated.
There is also the vexed question of fees, about which my noble friend Lord Graham of Edmonton will also say something. We are aware of the concern that has been expressed by some in the movement about the fee structure that is being developed by the FSA in relation to its duty under the relevant Industrial and Provident Societies Act. In passing, I must say that I shall look back with nostalgia on the Financial Services and Markets Act 2000, which was the most heavily amended Act ever to go through Parliament. I can remember every amendment.
I stress that the final level of fees for the coming year has not been finalised. The FSA's consultation with the movement has only just drawn to a close. The figures proposed in the FSA's consultation document—I emphasise the word "consultation"—were only illustrative. Many other figures have been quoted publicly but were completely unfounded. We understand that, along with many in the movement, the FSA prefers a flat fee approach. Inevitably, that will affect some societies unfavourably, but we must appreciate that some societies will gain from such a move, particularly those active in developing and updating their government structures.
We must not underestimate what the Bill will achieve: a more robust demutualisation procedure should create more confidence and strength. The ability to update industrial and provident society legislation through secondary legislation will ensure that the legal framework for societies need not fall further behind that for companies. In time, the Bill will have a profound effect in allowing industrial and provident society legislation to catch up in areas in which it is felt appropriate, helping to create a genuinely level playing field—that phrase again—with companies and across the mutual sector.
I thank my noble friend for bringing the Bill before the House and all those who have contributed to the debate. I affirm the Government's support for the Bill.
10.29 p.m.
Lord Graham of Edmonton: My Lords, it is with pleasure and not a little relief that we have come as far as we have with the Bill. I shall begin my closing remarks by telling the House that my noble friend Lord Carter was particularly anxious, regardless of anything else that was happening, to be here to deal with the Bill. I said earlier that as chairman of the UKCC, he had the responsibility six years ago to try to do something similar to what we are doing tonight. The group did a first class job, but it produced a 135-clause Bill. The former Chief Whip was very ambitious.
Lord Carter: My Lords, had I been Chief Whip, it would have been a two-clause Bill.
Lord Graham of Edmonton: My Lords, we slimmed it down to 13 clauses, which was still a lot.

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Everyone who is present tonight would rather that the Bill was a little more comprehensive, but beggars cannot be choosers. We are looking at a tiny advance towards a level playing field with other organisations.
I am delighted to see the noble Lord, Lord Brabazon, in his place. Earlier this evening, the noble Baroness, Lady Nicol, was present. She had the pleasure of being president of the Cambridge Cooperative Society for many years. The House is a repository for a great many who have been involved in that way.
I very much liked what my noble friend Lord Morris said about the modernising possibilities in Clause 2, but the measure must be carried with a modicum of patience. We shall never get major advances, but we have a foot in the door at all sorts of places, not least the Treasury where the Ministers are. I was pleased that the noble Baroness, Lady Thornton, took the opportunity to pinpoint successes outside the normal sphere of the consumer Co-operative movement. She painted a picture of what can happen if the idea of co-operation and mutuality is given a greater crack of the whip.
My noble friend Lord Fyfe made a unique contribution which went to the heart of what could have been a petrifying situation for the Co-operative movement. He used phrases that I have used before. I have said that the Co-operative movement never made a pauper nor a millionaire. It is not its job to make people either very poor or very rich. It has collective assets that need to be protected.
The noble Lord, Lord Newby, shared our regret at the limited nature of Clause 2. But as my noble friend the former Chief Whip pointed out, the possibilities are there and provided that one can read across to any changes that take place, they can be applied to the co-operative system.
I was more than pleased to hear the remarks of the noble Earl, Lord Northesk, because in the other place there was sparring and points were made. But I was delighted with the words of Christopher Chope at Third Reading when he spoke unashamedly of being satisfied that a good job had been done. Far more time was spent in the other place where consensus was reached than we are able to spend here.
The noble Earl, Lord Northesk, asked about fees. There is no question about that. I see that the noble Baroness, Lady Byford, is sitting next to him. She alluded to the concern in the Women's Institute movement about the possibilities. My noble friend Lord Carter has told us about the parameters in the matter.
My honourable friend Gareth Thomas and Mr Chope went to see representatives of the FSA to discuss the fees. I am informed that they were heard with respect and sympathy but were not told anything definite. The FSA was made fully aware of what we say are deleterious effects. The noble Baroness, Lady Byford, gave an example of the fee being £25 this year and the possibility of having to pay £250. I remember
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Mr Greg Knight reporting that an official had said, "Well, if you can't pay it, you need not join. You can go somewhere else".
Our objective is to increase the number of organisations, not to diminish them or to lead them in the wrong direction. I am therefore optimistic. We must bear in mind that the fees issue is an FSA matter, not a legislative one, and that is accepted. When Hansard is read by officials of the FSA and they read the words of the noble Earl, Lord Northesk, and of noble Lords from all around the Chamber, they will be fully aware that the feelings expressed by Mr Chope and Mr Thomas are echoed here.
In case people believe that we are making too much of a meal of the issue, I say that we may never have another opportunity to put on the record two aspects. First, this House is as competently equipped as is the other place in terms of what is happening outside. Secondly, when people look back and ask what noble Lords did when they had the opportunity to speak, they will see that we did not just nod the legislation through but that we debated it for an hour and a half. That has served the cause well.
I am grateful to Mr Thomas and his colleagues on all sides in the other place for giving us a good review and to all colleagues and friends on all sides of this House today. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Flags Regulations (Northern Ireland) (Amendment) 2002
10.37 p.m.
Baroness Farrington of Ribbletonrose to move, That the draft regulations laid before the House on 9th May be approved [29th Report from the Joint Committee].
The noble Baroness said: My Lords, these draft regulations make minor adjustments to the Flags Regulations (Northern Ireland) 2000. In part, the motivation is the very sad one that we must lift the requirement of the flying of the Union Flag from certain government buildings in Northern Ireland on the birthdays of the Queen Mother and Princess Margaret.
The other element of the regulations is much happier. They provide for the flag to he flown, as it will be elsewhere in the United Kingdom, during the weekend of celebrations for Her Majesty's Golden Jubilee from 1st to 4th June this year.
In Northern Ireland, unlike the rest of the United Kingdom, the flying of flags on government buildings has been a matter of some controversy and in 2000 the then Secretary of State thought it right to legislate to establish arrangements which reflect the practice elsewhere in the United Kingdom. The Flags (Northern Ireland) Order 2000 permits the Secretary of State to make regulations, subject to consultation with the Assembly and the approval of both Houses here.

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The draft instrument before us today is in the nature of routine maintenance on the earlier regulations. It is entirely consistent with them. The Assembly debated the draft amendments and a range of views was expressed. A copy of the Official Report of the debate has been made available to the House. It is fair to say that there was little opposition to the draft regulations in themselves and many Assembly Members expressly recognised the desirability of them.
Should noble Lords wish to know why we are making these minor amendments to legislation, I should explain that they are relatively small adjustments, although they reflect important events. However, that is the framework of the legislation: once it was decided to regulate by law in Northern Ireland matters that on this side of the water are simply a matter of administrative instruction, it was thought right to pin down very clearly what was to be clone. I commend the draft regulations to the House. I beg to move.
Moved, That the draft regulations laid before the House on 9th May be approved [29th Report from the Joint Committed].—(Baroness Farrington of lahleton.)
Viscount Bridgenian: My Lords, as the noble Baroness said, these regulations cover the momentous events of the first six months of this year; namely, the sad death of Princess Margaret, and of Her Majesty Queen Elizabeth The Queen Mother. However, as she also said, they reflect the particularly happy events that we are now about to witness. We are not required in this debate to debate the merits of the parent legislation. This is an administrative fine-tuning that is
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entirely within the spirit and the intention of the original regulations. We are pleased to support the Motion from this side of the House.
Lord Shutt of Greetland: My Lords, I, too, support this amendment to the regulations. We are drawing to the close of a long, varied and eventful day and, again, this Motion has an element of both sadness and celebration. As has been mentioned, clearly the omissions must be made from the regulations because of the two sad Royal deaths. But, obviously, it is also a time of great celebration of the Golden Jubilee. It is right that the dates in that respect should he inserted into the legislation.
In many ways it is a great pity that we have to be making regulations about the flying of flags, but that is the way things stand. Is it not surprising that we are doing so in respect of Northern Ireland when, perhaps, there has been a freer flying of flags over the past few days than has been the case in this part of England for a long while? However, the flag has a greater prominence in Northern Ireland. I look forward to the day when it may not have such prominence, and people may perhaps be able to fly flags when they wish to do so; and, indeed, when we do not have to cover this by regulation. For the time being, noble Lords on these Benches support the amendment to the regulations.
On Question, Motion agreed to.
Lord Carter: My Lords, this is the last time that I shall have the opportunity to move the Motion. Therefore, I beg to move that the House, and the Chief Whip, do now adjourn.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at seventeen minutes before eleven o'clock.

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